CP Ships promotes itself to U.K. investors

CP Ships promotes itself to U.K. investors

   CP Ships’ chief financial officer Ian Webber made a presentation to investors in London Monday at a conference organized by the Toronto Stock Exchange.

   Listed on both the Toronto Stock Exchange and the New York Stock Exchange, CP Ships saw its stock price fall more than 20 percent in August after the Canadian-registered container shipping group admitted it had overstated its profits in 2002, 2003 and in the first quarter of this year by a total of $41 million.

   Webber discussed the restatement of the company’s results, its profitability prospects and industry characteristics at the London conference.

   He said the profit correction was due mainly to “underestimated costs plus sundry balances written off.” He added that CP Ships is taking five actions to address the issue: implementing an SAP system, improving accounting and related business processes, reinforcing “review and reconciliation processes,” strengthening the finance organization, and moving all carrier brands under one operating and one financial system in early 2005.

   CP Ships expects an improved net income in the second half of the year, Webber said. For the first half of 2004, CP Ships earned a net income of $6 million, compared to a restated first-half loss of $2 million last year. The shipping group said in August it expects to raise its net income this year to a level higher than the uncorrected 2003 net income of $82 million.

   He sees firm volumes in the transatlantic trade, where the company plans to increase westbound rates in October and reduce capacity early next year.

   CP Ships also predicts a “substantial earnings improvement” in the second half of this year in the Asian trades, and “improving results with strong volume and some further northbound rate increases” in the Latin American trades.

   Webber cited industry forecasts showing that worldwide ship capacity would increase about 10 percent this year, less than the forecast growth in demand of nearly 13 percent. The supply/demand trend would be reversed in 2005 and 2006, however. Webber said ship capacity would rise 14 percent in 2005, as compared to worldwide cargo growth of about 8 percent in the same year.

   On Monday. the CP Ships stock rose 1 percent to $12.50 on the New York Stock Exchange. This compares to a 52-week high of $22.57 reached on Oct. 16 and a 52-week low of $11.47 on Aug. 30.