ASSOCIATED British Ports (ABP), owner and operator of Southampton docks, is reporting a buoyant first half of 2004 with both turnover and underlying operating profit set to increase.

Still stung by the government's refusal to allow the proposed controversial development at Dibden Bay on Southampton Water, ABP, highlighting increased traffic at Southampton Container Terminals, claims that this decision will have "no significant short-term impact'' on its UK ports business.

Southampton is one of ABP's top performing UK ports, annually handling 37 million tons of cargo, well in excess of 200 separate cruise ship calls and 750,000 vehicles for the import and export trade.

Bo Lerenius, ABP's group chief executive, said: "Turnover from the group's UK ports and transport operations is expected to increase by at least four per cent while underlying operating profit is expected to grow by at least two per cent.

"Roll-on/roll-off trade, deep-sea container traffic at the port of Southampton, vehicle imports and exports and cruise ship call volumes have all increased so far this year

"In April, the government rejected the group's application to develop the Dibden Terminal deep-sea container port at Southampton. As previously reported, the group will write off substantially all of the related £45m of capitalised costs in this year's interim results.

"The government's decision on Dibden Terminal will have no significant short-term impact on the group's underlying UK ports business.''

ABP said its cost reduction programme, implemented during 2003, will reduce the group's operating expenses by at least £3m per annum from the beginning of this year.

"In line with the group's strategy to grow existing business and develop new business through rigorously targeted investment, new revenue-related investments contracted so far during this year total more than £33m,'' said Mr Lerenius.

"These projects have construction lead times of up to 18 months and will only contribute to the group's results once they become operational.''