Steamships

profits up

THE Papua New Guinea-based Steamships Trading Co Ltd has reported an increase in pre-tax operating profit of 26.4 per cent for the year ended June 30, 1989. This brought pre-tax profit for the freight and con struction company to KlO.l million, compared with K 8 million the previous year.

Sales for the year K 166.9 million were considerably down on last year’s total of K 195.1 million due to a change in the method of accounting for the tur nover of the Papua New Guinea Ship

ping Corporation joint service between

Australia and PNG, and the transfer of the group’s Papua New Guinea mer chandising operations to an associated joint venture company. The tax provi sion was K 2.3 million, which was a con siderable increase on the previous K 758,000. The company paid K 2.52 mil lion in interest and allowed K 8.06 mil lion for depreciation.

The directors said they were particu larly pleased with the operations of the building products and services division, with the results vindicating the com pany’s decision to stay in these fields de spite unsatisfactory returns in the past.

They said the present high level of con struction activity in Papua New Guinea should ensure good earnings in the cur rent year.

The company said the upgrading of hotels which began at the Melanesian Hotel in Lae would be continued, with contracts recently having been let for up grades and extensions to the Gateway Hotel in Port Moresby and Highlander Hotel in Mount Hagen.

Strong competition, in Port Moresby

particularly, had led to lower margins for the group’s retail operations. But the Windward apartment complex on Ela Beach was fully let and providing a satis

factory return.

During the year, Steamships received a second new ship for carrying copper concentrate from Kiunga to the mouth of the Fly River. In other parts of the

company’s shipping operations, the

directors noted that severe competition on the Australian-Papua New Guinea trade had caused freight rates to be de pressed to an uneconomic level. The re port said two companies had been forced into receivership as a result.

The continued expansion of Colgate Palmolive (PNG) Pty Ltd and the in creased use of locally-produced palm oil had enabled Steamships to substantially lift output, and during the year the com

pany began exporting glycerine.

Since the end of the financial year, the company has signed a deal whereby its steel division will be managed by Trans field Corporation, a move the directors say will enable Steamships to increase its

participation in development of major

resource projects. But they warned that company profits could be affected if the Bougainville crisis continued as that situation would be bound to affect gov ernment revenue and internal spending.

Directors have agreed to pay a final dividend of 8.25 toea per share, making a total dividend for the year of 13.5 toea. □