InterBulk sees pre-tax profits rise after interest reduction

Revenues at the company, which moves chemicals and dry goods such as food around the world, rose 15.8% to £148m as it benefited from a pick-up in world trade and secured contracts. But much of this was offset by soaring fuel prices which have not yet fed through to higher rates on InterBulk’s contracts.

The main boost came from a £1.3m drop in interest payments as an interest rate swap deal, signed before the current period of low rates, fell away.

InterBulk’s East Kilbride-based finance director Scott Cunningham said: “The net result is where we want it to be.

“We have got an interest reduction which will be improved again with the Sinotrans deal.”

“I think we are definitely winning and are quite happy with our results.”

InterBulk received shareholder backing to sell £18.2m of shares to China’s Sinotrans earlier this month but awaits final sign-off from German regulators.

The sale will enable InterBulk to cut its interest bill by repaying its most expensive debt and revamping its borrowing terms with Bank of Scotland, which has lent it £90.4m, the major part of its £106.5m debt pile.

The Sinotrans deal will see Jim McColl’s 5.5% stake in InterBulk, of which he is a director, fall by around a third. But the two companies retain close links. Mr Cunningham works out of Clyde Blowers’s East Kilbride offices while InterBulk, which counts the refining plant at Grangemouth on the Firth of Forth among its major customers, also receives administrative support from Clyde Blowers.

InterBulk’s board is convinced of Mr McColl’s continuing support. Chairman David Rolph said: “He is a valued contributor to all the board discussions.”

InterBulk’s Rotterdam-based chief executive Koert van Wissen said that InterBulk is benefiting from a rebound in world trade and contract wins.

But he said the speed of fuel price rises meant that rising costs were not yet reflected in its contracts. “There is always a delay. When the price goes down, which normally would happen, we would have the advantage of that,” he said.

Mr Cunningham cautioned that revenue growth could slow: “The last financial year was very strong in terms of revenue growth and the first half year-on-year is also strong. If you look at what our customers are saying, it (revenue growth) is likely to become more modest.”

Liquid shipments account for the main part of InterBulk’s work but it is now seeking to expand its intermodal dry bulk service, where it transports goods by lorry, train and ship, from its European heartland.

Mr Cunningham said: “Half of our business already is outside of Europe. Our dry bulk business is predominantly European still. We are trying to take that out to mirror what we have done with liquid bulk in our dry bulk business.”

A key opportunity for InterBulk is a collaboration with Sinotrans, with whom it has worked for the past four years in transporting goods in and out of China, to offer its services within the rapidly expanding market.

Mr van Wissen said that half of new global chemicals capacity is being installed in China. Investment is coming from European and American companies as well as domestic firms.

Talks are ongoing with Sinotrans but nothing will be launched until the share sale has been completed.

Managers at InterBulk played down the chances of an eventual takeover by Sinotrans.

Mr Cunningham said: “It is not something that is on the table. It is not something that has been discussed. It is not where they want to go.”

Shares in InterBulk, which doubled after the announcement of the Sinotrans deal last month, have largely retained that gain.

They closed yesterday at 8.75p each, a gain of 0.25p or 3.1% on the day.