Napier Port profit drops after challenging first half

Covid-19 disruption drove Napier Port's profit down in the first half. Photo / NZME

Lower trade volumes and a fall in ship calls arising from Covid-related disruption drove Napier Port's underlying profit down by 32.1 per cent in the first half, the company said.

The underlying net profit fell to $7.2 million in the six months to March 31 from $10.6m in the same period last year, while the port's reported net profit decreased 15 per cent to $9.0m.

Revenue fell by 3.6 per cent to $50.7m, reflecting lower trade volumes and the reduction in vessel calls following supply chain and pandemic disruptions.

The result from operating activities fell by 22.8 per cent to $16.4m due to the decline in revenue, alongside an increase in operating expenses.

The port said its major capex project, 6 Wharf, continued to progress ahead of schedule and under budget.

The company will pay a 2.8 cent dividend, unchanged from the previous interim dividend.

Napier Port said demand for the region's food and fibre exports remained robust, however, the impact of labour shortages and supply chain disruption on trade was uncertain.

The company said its expected underlying result from operating activities for the year to September 30 remained at between $38m to $42m, assuming a continuation of current market conditions.

The trading environment and prices for key primary industry cargoes that cross the port's wharves continued to be positive.

At the same time, the port had made progress in putting in place new infrastructure.

"These successes and the favourable trading environment have, however, been overshadowed by ongoing seasonal labour shortages and by an escalation in global shipping disruptions that have created challenges for all parts of the supply chain – customers, ports, shippers, carriers and agents," the port said.

As a direct result, the port saw a 16.6 per cent reduction in container volumes for the half-year period to 113,000 twenty-foot equivalent units (TEU) from 135,000 TEU in the same period a year ago, with container ship visits falling to 102 from 133.

There was also an 8.7 per cent reduction in bulk cargo volumes to 1.7m tonnes, and a reduction in charter vessel visits to 155 from 167.

"Shipping schedule reliability has continued to be unpredictable, resulting in missed or delayed vessel arrivals at Napier Port as well as at other ports throughout New Zealand and internationally," chief executive Todd Dawson said.

"Ships arriving have required larger container exchanges for both us and cargo owners to manage.

"These factors have been compounded by pandemic-related absences across cargo owners' workforces and adverse local seasonal weather conditions.

"This created challenges for primary sector production and further disrupted the flow of cargo."

Dawson said he did not expect any immediate easing in global supply chain challenges.

However, he was confident that as Covid-19 becomes endemic and the shipping industry gradually adapts – that these pressures would lessen.

Dawson said Napier Port had continued to "look through" the current disruption and that the additional capacity offered by 6 Wharf would become evident in the new financial year.

Napier Port remained well funded, with $60m in undrawn bank facilities.