Land sales halt hits Forth Ports' profits

FORTH Ports, the ports and property group, today revealed that its profits last year dropped sharply as its decision to halt one-off land sales hit earnings.

Over 2007, pre-tax profits dropped 41 per cent to £32.3 million, from £55.6m the year before. However, the fall was less than the 50 per cent that many analysts in the City had been expecting.

And revenues were ahead by seven per cent as the Edinburgh-based group's ports operation put in a strong performance with underlying profit up 13 per cent to £38.7m.

In 2006, Forth redrafted its property framework, stopping piecemeal land sales of selected sites and replacing that with a wider strategic framework for its overall property assets.

Forth said that the value of its land development assets rose by three per cent last year to £282m. But its property arm booked an underlying operating loss of £1.3m, compared with an underlying operating profit of £4.2m in 2006.

"The property division met all of its principal milestones and drove forward its development plans for the (Edinburgh) Waterfront," the company said.

Despite the overall slide in profits, chief executive Charles Hammond said: "2007 has been a very good year for the group, with a strong underlying performance in ports and the successful achievement of milestones in property.

"With strong underlying demand in ports and a clear roadmap for the development of our property assets, we remain well placed to deliver further growth."

Forth – which runs seven British ports, including Leith, Grangemouth and Tilbury – said underlying earnings at the division rose by 13 per cent to £38.7m, helped by the acquisition of Nordic Group for £46m last June.

Forth has long been touted as a takeover target and speculation increased in January after it emerged that Australian firm Babcock & Brown (B&B) had built up a 20.4 per cent stake in the Scottish company.

Ports businesses are seen as favoured takeover targets as they tend to have strong cashflows.

At the time, Forth dismissed the stake-building as merely "a good investment" by B&B and made no further comment today.

In its annual update, Mr Hammond said of Forth's ports operation: "Both Tilbury and Scotland contributed to the strong performance through increasing volumes and operating efficiencies.

"At Leith, however, total throughput in terms of tonnage was down 13 per cent on the previous year.

"The value of our port investment properties increased to £178.8m from £161.8m last year which reflects a modest increase in Scotland and a large increase at Tilbury.

"The board looks forward with confidence to an improved operating performance in 2008."