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Forth Ports makes progress

RESULTS: Forth Ports has benefited from a more profitable business mix and cost reductions, but some ports are still facing volume declines
August 25, 2010

The most eye-catching news from Forth Ports this year was March's takeover approach by a consortium of shareholders. That was aborted at the end of May, sending the shares in the port operator back to pre-bid levels and, apart from £1.1m of related one-off costs, it left no trace on the half-year results.

IC TIP: Hold at 1291p

The figures offered modest grounds for optimism, though. The core ports business has turned the corner at Tilbury, where volumes grew 8 per cent. But some Scottish operations - notably container volumes at Grangemouth - are still contracting. Chief executive Charles Hammond says Scotland entered the recession later and is expected to emerge later, too. Overall port revenues were marginally lower at £76.7m. But a more lucrative business mix and last year's cost reductions meant that underlying operating profits from the ports grew 6 per cent to £19.7m - generating an impressive 26 per cent margin.

Earnings rose sharper still at the group level because, in December, Forth Ports bought out its joint-venture partner - Bank of Scotland - in the Ocean Terminal shopping centre project at Leith, Edinburgh. This pushed reported property revenues up from £0.8m to £4.3m.

Investec Securities expects full-year adjusted pre-tax profits of £34.5m and EPS of 55.4p (£33.2m and 55.7p in 2009).

FORTH PORTS (FPT)

ORD PRICE:1,291pMARKET VALUE:£591m
TOUCH:1,291-1,300p12-MONTH HIGH:1,425pLOW: 1,020p
DIVIDEND YIELD:2.3%PE RATIO:16
NET ASSET VALUE: 500pNET DEBT:107%

Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200986.612.418.79.5
201089.616.024.510.0
% change+3+29+31+5

Ex-div: 13 Oct

Payment: 5 Nov

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