Adsteam Posts $1 Million Drop in Profits

Australia's biggest marine towage group Adsteam Marine Ltd posted a net profit on Wednesday of $8.6 million for 2000/01, down from $9.6 million a year ago, but said it saw early signs of improved performance.

"There are early signs for an improved performance by the group's global operations in the current financial year," managing director David Ryan said in a statement.

Adsteam, which recently paid around $268.8 million for Howard Smith Ltd's towage business, said it expected to match market expectations for 2001/02, currently for a pre-abnormal net profit of $18.8 million to $19.3 million.

"We put out a warning late in June because we'd seen a softening in the market that was affecting our results, so in many respects we're disappointed with the results to June 30, 2001," managing director David Ryan said. "However, life as we look forward is very different."

The result compared with analysts' forecasts for a net profit of around $8.8 million, with estimates ranging from $8.5 million to $11.2 million, according to Multex Global Estimates.

Shares in the group climbed $0.2 to close at $1.23 in a weaker overall market, giving Adsteam a market capitalization of around $233.4 million.

The Howard Smith buy has virtually doubled the size of Adsteam, which is focussed on bedding down the acquisition and reaping the modest $1.6 million to $2.6 million cost savings targeted.

A range of price and cost strategies being implemented in Australia should help produce a much stronger result from its domestic business for 2001/02, while the outlook for Adsteam's British operations was also improving.

"It is pleasing to see, in the U.K. in particular, that vessel calls and tug boat jobs are currently ahead of the same period last year and the overall outlook for those operations is for a return to historical levels of profitability after a very difficult year to June 30, 2001," Ryan said.

Adsteam, which ranks as the world's largest independent harbor towage group with a fleet of 156 tugs, said the performance of its U.S. businesses was likely to be better in the year ahead.

"The outlook for the full year in the U.S. is for a further increase in financial performance over the good results achieved by Northland in the year to June 30, 2001," Ryan said.

The latest batch of results included a full year's contribution from Northland in the United States but just a small contribution from the Howard Smith businesses. -- (Reuters)