Profit flat, share price undulating

Despite a flat interim profit, investors pushed Ports of Auckland's share price higher yesterday as news of a cornerstone acquisition fuelled hopes of good times ahead.

The company reported a steady net profit of $21.5 million for the six months to December 31, from $21.12 million in the year-earlier period.

After hitting $6.80, the company's shares eventually settled back to close down 2c at $6.68c.

Ports of Auckland, which handles two-thirds of the country's imports by value and one-third of exports by value, declared an unchanged, fully imputed dividend of 15c a share, payable on March 18.

"The increase in profitability is a good result in view of several factors that affected container volumes," said chairman Neville Darrow.

"It was achieved through the underlying strength of our container business, the growth in break-bulk volumes and careful management of costs."

Analysts said the flat profit, which came amid a strong domestic economy, was due to the company losing a service last February that made up 8 per cent of volumes and US West Coast congestion in the latter part of last year that disrupted shipping.

Darrow said Ports of Auckland was trading soundly but faced several challenges, not the least of which was continuing strong competition.

"If we lose some services we will attract others. We are determined to be competitive and the Auckland Port will continue to have the necessary capacity, equipment, technology, attitude and performance to meet these challenges and to fulfil customers' expectations," he said.

Interim revenue dropped 6 per cent, partly as a result of the sale of the port's marina division in May.

The company said it was buying a cornerstone 27.5 per cent stake, costing $3 million, in United Containers, one of New Zealand's largest container depot businesses.

Chief executive Geoff Vazey said UCL was a good strategic fit.

"The acquisition [gives] the company greater depth in the supply chain for containers within New Zealand."

He said the movement of empty and full containers was inextricably linked.

"Empties are a significant part of supply-chain costs. As the vast majority of imports come into Auckland, the pool of empty containers originates here in Auckland and we have chosen to widen our focus to participate in this business."

The port's 80 per cent shareholder, Auckland Regional Council subsidiary Auckland Regional Holdings, did not comment on the numbers. Chairwoman Judith Bassett could not be contacted yesterday.

Rob Bode, head of research at First NZ Capital, said the result was flat and in line with expectations. There was nothing new in the challenges outlined by the company.

Executives had alluded in the past to the potential for a chunk of business to be lost.

"The theme is: well, if we lose it someone else will fill the gap in due course," he said.

The stake in UCL was a strategic purchase bought to help Ports of Auckland offer a more seamless service to customers, said Bode.

"The detail on that is small at the moment. It's a small strategic acquisition expected to provide improved logistics."

Ports of Auckland made no comment on the progress of talks with dairy giant Fonterra about whether it will choose Auckland or Tauranga as its main port.