Port of Tauranga results released

A ship arrives at The Port of Tauranga.

New Zealand's freight gateway Port of Tauranga today reports it is positioned for further growth as it moves to put in place the final elements of infrastructure expansion necessary to support the arrival of the next generation of container vessels to New Zealand waters.

In line with February 2015 guidance, Reported Net Profit After Tax for the 12 months June 30, 2015 rose 1.1 per cent to $79.1 million, up from $78.3 million in the same period last year with traffic flows from the Company's expanded freight catchment offsetting falls in log exports across its Tauranga wharves.

Reported profit included a net $0.141 million of one-off items relating to the sale of a 49.9 per cent interest in Timaru Container Limited, transactions relating to the formation of Coda and impairment of property, plant and equipment and goodwill.

The Port handled 851,106 TEUs in the 2015 financial year (up 12per cent on the prior year), while total cargo volumes increased 2per cent to 20.2 million tonnes. Meanwhile, trans-shipped containers (those transferred from one ship to another) increased by 17per cent to 203,417 TEUs at the Tauranga Container Terminal.

Revenue for the year was $268.5 million, largely unchanged from last year's $266.5 million, while underlying profit was also up slightly to $79.0 million from $78.3 million last year.

Land, buildings, wharves, hardstanding and harbour improvements were revalued as at June 30 2015 resulting in values increasing by $81.5 million.

Cash flows from operating activities rose 10per cent to $90.3 million from $82.4 million a year earlier.

Despite the heavy capital investment to accommodate large ships, Port of Tauranga's balance sheet remains strong with gearing (debt to debt plus equity) at 32per cent up from the prior year's 30per cent.

"Port of Tauranga's five year $350 million programme to expand its freight hinterland and develop the infrastructure to support visits from the next generation 6,500 TEU ships has underpinned our solid financial performance and will continue to do so in the years ahead," said Port of Tauranga Chairman, David Pilkington.

"The programme, which has included the development of freight marshalling facilities across New Zealand as well as significant port infrastructure investment, has delivered increases in freight to the port from outside of our traditional catchments."

"These traffic flows will continue to grow and will underpin the arrival of the large vessels, the first of which is due in port next year soon after we have completed the dredging of the Tauranga harbour channel."

Reflecting its confidence in Port of Tauranga's prospects, the Board has today declared a fullyimputed final dividend of 30 cents per share, taking total dividends for the year to 52 cents per share - up 4% on last year's full year dividend of 50 cents per share.

The record date for entitlements is Septemeber 18 2015 and the payment date is 2 October 2015.

Meanwhile, as foreshadowed in February, Port of Tauranga intends to review its capital structure once its capital expenditure programme comes to an end with the completion of the channel dredging.

Mr Pilkington said Port of Tauranga remains confident of continued growth for the 2016 financial year as New Zealand's freight continues to consolidate on its wharves.

"New Zealand's primary produce sectors are vulnerable to the cyclical nature of international demand and price. The lower global prices for dairy products and log exports we are now seeing will have some impact on volumes in the coming financial year, but we believe strong demand for other export cargoes, including meat and kiwifruit, will help offset decreases.

"Underlying profit is a non-GAAP profit measures and are reconciled to reported net profit in note five of the Group's financial statements for the year to 30 June 2015 attached to this release.

"The diversity of Port of Tauranga's cargoes and income streams, its strategic partnerships and Tauranga's growing importance as a trans-shipment hub also provide protection. In addition, all cargo volumes, container and bulk, will ultimately benefit from the cost savings that will follow the introduction of larger ships." Mr Pilkington said.

Port of Tauranga chief executive Mark Cairns said the Company is entering the final phase of a programme that will future proof the port for the next 20 to 30 years and deliver significant efficiencies to the New Zealand supply chain.

"The forecast $300 million annual transport costs savings3 that will come with the arrival of the new 6,500 TEU ships will provide a significant offset to cyclical downturns such as the one the New Zealand dairy and forestry sectors are now experiencing.

"Port of Tauranga will be the first New Zealand port able to berth the next generation of 6,500 TEU ships. The investments we have made expanding the Company's freight catchment from Northland to the bottom of the South Island will ensure all shippers benefit from the arrival of the new vessels.

"We are entering a new era for New Zealand shipping and Port of Tauranga is positioned to be at the forefront of developing New Zealand's routes to international markets as the country's Port for the Future."

Cargo Trends
Imports increased 8per cent to 6.9 million tonnes from 6.4 million tonnes last year.

