Profit rises despite pressure

By YOKE HAR LEE

Ports of Auckland has emerged from the first six months of the year with a 17 per cent rise in net profit to $20.4 million, despite being rattled by the loss of a major client and stiff competition from other ports.

Chairman Sir Richard Carter said the profit reflected the outstanding progress in reducing operational costs and the contribution from the marketing of berths at Westhaven Marina.

Shareholders will be rewarded with a 15c special dividend on top of a 9c interim dividend.

The port expects to see less dairy throughput but says it is well positioned for any growth in import and other volumes.

Chief executive Geoff Vazey told the Business Herald that staff should take the credit for submitting innovative suggestions on how to reduce operational costs and raise productivity.

"We think we will continue to be able to achieve the cost savings.

"They [staff] now understand they have to continue to do better to keep the level of business which will contribute to job security."

Mr Vazey was optimistic that results for the next six months would match the first half's performance.

"In June, people speculated that we would be losing between $10 million and $12 million in revenue [based on the volume accounted for by the lost client, ANZDL].

"We have proven that although we did lose revenue, we were able to respond in a way that the resulting cost reductions were more than the revenues lost.

"By holding down our costs and targeting the most important high-value import containers, we have succeeded in improving our earnings per TEU [20ft equivalents]."

Last year, ANZDL stopped using Auckland in favour of Metroport in Tauranga.

Ports of Auckland also moved last month to reduce its published list of prices, including its wharfage for empty containers. Sir Richard said the move would affect future revenue.

While overall operating revenue rose, that from port commercial services fell 4 per cent to $68 million, reflecting the tough competition.

But earnings before tax for the commercial services rose nearly 8 per cent to $25.6 million.

Earnings per share for the port was 15.4c, compared to 13.2c in the same period last year.

Mr Vazey said a key strategy had involved working closely with clients carrying high-tech, high-value products so shipping lines would be able to achieve the higher freight revenue needed to keep them profitable.

Overall container volume fell almost 1 per cent, mainly because of increased competition. The port handled a total of 260,600 TEUs compared to 262,000 in the same period last year.

Axis Fergusson Wharf's volume dropped 10 per cent after the loss of ANZDL as a client, and because of a move to optimise capacity at both it and Axis Bledisloe.

Mr Vazey said that working with customers had allowed the port to shift capacity from Axis Fergusson, which was running at 85 per cent, to Axis Bledisloe.

"This has brought about improved productivity, enabling us to handle more capacity."

It had also allowed postponement of the extension of Axis Fergusson.

With the loss of ANZDL, the three other major shipping lines servicing the North American market and still using Auckland had secured new business from a better balance of import and export cargoes, Mr Vazey said.

Breakbulk volumes rose 10 per cent through increased imports of new and used vehicles, he said.

One of the most interesting aspects over the past six months had been the increase in imports compared to exports.

"The import/export balance for containers is 58:42 across the whole port. "At Axis Fergusson, it is 56:44. This reflects the state of the New Zealand economy.

"As Sir Richard Carter has noted, the recovery currently being experienced is being led by consumer demand rather than exports.

"We have had strong growth in imports, but exports have been slow to build up."