Tauranga port CEO Leonard Sampson expects new business opportunities from Ruakura inland port opening. Photo / George Novak
Two months into the 2024 financial year, Port of Tauranga is expecting another year of choppy economic seas and is again thankful for its diversity and cargo strengths, says chief executive Leonard Sampson.
He doesn’t expect the pressure to ease up after the NZX-listed port rode out a stormy FY23, turning in a 5.2 per cent increase in group net profit and a 12 per cent revenue lift, despite a weather-impacted fall in cargo volumes and shrinking consumer demand for containerised imports.
New Zealand’s biggest port and its main export gateway reported group net profit after tax of $117.1 million for the year ended June 30, compared with $111.3m in FY22.
Revenue was $420.9m ($375.3m) on a 3.6 per cent decrease in total trade and a 5.1 per cent fall in container volumes.
Subsidiary and associate company earnings declined 10.7 per cent to $13.3m, with other ports in the group experiencing decreased bulk exports and logistics operation Coda Group squeezed by the imports slowdown.
The NZX-listed port group will pay a final dividend of 8.8c per share, slightly up on FY22′s 8.2c per share, making a total ordinary dividend for the year of 15.6c per share (14.7c).
Ebitda, earnings before interest, tax, depreciation and amortisation, was $219.1m, against $204.7m the previous year.
Sampson said the “really solid” result was pleasing, especially given the trading challenges of the second half of the year.
The result reflected the diversity of the group’s business, which meant declining activity in one area could be countered by upticks in another, he said.
Chairwoman Julia Hoare said first-half financial results were assisted by a lift in container transhipments and the return of cruise ships, but the second half was impacted by the effect on North Island transport networks of extreme weather events.
Cyclone Gabrielle’s February hit on the forestry sector led to early harvesting of some damaged trees which supported the year’s strong log volumes, but the port had seen a notable fall in container import volumes since April, she said.
Sampson said the decline in consumer demand for containerised imports was “a here and now” issue and the port “desperately” needed the regulatory green light for a long-planned container terminal wharf extension because space was now close to capacity. The extension is also considered crucial for the future of coastal shipping. The company has yet to get a resource consent decision from the Environment Court which heard the case in February and early March.
He expected FY24 to be another challenging year for the port, which is 54 per cent owned by the Bay of Plenty Regional Council and handles 42 per cent of the country’s container trade.
“We’re into the second month of the new financial year and key commodity prices are at five-year lows and we still have relatively high inflation.”
Here again, the port group’s “very strong” cargo flows and diversity would stand it in good stead for the year ahead. The company will give FY24 earnings guidance at its annual shareholders’ meeting on October 27.
Total trade in FY23 decreased 3.6 per cent to 24.7m tonnes, compared with 25.6m tonnes in FY22.
Imports fell by 7 per cent to 9 million tonnes, while export volumes reduced 1.5 per cent to 15.7m tonnes.
Container volumes were down 5.1 per cent to 1.18m TEUS (twenty foot equivalents). Metroport Auckland container volumes slowed by 12.8 per cent.
Operating costs rose 15.6 per cent to $210.6m, with labour and fuel costs swelling due to inflation in the economy. Renegotiation of the company’s agreement with KiwiRail led to a significant increase in rail costs.
Ship visits increased by 4.6 per cent to 1432, including 86 cruise liners which tied up over the summer, returning to the Bay of Plenty for the first time since the pandemic halted international tourism in March 2020.
Log export volumes increased 2.6 per cent to 6.2m tonnes, while dairy exports, including transhipped cargoes loaded from other vessels, rose 2.7 per cent. Meat volumes were up 3 per cent.
Kiwifruit export volumes slumped by 20.3 per cent, reflecting the impact of weather events and fruit quality issues. However the long-term outlook for this export sector remained strong, the port said.
The port, along with most other New Zealand ports, reinstated set berthing windows for vessels in March following more than two years of shipping upheaval and congestion due to the pandemic.
Before March, more than two-thirds of vessels arriving at Tauranga were off-schedule.
The improvement in schedule was helping productivity return to normal levels, chair Hoare said.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.