Total trade was down 9 per cent in the first quarter of the 2024 financial year. Photo / Alex Cairns
A big dip in cargo volumes in the first quarter of the financial year has taken the shine off Port of Tauranga’s full-year earnings outlook, expected to be in the range of $95 million to $107m.
The NZX-listed company - New Zealand’s biggest port and main export gateway - told its annual shareholders meeting on Friday that total container volumes in the first three months fell 20.9 per cent. Containerised imports were down 23 per cent on the same period in FY23.
In the three months to September 30, total trade was down 9 per cent in volume at 5.8 million tonnes.
Group net profit after tax in FY23 was $117.1m, largely driven by parent company earnings.
Port of Tauranga’s share price fell 25c or 4.63 per cent to $5.15 immediately after the early afternoon earnings announcement.
Chief executive Leonard Sampson said a number of factors had contributed to the volume drop.
He cited continued global economic volatility, coastal shipping changes, an early finish to the kiwifruit export season and a slow start to the dairy export season.
“Softening international commodity pricing and demand has had an impact on some key exports, as shippers have hit pause to instead focus on building inventory, or look for alternative international markets,” Sampson said.
A key factor in the slump in container volumes was changes in coast vessel rotations resulting in containerised trans-shipment decreasing 31 per cent in the period.
The big dip in containerised imports reflected weaker domestic consumption and increased rail costs.
Sampson expected some recovery in containerised imports in the lead-up to Christmas.
“Our diverse range of cargoes will continue to hold us in good stead as we navigate the challenging economic conditions.”
The port is expecting close to a record number of cruise ship visits this summer, with 112 currently booked. This compares with 88 last season. Pre-pandemic, the season record was 116 cruise ship visits.
Based on the first quarter’s results and excluding significant market changes, the company expected full-year earnings to be in the range of $95m-$107m.
The port is 54 per cent owned by the Bay of Plenty Regional Council.
Chairwoman Julia Hoare told shareholders at the meeting a highlight of the year had been the opening of the Ruakura inland port in Hamilton, a joint venture with Tainui Group Holdings, the commercial development arm of Waikato-Tainui.
The inland port, which connected the Waikato region by rail to port operations in Tauranga and Auckland, was “a real game changer” for the upper North Island freight network, she said.
It would unlock environmental and economic benefits for importers and exporters based, or soon to be based, in the Waikato.
“This investment is the latest in more than a decade of developments designed to ensure New Zealand remains competitive internationally, by facilitating visits from bigger container ships,” Hoare said.
The port company’s strategy supported New Zealand’s decarbonisation efforts, addressed shipping capacity constraints and protected the country’s access to global customers.
“There is still one crucial development urgently required.”
That was a resource consent to convert some port land at Sulphur Point into a third container ship berth. The port was awaiting an Environment Court decision from a hearing in March and was hopeful of an “imminent” resolution, Hoare said.
“The berth project is critical to the New Zealand economy. Without it, importers and exporters will face capacity constraints within a few years. We already have a number of weekly services on our waiting list for berthing windows.”
The project was also essential for building resilience, the need for which severe weather events had exposed this year, she said.
“The current regulatory framework does not always encourage nor facilitate investment in new or existing infrastructure - even when it is environmentally sound and/or critical to the national economy.
“In our view, there are challenges in upgrading existing assets to ensure they are fully utilised.
“As a result, the adoption of new technology such as automation may be delayed.”
Hoare said the new government had an opportunity to “smooth the path for sound investment, as well as deliver the required infrastructure, to facilitate a truly integrated, resilient and cost-effective upper North Island supply chain”.
Sampson told shareholders the company was close to choosing a vendor for an electric-powered automated container-handling project, in anticipation of the terminal extension. Automation would help improve safety and reduce fuel consumption and greenhouse gas emissions, he said. An $11m electricity infrastructure upgrade had been done in anticipation of the berth development.
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.