P&O feels the pinch
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• P&O's road transport fleet suffered last year as the recession continued to erode profit margins.
Operating profit from P&O European Transport Services is down £6.6m to £13.1m, according to the company's 1994 financial report.
P&O head office denies that profits plummeted to City analysts' estimates of 2-2.5% of revenue; it says they were 5-10%.
But it adds that profits are well below the target of 15% with business at a "very low ebb", particularly in the early part of the year. The five-company POETS section, which incorporates P&O Roadtanks, Distribution, Pandoro, Ferrymasters and the German haulier Rhenania, is suffering from the "very slow recovery from recession in Germany and at home", says the report.
P&O denies it is about to sell the worst performers: it is "genuinely confident" that 1995 will bring improved results.
P&O Containers increased operating profit by 50% to £63.2m through improved efficiency, and P&O Ferries increased the number of freight units carried by 25%. Ferry profits rose £38m to £113.9m but P&O chairman Geoffrey Stirling admits the Channel Tunnel will hit earnings this year.
Market unease about the P&O group's position was underlined when, despite a 41% rise in operating profits, shares fell 9% on the day the results were announced last week.
Analysts say the Channel Tunnel, capital spending and the weakness of the dollar all contributed to the share drop.