Record container traffic, but vehicle slump hits Ports of Auckland profits

Ports of Auckland half year results:
Revenue - $88.4m, up 3.7pc
Profit - -$9.2m, down 26.2pc
Dividend - deferred due to capital review

Ports of Auckland has announced a net profit after tax of $9.3m for the year to 31 December 2008, compared to $12.6m for the same period half last year.

Improved performance from its container terminals was very pleasing, said managing director Jens Madsen, as this was the area of the business subject to strong competition.

A review of the company's capital structure is underway, with no interim dividend being paid out.

Container volumes at the Port, which is 100 per cent owned by the Auckland Regional Council, reached a record high of 455,083 TEU(twenty-foot equivalent units) up 6.4 per cent on the same period in 2007.

As shipping lines consolidated operations to reduce cost, Ports of Auckland won bigger services carrying more volume.

Ports of Auckland's focus on productivity was paying off, said Madsen.

But despite good numbers for handling containers, the company's overall result was "significantly impacted" by a 24 per cent fall in vehicle imports.

"The decline in vehicle imports reflects the significant global downturn this industry is experiencing, and a recovery is not forecast." said Madsen.

This fall is mainly in the importation of used cars, with new vehicle imports holding up. Over the past few years, more than 80,000 vehicles have come in during each six month period, with 86,200 coming in during the half year to June 2008.

In the last six months of last year, only 66,500 came into the port.

There were 22 cruise ship calls in the half year compared to 19 in the same half for 2007.

Madsen said management had introduced a range of measures to curtail costs, including an executive salary freeze.

"We are making an intensive effort to curtail costs, including working constructively with staff and unions on a range of strategies to reduce unit cost and minimise potential job losses." he said.

Madsen said a full capital structure review was underway.

"The objectives of the review, which will be completed by the first quarter of next financial year, are to lock in longer-term funding and ensure the company's dividend payout policy of 75 per cent of net profit after tax is appropriate.

The Ports of Auckland Board had decided to defer a decision to pay an interim dividend, Mr Madsen said. "This is a prudent move given the current capital structure review."

Debt levels at 31 December 2008 were $355.5 million, similar to debt levels at 30 June 2008. Interest paid for the period was $14.4m compared to $13.5m.

Madsen said trade volumes were weak over January and February, but had picked up slightly with the beginning of the export season this month.

"However, there is no doubt that the trading environment in New Zealand and abroad is extremely challenging, and will continue to be so in the foreseeable future."

"It is difficult to accurately forecast forward volumes; however, we are encouraged by our recent market share gains and ability to reduce costs."

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