Logging fall hits port profits

From left to right: Chris Greenough CEO of Kotahi, Scott Brownlee CEO of Coda and Port of Tauranga Chief Executive Officer Mark Cairns. Photo / Nick Reed

Port of Tauranga has reported continued growth in container and dairy export volumes for the first half of its 2016 financial year to December 2015, offsetting a fall in log exports over the period.

Reported and underlying group net profit after tax was $38.6 million.

The result was slightly ahead of the prior year's interim underlying profit after tax of $38.5 million, but lower than the reported net profit of $42.6 million.

The previous result included a non-recurring gain on the sale of associate companies of $4.1 million with the merger of Tapper Transport into freight logistics company Coda Group.

The port reconfirmed its full year earnings guidance to be in line with last year's underlying after-tax profit of $79 million.

Revenue for the six months was down 9.8 per cent, after the exclusion of Tapper Transport revenue, now equity accounted as an associate company.

Chief executive Mark Cairns said that when the port fully owned Tapper Transport, it counted the revenue through the group, but now that the port only owned 50 per cent, it had to be equity accounted.

"We have the earnings, but the revenue is deducted," he said.

The six-month result was supported by a 10.4 per cent rise in container volumes to 470,928 TEUs (20-foot equivalent units), reinforcing Port of Tauranga's position as New Zealand's premier freight gateway.

These gains were diluted by a 16.2 per cent decrease in log export volumes to 2.4 million tonnes from 2.8 million tonnes in the prior year.

Chairman David Pilkington said the port had delivered a strong six-month result, especially in the face of the decline in log export volumes.

"Our strategy of extending the port's freight catchment across New Zealand continues to deliver results for shareholders and the country's exporters and importers," Mr Pilkington said.

Mr Cairns said the port was in an excellent position to continue to grow its cargo volumes as more exporters and importers recognised the value the hub port strategy delivered with reliable, fast and cost-efficient routes to markets.

"With the Tauranga harbour channel dredging proceeding well, we are on track to complete our contractual commitments with freight and logistics management company Kotahi by July, in order to see larger vessels starting to call at the container terminal by the end of 2016," he said.

"This is the final building block in our five-year $350 million investment programme to prepare for larger ships, which have the potential to deliver annual savings of as much as $300 million to New Zealand shippers.

"In the medium term, with the arrival of larger ships, we will be handling significantly larger volumes of cargo per shipment," Mr Cairns said.

Port of Tauranga six-monthly interim results:

* Total trade for the six months to 31 December 2015 up 1.1 per cent to 10.1 million tonnes

* Container volumes up 10.4 per cent to 470,928 TEUs (20-foot equivalent units)

* Group net profit after tax of $38.6 million

* Imports increased by 1.6 per cent while exports increased 0.8 per cent

* Dairy product export volumes increase 29 per cent

* Kiwifruit exports up by 22.9 per cent

* Interim dividend up 4.6 per cent to 23 cents per share