Profit plunge sparks talk of city's port sale

Ports of Auckland makes up 40 per cent of Auckland Regional Holdings' $1.2 billion investment portfolio. Photo / Martin Sykes

The prospect of New Zealand's largest port operation being sold to private owners may be explored as a result of the global economic situation.

Ports of Auckland board chairman Gary Judd said it was the right time to review all possibilities for the port's structure. His comment came after the company's half-year result showed a sharp drop in profit.

Any suggestion of sale, though, did not get support from the public owner yesterday.

But the future of that owner - the Auckland Regional Council which owns 100 per cent of the ports company through its investment arm, Auckland Regional Holdings - is in doubt as the Royal Commission of Inquiry on Auckland Governance considers the local political structure.

The company's half-year result showed a 26 per cent drop in profit from the same period last year to $9.3 million, and the board deferred payment of an interim dividend to Auckland Regional Holdings.

The dividend for the same period last year was $9.5 million.

Managing director Jens Madsen said executive salaries had been frozen, and he hinted at possible job losses among the company's 600 staff.

Dividends from the port company are one of the ARC's main sources of revenue, helping to pay for public transport and other civic developments worth more than $1 billion.

They include rail electrification, an integrated ticketing service and the Tank Farm development on the western edge of central Auckland.

Mr Judd yesterday acknowledged that capital structure review could recommend selling the ports into private ownership through a public share listing, although that was for the owner to decide on all possible scenarios.

The board would not be doing its job if it did not look at appropriate action in the unprecedented global economic times, he said.

Asked about the possibility of looking at a public listing, Mr Judd said: "I suppose we could make a recommendation to that effect, but it is not our decision to make."

While the port is owned by Auckland Regional Holdings the regional council would have to make the decision.

ARC chairman Mike Lee, who pushed for buying the last 20 per cent of privately owned port shares in 2005 for $170 million, said the high degree of interest in public ownership meant there was no political will to sell the port company.

Besides, now was the worst possible time to be selling assets.

Regional Holdings chairwoman Judith Bassett said the investment arm never had a closed mind on any options to do with its assets, "but selling Ports of Auckland is not on our agenda".

She said that even though the global recession was hitting investment returns, ARH was still able to make a $155 million cash contribution to the ARC this year.

This is largely because ARH has $210 million in cash.

The future ownership of Ports of Auckland could become a matter for a super city if, as expected, the Royal Commission of Inquiry on Auckland Governance recommends regional assets come under a super city.

- Information in this story has been corrected from an earlier version.