SANTOS Brasil, the largest container terminal in South America, has reported healthy underlying growth last year with an 18.3% increase in net operating revenues. But the company saw profits eaten up by the cost of an initial public offering in the final quarter.

Last October's IPO on the Brazilian stock exchange cost the company R$138.8m ($66.1m), which converted earnings before interest, tax, depreciation and amortisation of R$27.8m in the last quarter of 2005 into a comparative loss of R$94.8m in the final quarter last year.

The cost of the flotation dragged the final figure down by 80.6% year on year. Earnings before interest, tax, depreciation and amortisation were R$22.7m compared with R$116.6m the previous year.

Figures adjusted for the exceptional costs of the float, however, point to a healthy improvement in operating conditions, with a 38.6% rise in earnings.

Gross operating revenues were up 21% to R$468.2m with net operating revenues of R$418.3m. The terminal handled 732,301 containers, more than 1m teu, up 8% on the previous year. The last quarter showed a sharp increase of 23% and the upturn has led the group to forecast 820,000 containers this year, around 1.2m teu.

The R$925m raised by last year's flotation has also transformed the company's financial position, allowing it to reduce total indebtedness from R$631.3m to R$197.7m.

Wady Jasmin, Santos Brasil chief executive, said the company was planning a R$200m capital expenditure programme this year, twice that of previous years.

'We are planning to acquire two new post-panamax container cranes for R$40m, 12 RTGs totalling R$40m and we are planning to spend in construction at terminal 4 something to the order of R$120m,' he said.

A legal dispute with rival terminal operator Libra Terminais over the operation of an adjacent facility has held up the company's expansion.

'We believe this will come to us,' Mr Jasmin said. 'We believe we have a very strong case. The only workable solution for the port of Santos in the short term is expansion.

'Our need goes hand in hand with the needs of the port, exporters and shippers so we are very optimistic. We believe by March we will start working at terminal 4.'

Units traded on the Brazilian stock exchange and in New York were trading at R$26.9 yesterday, 12% above the October float price.