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Port Of Tauranga Shows Solid First Half Growth

The Port of Tauranga Limited today announced that its net profit for the six months to 31 December 2001 was $12.3 million, an increase of 16 percent on the $10.579 million it earned in the first half of the previous year.

Chairman Mr Fraser McKenzie said the result was achieved on revenue of $43.353 million compared with $37.123 million previously.

He said an indication of the strong growth that the Company had sustained in recent years was provided by the fact that its tax paid profit for the latest half was in excess of the $11.653 million that it achieved in the full year to 30 June 1998.

"That result, achieved just three and a half years ago was earned on an asset base similar in value to that which underpinned the latest profit."

Mr McKenzie said that during the latest half the Company advanced a number of strategic initiatives.

These included an agreement to purchase Owens Services BOP, its investment in Northport, the continued development of METROPORT and the implementation of the process required for it to make a $67 million return of surplus capital to shareholders.

The purchase of Owens Services was approved by the Commerce Commission on 8 February after the close of the half year.

Mr McKenzie said Owens Services, which operated log marshalling, agency, storage and distribution services at Tauranga and at nine other ports throughout New Zealand, would generate significant levels of additional revenues for the company.

Its operations were highly complementary to the operation of the Port, but future log export volumes would directly influence that company's future revenues.

The return of capital, approved by shareholders at a special meeting on 5 December 2001, was also approved by the High Court after 31 December 2001.

This return of surplus capital was achieved by the cancellation of one in every eight shares held by each shareholder in the Company and the tax-free distribution to them of $7 in return for each share cancelled. This payment was made to shareholders on 15 February.

In conjunction with the return of capital and its investment in other areas, the Port had since 31 December entered into a commercial funding facility allowing it to borrow up to $250 million from institutional lenders.

"As part of this process its operations were thoroughly evaluated by the ratings agency Standard and Poor's and this resulted in a rating of BBB+."

Mr McKenzie said the fund raising and the return of capital would significantly change the structure of the Company's balance sheet, but this would remain sound and be managed within conservative parameters.

He said the Northport joint venture with Northland Port Corporation, involving the establishment of a new deep-water port at Marsden Point, was proceeding within budget and should start operating in June this year.

METROPORT, the Company's inland port in South Auckland, was continuing to play a significant role in improving the Company's competitive position, by widening its catchment area and by attracting new shippers to the Port's services.

The latest half saw further growth in the volume of dairy products shipped which rose 13.6 percent.

"We have yet to experience any impact from the reported fall-off in demand for dairy products that is beginning to be evident in international markets, but this may influence volumes in the coming months."

Growth in container volume saw 162,178 TEUs (twenty-foot equivalent units) go through the Port, an increase of 15.9 percent on the previous period and more than had been budgeted.

During the period shipments of most commodities showed healthy volume growth.

Log shipments recovered 21.7 percent from the low levels of the previous first half and sawn timber and wood pulp volumes also rose. It was expected that log volumes would be lower during the second half of the year but volumes for the full year are still likely to reach budgeted levels.

The total tonnage handled by the port in the period was 19 percent higher at 5,830,947 tonnes, which was 13 percent ahead of budget.

Import tonnages were 14 percent above budget with strong increases shown in oil products, fertiliser, chemical and grain shipments. Grain shipments in the half-year exceeded the record volume established for the last full year.

During the period Maersk Sealand, the world's largest container shipping line launched a new service linking Tauranga, New Plymouth and Timaru to the Caribbean, Latin American and United States East Coast.

This service was facilitated by a long term shipping agreement between Maersk Sealand and Fonterra and Mr McKenzie said it further complemented Port of Tauranga's growing involvement in dairy exports.

He said the Board and management remained tightly focused on the process of continually refining and improving the Company's core business, while at the same time carefully considering and pursuing new opportunities that had the potential to create meaningful improvements in shareholder value.

The outlook for the remainder of the year remained positive, and the Board was forecasting a satisfactory full year profit. The Directors have declared an interim dividend of eleven cents per share compared with nine cents last year, he said.

Ends

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