UPDATE: Port of Tauranga earnings boosted

UPDATE: Port of Tauranga earnings boosted by Auckland congestion

(Updates with additional comment throughout.)

By Gavin Evans

Feb. 18 (BusinessDesk) - Port of Tauranga says its first-half result benefitted from congestion on Auckland's wharves and that trend is expected to continue for the rest of the financial year.

The company today reported a 4 percent lift in first-half earnings and signalled its full-year net profit will be close to $100 million. Total cargo volume in the six months through December climbed almost 9 percent to 13.6 million tonnes, boosted particularly by logs and timber exports.

Container volumes were 5.1 percent higher at the equivalent of 621,117 20-foot units. Its MetroPort operation in Auckland handled 3.8 percent more containers and set a new record for rail transfers during the peak season from October through December.

“Container services have been diverted to Tauranga due to congestion at Auckland and we expect this to continue for the remainder of the financial year,” the company said in its half-year report.

Chief executive Mark Cairns said KiwiRail had done well to gear up for shipments diverted to Tauranga due to operational issues in Auckland.

The company’s shares rose 3 cents to $5.26, taking their gain the past year to 4.5 percent.

Port of Tauranga – Auckland’s long-time rival - is the country’s largest port and also has interests in Northport and PrimePort Timaru. Almost a fifth of its container movements in the period were trans-shipments, reflecting its growing role as a hub where shippers from around the country can access connections into northern Asia and South America.

A government working group is looking at ways to improve logistics chains to meet growing freight demand in many parts of the upper North Island and whether some of the volume handled by Ports of Auckland could be better handled long-term by expansion at Tauranga and Northport.

Port of Tauranga has ordered a ninth container crane for delivery in 2020 and has started preparations to extend its container terminal by 385 metres. It is forecasting about $45 million of capital expenditure this year, from $16.8 million during a lull in activity last year.

Cairns said the firm is reconfiguring its existing wharf space on both sides of the harbour to ensure efficient handling.

“We have the capacity to increase train frequency in future as required,” he said.

Earlier today the company reported net profit of $49 million in the six months ended Dec. 31, from $47.1 million a year earlier.

In October, it forecast full-year net profit of $96 million to $101 million, from $93.4 million in the June year. Today it said earnings should come in at the upper end of that range, assuming full-year container volumes of about 1.3 million.

Import tonnage increased 5.7 percent to almost 5 million tonnes, while export cargoes were almost 11 percent higher at 8.6 million tonnes.

Logs drove that export volume, increasing almost 12 percent to 3.67 million tonnes. Sawn timber volumes increased by 9 percent, Kiwifruit volumes were 30 percent higher at 486,000 tonnes, while frozen meat and apple volumes increased by 17 percent and 65 percent respectively.

Dairy exports were barely changed at 1.15 million tonnes, while fertiliser imports were marginally lower at 331,000 tonnes.

Port of Tauranga said the net earnings of its subsidiaries and associates, including the Coda Group logistics operation and its stakes in Timaru and Northport, fell to $6.2 million from $7.9 million a year earlier. It booked $4.8 million of equity accounted earnings from them, from $7.9 million the year before.

The company said its wholly-owned Quality Marshalling business - which prepares freight on wharf for loading - increased net profit by 36 percent and showed good performances across all its operations.

Earnings from Timaru were down due to higher wharf maintenance costs and lower container volumes. Northport’s total trade was down 5 percent but container volumes were 49 percent higher at almost 12,000 units. Profit from Coda was down about $2 million due to audit adjustments from the prior year.

Port of Tauranga will pay an interim dividend of 6 cents on March 22, up from 5.7 cents a year earlier.

(BusinessDesk)

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