Napier Port beats IPO forecasts as Hawke's Bay exports boost earnings

Napier Port shares listed on the NZX in August. Photo / Supplied.

Full-year earnings at Napier Port Holdings beat the company's prospectus forecast by 3.2 per cent on record log volumes and as higher than projected refrigerated cargo volumes boosted container volumes and average revenue.

The firm, which listed its shares in August, reported net profit of $6.8 million for the year ended Sept. 30, up from the $5.6 million forecast, but down from $17.6 million a year earlier when the port was wholly-owned by Hawke's Bay Regional Council.

Excluding $6.4 million of costs from the share offer and other listing-related restructuring costs, pro forma net profit was $19.8 million – 3.2 per cent ahead of forecast.

On the same basis, earnings before interest, tax, depreciation and amortisation were 2.1 per cent higher than forecast at $40.5 million and up from $37.2 million the year before. Statutory ebitda was $34.4 million from $39.4 million a year earlier.

"Another record apple crop drove an 8.6 per cent increase in apple container volumes, and 1.9 per cent for all containers, on last year, with the pipfruit industry per hectare production well above the global average and continuing to intensify," port chief executive Todd Dawson said.

"Despite a correction in export log prices in the last quarter of the year, a record 2.6 million tonnes of logs were handled in the 2019 financial year, which represents a doubling of log volume over the last three years."

The company reiterated its 2020 forecast for pro forma ebitda of $40.9 million. It noted that it continues to monitor log volumes.

Last month, Port of Tauranga reported a 5 per cent drop in its September-quarter log volumes.

Dawson told BusinessDesk that Napier's log volumes in that quarter, and in October, were consistent with the 2.5 million tonnes the firm had forecast for last year and the current year.

He said that, compared with some regions, many of the port's major log customers were large estate owners, who tended to maintain consistent volumes irrespective of price fluctuations.

The port has also benefited as much of the region's forestry was planted in the mid-1990s, which meant that it was still an optimal time for small woodlot owners to harvest their trees.

Napier Port shares, issued at $2.60, rose 1.9 per cent to $3.30. The shares peaked at $3.50 in October.

As signalled, the company will pay a 2.5 cent final dividend on Dec. 20 to shareholders registered at Dec. 2.

Port of Napier, still 55 per cent-owned by the regional council, is the country's fourth-largest container operation and the sixth-largest for bulk cargo.

It is enjoying strong growth from Hawke's Bay's expanding pipfruit, log, wood pulp and timber production. About two-thirds of its revenue comes from container-related services.

Full-year revenue rose almost 9 per cent to $99.6 million, driven by a 5.5 per cent increase in container revenue, an 11.4 per cent increase from bulk cargoes and a 46 per cent jump in cruise ship revenue. Revenue was 2.3 per cent ahead of forecast.

Container revenue was 2.8 per cent ahead of forecast at $61.2 million. Volume rose to the equivalent of 271,000 20-foot units, up from 266,000 a year earlier and a forecast of 269,000.

The port noted the increase in revenue was driven by the jump in higher-revenue refrigerated units to 54,000 – 5,000 more than was forecast.

Dawson noted that while apple exports had been strong, that was driven by good growing conditions and had been within the range of possible outcomes the company had expected.

Bulk cargo revenues were more than expected due to more vessel calls than forecast. Log exports were almost 17 per cent higher than a year earlier at 2.58 million tonnes and about 3 per cent more than forecast.