Ports of Auckland appears to be overcoming some adversity, and pledges to bring back reliable vessel berthing times. Photo / Supplied
Ports of Auckland appears to be overcoming some adversity, and pledges to bring back reliable vessel berthing times. Photo / Supplied
Auckland Council-owned Ports of Auckland has delivered a much improved financial result for the first six months of the 2023 year and signalled its confidence in a turnaround with an increased full year profit forecast.
The lift in performance for the country’s main imports gateway after several years in turbulentfinancial water is good news for Auckland’s ratepayers with the port declaring an interim dividend of $15 million to its council shareholder, compared to $2.1m in the same period last year.
The company expected to pay a total dividend of $30m for the full year, up 111 per cent on FY22′s 14.2m, while debt had been reduced.
The ports’ group posted a 40 per cent lift in the first half underlying profit with a net profit after tax of $20.8m, compared with $14.8m in the corresponding period last year.
Based on the first half results, its forecast net profit for the full year has been increased by $7-$10m to $42m-$45m. This was an increase of 20-28 per cent on the FY23 budget of $35m, the port said.
The port has already committed to the Auckland Council to deliver a FY24 net profit after tax of $52m.
Chair Jan Dawson, who took up the role in September 2021 after a string of poor financial and productivity performances and serious health and safety issues at the port, said the board was “very happy” with progress on its three-year turnaround strategy.
The strategy focused on safety, customers, efficiency and financial performance.
“After the disruption of the last few years, our half year results show this focus is paying dividends.”
New chief executive Roger Gray, appointed last year, told the Herald new peak and off-peak container terminal access charges only contributed a small part to the half year result.
The two new revenue streams would be evident in the second half and FY24, he said.
On January 1 the port increased container yard access prices from $35 to $65 during peak hours, with off-peak charges (7pm-7am) going up from $8 to $20. (For comparison, the port said Melbourne port’s access charge was around A$120.)
New multi-cargo charges will come in later this year.
The port company will not produce a detailed half year report. These cost up to $100,000 to put out and the company reported its financials and productivity performance regularly to the council throughout the year, Gray said.
The port company’s focus in the second half would be to help resolve New Zealand’s supply chain issues by running a “safe, profitable and reliable port”.
The port had made “excellent progress” towards achieving fair returns on its assets, a sore point with new Auckland mayor Wayne Brown who campaigned on making the port provide better returns to ratepayers for the blue-chip waterfront land it occupies.
Auckland port chief executive Roger Gray. Photo / Supplied
Gray said during the first half the container terminal had improved throughput by around 3000 TEU (twenty foot equivalent containers) a week, compared to the start of the financial year.
A highlight of the next half year would be the reinstatement next month of vessel berthing windows, disrupted in the pandemic container shipping upheaval. These provide shipping companies agreed vessel visit times.
“That’s a really big step forward. But it won’t be smooth. There will be ups and downs, in a similar way to those experienced by airlines (post-pandemic disruption) and hotels.”
Asked if he expected import volumes to fall as is being experienced by overseas ports in the global economic downturn, Gray said imports would probably soften in the second half of the 2023 calendar year.
“One of the reasons is that warehouses across the country are full. We may see off the back of Cyclone Gabrielle the type of imports change. There could be more roll-on roll-off imports of heavy equipment and construction equipment (for the recovery effort).
“There’s a lot of consumables sitting in warehouses. I think you’ll start to see cargo owners and imports wanting to work their inventory levels down before they bring in new stock.
“With interest rates going up, there’s capital pressure.”
The port gained resource consent in the first half for channel dredging to allow bigger commercial vessels to access Auckland, but Gray said the $20m project was unlikely to start for another 12 months.
Deepening the channel will allow the port to handle container ships carrying up to 10,000 TEU without tidal issues.
Currently it regularly handles vessels carrying up to 5800 TEU.
Asked about the cost of converting a fleet of new automated straddle carriers to manual operation, necessary after the new port leaders decided to abandon a costly six year failed attempt to implement container terminal automation, Gray said negotiations with the automation project supplier were still underway.
Port observers expect the conversions to be expensive.
Gray said negotiations would be completed in the second half of this financial year and the port would disclose the cost.
“I don’t expect to see those costs flow into the full year 2023.”
Gray said the successful development of the code with the union was “transformational if you take where we were 18 months to two years ago”.
The container terminal broke even in the first half at a net profit after tax level and was on track for a positive result in the second half.
The terminal made a $25m loss in FY22. Container throughput increased by 15 per cent in the first half to 421,375 TEU.
Meanwhile, Gray said the port would work with the Government, Auckland Council and stakeholders on a plan for the future use of port land, “balancing the city’s need to have an operating port and a resilient supply chain, with increasing public access to waterfront land.”
