Port of Tauranga says FY profit to rise as much as 10% after 'very strong' first quarter
By Jonathan Underhill
Oct. 19 (BusinessDesk) - Port of Tauranga forecast 2018 profit will rise as much as 10 percent, saying it expects a strong pick-up in freight volumes in the first quarter to continue.
New Zealand's biggest port company expects full-year earnings to be $88 million-to-$92 million, up from $83.4 million in 2017, chief executive Mark Cairns told shareholders at their annual meeting in Tauranga today.
That comes after "a very strong start to the year" with total trade up 15 percent, Cairns said. Log volumes rose 13 percent in the first quarter, container numbers climbed 26 percent and trans-shipped containers soared 87 percent, evidence of Port of Tauranga’s consolidation as New Zealand’s hub port, he said. Net profit in the first quarter rose 15 percent.
"We expect cargo and earnings growth to continue" and "we still have ample headroom to handle increasing volumes," Cairns said.
Port of Tauranga recorded a 10 percent gain in total trade to 22.2 million tonnes in 2017 and handled a record 1.08 million containers, up about 14 percent from 2016 levels. Over the past six years, it has captured 55 percent of the nation's international cargo volume growth, more than four times its nearest rival. Last year it completed a five-year, $350 million capital spending programme that included preparations for bigger ships including dredging shipping lanes and adding cranes, straddle carriers and tugs, expanding its wharf and marshalling areas.
Mergers between global container shippers including Maersk Line's acquisition of Hamburg Sud and CMA CGM's purchaser of Singapore-based APL will accelerate the use of larger ships visiting New Zealand, says Port of Tauranga chair David Pilkington.
"We strongly believe that the move to larger vessels will only be accelerated, rather than hindered, by any restructuring," Pilkington said. "We are extremely gratified by the almost instantaneous pay off from our expansion programme of the past six years. We invested with the knowledge that bigger ships offer significant benefits to importers and exporters as well as the environment."
Maersk, the world's biggest container line, agreed to buy Hamburg Sud for US$4 billion while France's CMA CGM acquired APL for US$2.4 billion and this month announced the purchase of a majority holding in Soframa Unilines. The deals are expected to reduce overcapacity in the sector and help lift container lines climb out of a severe downturn.
CEO Cairns also pointed to the volume of rail traffic flowing between Auckland and Tauranga. Over the past two years, the number of trains on the route climbed to 78 a week from 54 and "we have recently increased the number of trains to 86 per week, to handle the increasing volumes."
Port of Tauranga shares rose 0.2 percent to $4.40 and have gained 15 percent this year.
The company operates New Zealand's most productive container terminal, with productivity which is 59 percent higher than the average of Australian ports, based on Ministry of Transport figures.