Port of Tauranga posts record profit, claims title of NZ’s biggest port
By Jonathan Underhill
Aug. 18 (BusinessDesk) – Port of Tauranga Ltd. reported record annual earnings on growth in volumes of logs, containers, fertiliser and dairy products, giving it the confidence to claim the title of New Zealand’s biggest port ahead of Ports of Auckland.
Underlying net profit rose 17% to $57.9 million, the Tauranga-based company said in a statement. Sales jumped 25% to $185 million. Net income, including a deferred tax adjustment, was $58.4 million.
Port of Tauranga has been shielded from the patchy economic recovery because of demand for commodities in Asia and higher returns for dairy farmers, which has lifted volumes of fertiliser and stock feed as well as shipments of dairy products overseas. Total trade volumes rose 12% to 15.4 million tonnes, which the company said was “78% more international volume and more than three times the export volume” of its nearest competitor (Ports of Auckland).
Tauranga’s container volumes grew 15% to 590,506 TEUs (twenty foot equivalent units), amounting to 40.5% of total trade. Ports of Auckland hasn’t posted its latest results but had record container volumes of 867,368 TEUs in 2010 and non-containerised volumes of 2.8 million tonnes.
More significantly in the latest year, container trans-shipment volumes – containers sent round the coast on smaller vessels to be loaded for export at Tauranga - surged 52%, with growth from ports at Wellington and Nelson and from the South Island. That helps reinforce Tauranga’s claim as the key hub port for New Zealand.
Chairman John Palmer said the port expects to lift profit to a new record in the current year, even in the face of an uncertain global economic outlook, as demand in Asia, especially China, is likely to continue undimmed.
“The consensus is that China’s appetite for raw materials will continue, and that demand will also come from other growth economies such as India,” Parker said in the statement.
The company will pay a final dividend of 21 cents a share, making 31 cents for the year, up about 7% from 2010’s payments.
The shares rose 0.2% to $9.30 on the NZX today and have climbed 24% this year. Profit before one-time items beat Forsyth Barr analyst Jeremy Simpson’s forecast of $55.2 million, though total dividends for the year were below his estimate of 35 cents.
Chief executive Mark Cairns said the port plans to make significant investments over the next three years and the increase in payments to shareholders was reasonable.
The volume of log exports rose 16% to 4.4 million tonnes and Parker said demand “looks to be robust for the foreseeable future” given China’s strong economic growth and reduced supplies from Russia into that market.
Fertiliser import volumes rose 64% to 530,000 tonnes and grain and dairy food supplement cargoes rose 26% to 1.1 million tonnes, the port said.
In the container business, Port of Tauranga competes head on with Ports of Auckland, having established its MetroPort facility in south Auckland’s industrial belt, which is linked by rail to the Tauranga wharves. MetroPort lifted container volumes by 20% to 138,000 TEUs in the latest year. Auckland has responded by building its own inland port facility.
Tauranga is expecting some drop off in export volumes of kiwifruit as the effects of the vine canker PSA reduce production.
The company said it has reached an out of court settlement with NZL, the transport and stevedore company that had claimed rights to use Tauranga’s Sulphur Point Container Terminal. The settlement is confidential though Cairns said the quantum was not material and the agreement extinguishes NZL’s claims.
Tauranga has been heartened by a NZ Shippers’ Council report last year that suggested it should become the first North Island facility capable of handling larger 7,000 TEU ship from the current 4,000. The port aims to be ready for the bigger ships within five years. Auckland also has a dredging programme underway to prepare for larger ships.