POAL records a 20% rise in after-tax surplus

POAL records a 20% rise in after-tax surplus

Ports of Auckland’s surplus after tax including unusual items rose 20% to $57.2 million for the year ended 30 June 2004. Excluding unusuals, the surplus after tax increased 4% to $44.3 million.

“This is another sound result,” said the Chairman, Neville Darrow, on announcing the financial performance.

“Ports of Auckland is a strong company underpinned by solid fundamentals. The cash flows and balance sheet are very sound, and returns to shareholders continue to grow over the medium and long term.”

The record after-tax profit includes a gain of approximately $15.0 million from the sale of the Westhaven and Hobson West Marinas in May 2004.

Total earnings before interest and tax (EBIT) excluding unusuals were down 1% to $75.1 million. The Westhaven Marina berth unit sales programme was largely completed in the 2002-03 year.

Operational performance

Port Operations EBIT, excluding unusuals, rose 1% to $65.3 million.

Port Operations represents the bulk of the Company’s activities, covering all cargo and container operations and marine services.

Earnings per share

Earnings per share were 53.9 cents, up 20%, including unusuals. If unusuals are excluded, the result is a 4% rise to 41.8 cents.

Dividend

The Board declared a final dividend of 25.5 cents per share, bringing the total ordinary dividend to 40.5 cents, an increase of 19% on last year.

The total dividend represents 75% of the Company’s after-tax earnings including the gain on the sale of the Westhaven and Hobson West Marinas and other unusual items.

This is the same basis of calculation that was made last year when the dividend was 34 cents per share, of which 4.1 cents arose from unusual items.

Mr Darrow said: “The Board has decided against paying a special dividend related to the gross proceeds of the sale of the Marinas.”

He said the reasons for this decision are:

With the recent change in the Company’s major (80%) shareholder, it is desirable to clarify the strategic direction and most appropriate capital structure of the Company. The Company is analysing opportunities in both its port activities and property portfolio. These may result in investment opportunities and/or capital restructure which would be value enhancing to shareholders. To pay out a higher dividend would be both inappropriate and unwarranted until 1 and 2 above are determined.

The final ordinary dividend is payable on 21 September 2004 and is fully imputed for tax.

Property

With respect to the Company’s remaining investment properties, Mr Darrow said that no decision had been made to sell other holdings.

“The Company has joined with Auckland City and the Auckland Regional Council to develop further the broad vision for the waterfront area between the Harbour Bridge and Mechanics Bay. All three parties want an outcome of which all Aucklanders will be proud,” he said.

Performance against strategy

The Chief Executive, Geoff Vazey, outlined the Company’s progress against strategy for 2003-04.

“Our mission is to ensure the most efficient and cost-effective supply chain is created for containerised cargo between exporters and importers, and shipping services. An optimised supply chain will bring business growth for the Company to the benefit of our stakeholders and the region. This is because increasingly products don’t compete – supply chains do,” Mr Vazey said.

“We have a clear strategy to achieve our vision and it is the right one. It consists of three strategic platforms – to deliver superior customer service and to create new service offerings; to ensure we have the necessary cargo-handling capacity and operational capability into the future; and to pursue key market initiatives that will add value and advantage our supply chain.”

A reliable company

“The Company has delivered consistently to its customers and shareholders, and we are determined to deliver going forward,” Mr Vazey said.

He said that while competition was intense the Company’s competitive advantages were considerable.

“We’ve got the big ships and we’re servicing them well. This is the reality here in Auckland. We also have an all-weather port – unlike most other New Zealand ports – and once dredging is completed we’ll have the best port access for big ships.

“We’ve got Australasia’s third-largest, and New Zealand’s largest and best-equipped, terminal operator to serve the big ships. Axis Intermodal’s high performance is confirmed by customer ratings,” he said.

“We’ve achieved good growth. The Axis terminal volumes are still growing despite some market relocation during the year. Terminal volumes grew 4% compared with 2% for the overall Company as Auckland’s imports continue to grow and export goods are increasingly containerised.

“We’re always ahead of demand for container-handling capacity. We have spare capacity right now and we have new capacity coming on-stream soon. In the future we can more than double capacity at the seaport without expanding beyond our present east-west boundaries. Together with other initiatives, we can grow to over 3 million TEUs a year,” Mr Vazey said.

“We have the technology. Innovative high-tech systems and products, and electronic information flows extend through Axis Intermodal’s entire container logistics chain. They provide importers, exporters, freight forwarders, shipping lines, and road and rail transporters with a container flow visibility that is unrivalled in New Zealand ports.

“We’re in the best location – we have the country’s largest consumer population and manufacturing base. This enables fastest delivery to the Auckland market and ensures shipping lines can balance cargo flows. These are very significant competitive advantages. As a result, we are New Zealand’s most well-balanced major port, with a 58:42 ratio of full import to full export containers,” he said.

“Auckland is ideal for imports and the 8% growth in transhipments confirms that shipping lines are increasingly using Axis facilities to link their various services. Auckland’s rail infrastructure is advantageous and roading improvements are enhancing access to the seaport.”

Outlook

Mr Vazey said that the Company’s strategy had been rewarded with a strong start to the new financial year.

July container volumes reached 61,360 TEUs – a 20% increase on July last year and the second-highest monthly volume ever. Breakbulk (non-containerised) volumes were up a very substantial 8% to 414,600 tonnes.

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