Adsteam Pumps Up Dividend; Looks To Tugs Offshore

Sydney Morning Herald

Wednesday November 9, 2005

Matt O'Sullivan

Adsteam Marine may expand its tugboat operations into overseas ports after a disastrous foray into North America taught the company to stick to what it does best.

Shares in Adsteam rose almost 8 per cent, or 13c, to $1.79 yesterday on news the company would pay out about 50 per cent of net profit by way of dividends this financial year.

The country's largest tugboat operator said it was eyeing expansion outside its existing markets in Australia and Britain. "We are looking at opportunities to grow outside our UK and Australasian businesses. So logically we would look in Asia and Europe," managing director John Moller said yesterday.

Adsteam's expansion plans come less than three months after it finally gained approval for the sale of its Alaskan fuel distribution business, Northland.

Proceeds from the sale of Northland have helped Adsteam to reduce its once crippling debt from $418 million more than two years ago to $290 million. The move to reduce debt is part of a plan in train since May 2003 to lower costs and focus on its core business.

Mr Moller declined to say where in Asia or Europe the company might be interested in making acquisitions, but he did admit it had "no definite targets at this stage".

JP Morgan analyst Alex Mees said investors were not opposed to Adsteam expanding overseas so long as the company stuck to its core business of tugboat operations. "Provided it's in the core range of ship-assist services there is the potential for it to stimulate growth in the company," he said.

The Alaskan business had created problems because it was focused on fuel distribution and barging, rather than Adsteam's main business.

Mr Mees was not aware of any specific strategy for expansion, although key ports such as Singapore or Hong Hong would be a difficult proposition because of tough competition.

The company also reiterated its full-year net profit forecast of $42-$46 million at its annual meeting in Sydney yesterday. Adsteam posted a profit of $23.3 million in 2004-05.

Chairman Robert Corlett said shareholders could expect a dividend of 7.8c to 8.5c a share for the full year, compared with 4.3c last financial year.

© 2005 Sydney Morning Herald

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