Asciano boss rules out sale of port assets

Asciano chief executive Mark Rowsthorn has played down speculation the group would look to sell its container ports assets to concentrate on growing its coal rail division, which makes higher returns.

"They are an important part of the business and they allow us to diversify our earnings," he said.

But Rowsthorn did not dismiss the possibility out of hand, noting that the group was about to begin meetings as part of its annual strategic review, reported The Australian.

"We're just starting the review and we'll look at the long-term market position of each of our businesses," he said. "We'd never say never."

Asciano has four main divisions: container ports, coal rail, intermodal (rail) and automotive.

Of the four divisions, the container ports business has struggled to deliver the same levels of return as the others.

UBS analyst Simon Mitchell said that earnings before interest and tax returns of 10 per cent or greater would be difficult to achieve for the container ports business because it had high intangible asset carrying values and was forecast to achieve only flat earnings in the medium term.

In contrast, the other divisions were achieving returns of 13-15 per cent, Mitchell said.

Apart from improving its returns profile, a sale of the container ports business could also be channelled into strengthening Asciano's balance sheet and giving it funds to grow the coal rail business, where its main competitor is newly listed QR National.

Mitchell estimated that a sale of container ports priced at 12 times underlying earnings would fetch proceeds of US$2.74 billion, which would allow Asciano to reduce its pro-forma net debt to just $293 million.

Mitchell said this would in turn allow Asciano to use the funds it has to further expand its coal rail operations, which could have a significant call on capex as it seeks to win market share.

The speculation on Asciano's Patricks ports business comes as competitor DP World Australia explores the possibility of selling its stevedoring assets.

DP World was assessing its options for a trade sale or float of its local unit, with the help of Deutsche Bank and JPMorgan.

It has since emerged that US-based Citi Infrastructure Investors is a likely bidder for the assets.
(Source:www.cargonewsasia.com)