This reflected growth in cement volumes, up 55per cent to 165,503 tonnes in line with the strength of the New Zealand construction industry. Car volumes more than doubled to 11,607 units.

General cargoes also increased 22per cent to 3.2 million tonnes, but were offset by grain imports being down 13per cent; bulk liquids down 6per cent, and coal imports down nearly 100% due to a decline in thermal electricity generation.

Export volumes were flat on the prior year at 13.3 million tonnes with strong rises in dairy commodities, meat, kiwifruit and general freight offsetting falls in logs, sawn timber, apples, onions and steel.

The number of containers crossing Tauranga's wharves grew 12per cent to 851,106 TEUs from 759,587 in 2014. This growth was assisted by last year's agreement with logistics provider Kotahi for the delivery of agreed volumes of container traffic to Port of Tauranga.

Operational Developments
This year, in anticipation of the arrival of larger ships, Port of Tauranga has continued to streamline all parts of the supply chain linking New Zealand shippers with the vessels that carry their freight to and from offshore markets.

The Company has taken delivery of two brand new tug boats, the Tai Pari and her sister vessel the Tai Timu for its Tauranga port operations. The new tugs have a 74-tonne bollard pull capacity and features to make them highly manoeuvrable. The tugs are ideally suited to handling the new generation of ships.

The Port has also ordered two new super post-panamax gantry cranes, due for delivery late in 2016 which coincides with the completion of the dredging.

Meanwhile, the Company will commence its long-awaited project to dredge Tauranga harbour's shipping channels in October 2015. Danish dredging company Rohde Nielsen has won the tender for the work, and will widen and deepen the shipping channels to a depth of 14.5 metres inside Tauranga harbour and 15.8 metres outside the harbour.

Port of Tauranga's South Island operations are going from strength to strength.

The Company opened its new inland port, MetroPort Christchurch, at Rolleston, just south of Christchurch, at the end of July. The hub, which enables the receipt, packing and distribution of containerised cargo and the provision of empty container depot services, is modelled on Port of Tauranga's highly-successful south Auckland inland hub MetroPort.

The hub is giving South Island shippers access to Port of Tauranga's container terminal at Timaru and its broader New Zealand infrastructure.

Timaru Container Terminal has commissioned a third mobile harbour container crane to handle increased container volumes. The alliance with freight management company Kotahi is meanwhile generating increased volumes of exports at both the Tauranga and Timaru container terminals.

New Alliances
Following last year's alliance with Kotahi, Port of Tauranga this year concluded a new logistics joint venture with the freight and logistics provider to streamline land-side logistics.

Named Coda, the new venture is driving efficiencies across the New Zealand supply chain and is delivering benefits to New Zealand shippers and Port of Tauranga shareholders. It combines Kotahi's Dairy Transport Logistics with Port of Tauranga's subsidiary Tapper Transport, its container packing and unpacking facility MetroPack and its 37.5per cent shareholding in empty container repair and storage business, MetroBox.

Health & Safety
Port of Tauranga continues to improve health and safety in and around its operations.

Two years ago, the Company introduced new reporting regimes for accidents and near miss incidents, alongside programmes to foster greater personal accountability for safety.

As a result of these and other initiatives, the Company's Lost Time Injury Frequency Rate (LTIFR) fell to 2.9 incidents per million hours worked in the year to June 30 2015 (from 3.1 in 2014).

Port of Tauranga considers any injury, no matter how minor, to be one too many and will remain vigilant as it moves to a new national workplace safety regulatory environment.

Outlook
Mr Cairns said not only is the company well positioned for growth over the medium term.

"But we are also now better balanced to accommodate any volume weakness from cyclical commodity influences in the short term, following our recent investments in; PrimePort Timaru, Timaru Container Terminal, MetroPort Christchurch and Coda."

"The first month of this financial year has continued to show increased container traffic with volumes up 19per cent on last year and with significantly higher container volumes being railed to Auckland."

The recently released Ministry of Transport Freight Information Gathering Study (FIGS) shows Port of Tauranga being New Zealand's busiest container terminal for the last quarter.

"Trade volumes are expected to be slightly higher in 2016. At this stage, we are expecting log volumes to be similar to the last financial year."

"With a low dairy payout, fertiliser and dairy food supplement volumes are expected to decrease, but these will be offset by an increase in kiwifruit and container trade.

"With the dredging starting in October 2015 we will have the infrastructure in place to handle the 6,500 TEU ships in late 2016, and we expect container volumes to exceed 1 million TEUs in the 2016/2017 financial year."