KEY POINTS:
Revenue, profit and container volumes are up at Ports of Auckland but the company is facing a volatile environment, says managing director Jens Madsen.
Next generation larger vessels capable of carrying 6000 20ft-equivalent container units could arrive in New Zealand within five years and in the meantime it
was realistic to assume that some medium-sized shipping lines would join forces, Madsen said.
"Shipping line and service changes have impacted volume flows for many New Zealand ports some of which have benefited Auckland during the six month period under review," he said.
"While such changes have been and still are the norm of the shipping industry we expect the current volatility to remain throughout 2008."
Last month Ports of Auckland lost a contract with French container shipping company CMA CGM to rival Port of Tauranga but recently gained business from Gold Star Line and from Maersk.
"We believe rationalisation and also consolidation within the industry will continue and we think that the current volatility will remain during the course of 2008."
Net profit for the six months ending December 31 was $12.6 million, up from $10.6 million the previous year, while revenue was $85.2 million, up from $77.5 million.
Total container volume was up 20 per cent at 427,867 20ft-equivalent container units, although breakbulk cargo volume, non-containerised, was down 13 per cent at 1.9 million tonnes - mostly attributed to the transfer of Wynyard Wharf as part of the Tank Farm distribution to shareholder Auckland Regional Holdings.
Drought conditions had seen a bit of a slowdown in exports, while imports had fallen a little short of expectation during January and February.
The dairy sector accounted for 10 per cent of exports, while March to the end of May was the peak season for exports.
"So it all depends very much on the commodity groups moving," Madsen said. "At the end of the day will they be negatively impacted because of the weather? We don't think that they will."
Ports of Auckland expected in future there would be two main hub ports in both the North and South Islands, with important smaller ports acting as feeders.
"I think that all ports have got a role to play but it's quite clear that with the trend in shipping that it is simply impossible that most of the 11 container ports continue to cater to what I would refer to as international ships business or direct calls in New Zealand."
The prospect of a merger with Port of Tauranga came to nothing last year and Madsen did not expect it to return to the agenda.
"Our shareholder made a pretty clear decision on the merger so from that perspective it's water under the bridge as far as I'm concerned."
First New Zealand Capital analyst Rob Bode said the result was pretty much as expected.
"I think the bigger interest was in their plans for the future really," Bode said.
"They're looking at their options for their expansion and they're getting towards their capacity limits in a couple of years and they've got to be making a decision shortly."
Auckland Regional Council chairman Mike Lee wanted to convert Queens Wharf into a cruise ship terminal, with public features such as markets and exhibitions.
The wharf was currently used for used cars and bananas and though there was not a timetable for any change plans were in place in case it went ahead, Madsen said.
"I think it's crucial to take note that we are not going to release Queens Wharf unless we have the interests of our customers well protected throughout the period so there would be a lead time of approximately three years - if it happens."
PORTS OF AUCKLAND
Six months to December 31
Revenue
2007 - $85.2m
2006 - $77.5
Net profit
2007 - $12.6m
2006 - $10.6m
