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Current as of 05/12/16 07:59AM NZST
Jamie Gray is a business reporter for the NZ Herald

Port of Tauranga profits dip as log volumes fall

Firm to return $140m to shareholders
Port of Tauranga CEO Mark Cairns. Photo / NZME
Port of Tauranga CEO Mark Cairns. Photo / NZME

Port of Tauranga posted a 2.3 per cent decline in full-year profit, partly reflecting an accounting change but also a sharp decline in log volume.

The company also said it planned to return $140 million to shareholders over four years and to conduct a five-for-one share split to boost liquidity.

In the year to June, the port's profit fell to $77.3m from $79.1m a year earlier, the company said.

Operating revenue fell to $245.5m from $268.5m, which it said partly reflected having to equity account Tapper Transport - formerly 100 per cent owned by the port - as an associate company within its Coda partnership.

The port company has been reviewing its capital needs because its five-year, $350m capital expenditure programme, which has included dredging its shipping lanes to accommodate larger ships as soon as October this year, adding cranes, straddle carriers and tugs, expanding its wharf and marshalling areas, and buying property, comes to an end in 2017.

The first instalment of the capital return is by way of a fully imputed special dividend of $34m, or 25c a share.

"I'm pleased that we have been able to maintain earnings to complete the $350m investment, against the background of a 1 million tonne decline in logs," said Port of Tauranga chief executive Mark Cairns.

I'm pleased that we have been able to maintain earnings to complete the $350m investment, against the background of a 1 million tonne decline in logs.
Mark Cairns - CEO Port of Tauranga

Log volumes were down by 18.2 per cent to 4.6m tonnes - reflecting high inventory levels in China. Dairy industry-related imports - such as fertiliser (down 10 per cent) and stock feed (down 28.2 per cent) were also weaker.

Cairns said he expected China's log inventory levels to get down to 2013 levels this year.

Following the introduction of new shipping services - ships capable of carrying up to 9000 TEU (20 foot equivalent units), the port expects to be able to handle over 1m TEUs in the year to June 2017.

"We expect to see log exports increase to 2015 levels with other export cargoes, such as kiwifruit, expected to continue their strong trajectory," he said.

Cairns said he expected the arrival of bigger ships from October to be a game changer for the port.

Chairman David Pilkington said the company would retain a strong balance sheet after the capital return while returning excess capital in a tax-effective manner.

"A return of the full $140 million to shareholders would still ensure the company retains a conservatively geared balance sheet and an investment-grade credit rating," Pilkington said.

The company will pay a final dividend of 30c, also tax paid, lifting ordinary payments for the year by 1.9 per cent to 53c. Including the special dividends, payments are 78c.

The share split was designed to enhance liquidity in the market for its shares.

The port's container volumes rose 12 per cent to 954,006 TEUs in the year, and MetroPort alone recorded a 39 per cent increase in volumes to 248,309 TEUs. Total cargo throughput slipped to 20.1m tonnes from 20.2m, reflecting a decline in bulk cargo to 9.4m tonnes from 10.6m.

The company plans to provide guidance for the 2017 year at its annual meeting on October 20.

- Additional reporting BusinessDesk

- NZ Herald

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