Levelling off for South Port

Three years of consistently strong trends in cargo volumes by South Port New Zealand Ltd have been followed by the expected plateau in growth during the first half of the 2003 June year.

The operator of the Bluff export-import port today reported operating revenues for the six months ending 31 December 2002 of $7.4m, a rise of 7.6% on the previous interim period’s $6.9m. Operating surplus before interest and taxation was $2.23m compared with $2.32m last year.

Interest required $141,000 ($131,000) and tax $700,000 ($688,000), leaving the surplus after tax at $1.39m, down 7.4% on the $1.5m net profit achieved in the first half last year. It should be noted that the prior period interim result included non-recurring net gains on property disposals of $183,000.

Over the last five years the southern part of New Zealand has seen “unprecedented investment in both existing and new production plants” related to the processing of the region’s significant growth in primary products, says the chairman of South Port, Mr John Harrington.

“This led to exceptionally strong trading by the port company in the corresponding 31 December 2001, and 30 June 2002 periods with record production volumes that were naturally going to be difficult to surpass,” he says, recalling that in February 2002 he had cautioned that the positive economic cycle of that time would level off.

South Port is “very pleased, however, to have locked in most of the gains,” he says. “The capital expenditure made in recent years is long-term in nature and will deliver benefits to the company over a 15-20 year time horizon.”

Mr Harrington says that, based on the first half’s trading pattern and emerging cautious sentiment about the implications for exporting of the stronger New Zealand dollar, South Port expects the full year result to be either equal to or slightly behind the 2002 profit level. “The recent rapid appreciation of the New Zealand dollar will have an effect on export returns across most industries and may stifle further growth in the short to medium term.”

Despite this change in the commercial operating environment, South Port’s customers “remain confident about the long term prospects of their respective industries.”

Directors are sustaining the level of interim dividend at the 2002 level of 2.75 cents per share fully imputed and payable on 28 February 2003.

Total cargo handled in the first half was 1,044,000 tonnes compared with a record 1,084,000 tonnes recorded in the corresponding period.

“The levelling off of cargoes was not unexpected and is consistent with volumes budgeted in the current year,” says the chief executive, Mr Mark O’Connor. “Firm import activity was underpinned by higher volumes of fertiliser and petroleum cargo. Exports of processed forestry products (sawn timber, medium density fibreboard and veneer) are also strong but log and woodchip volumes did not meet expectations.”

“Wood chips were impacted by weak market conditions and logs by intense domestic demand and are likely to fall short of budget at year end.

There were ongoing infrastructure developments during the period. A new racking system has increased utilisation of the No. 2 cold store by a further 40% with cheese sourced from NZMP Edendale being stored. The remainder of South Port’s number 4 berth on Island Harbour is being paved and a further 50 refrigerated container power points added to provide full service to containers in close proximity to vessels.

In the local shipping environment, Tasman Orient Line has just announced the introduction of newer faster vessels into their East Asian Service. These vessels will be seen making direct calls at South Port and enable a quicker transit, plus direct access to a number of critical Asian ports. Effective trans-shipment options to South East and North Asia will also be included from Bluff via Tauranga.

Mr O’Connor welcomes the intention of the shipping line MSC to introduce a direct fixed day weekly service to Europe from the South Island. Whilst not winning direct calls from MSC’s large-scale container vessels, South Port will offer regional importers and exporters trans-shipment access to the new service via the existing MSC/PONL transtasman service which calls at Bluff fortnightly.

He confirmed that the company has received no claims in relation to the grounding of the Tai Ping bulk carrier in Bluff Harbour in October. A final report on the incident, which is under investigation by the Maritime Safety Authority and Transport Accident Investigation Commission, is not expected for several months.

© Scoop Media