Napier Port expects cyclone recovery by end of year

Napier Port said its first half profit has dropped. Photo / File

The impact of Cyclone Gabrielle made its presence felt on Napier Port’s first-half earnings, with its net profit falling by 3.3 per cent to $8.7 million, but the company expects to see a return to near normal conditions by the end of its financial year.

The cyclone, which hit the East Coast in February, had made for an uncertain full-year outlook but Napier Port said most of the trades were getting back to normal.

In its result, Napier Port cut its interim dividend to a fully imputed 1.7 cents per share from 2.8c in the previous comparative period.

Revenue rose 22.8 per cent to $62.3m in the half due to higher container volumes and the return of cruise vessels to the port.

Chairman Blair O’Keeffe said the company had entered 2023 with an optimistic outlook.

“Pandemic pressures including constraints on labour were easing, and cargo flows were buoyant supported by increasing shipping services,” he said.

The company’s newly built Te Whiti wharf was enabling significant flexibility, and underpinning a positive long-term outlook for the business, he said.

“As a result, Napier Port had been tracking to the upper end of guidance which has subsequently been tempered by Cyclone Gabrielle,” he said.

Chief executive Todd Dawson told the Herald he expected conditions to remain muted until year’s end.

In the log trade, which accounts for 60 to 65 per cent of tonnage through the port, prices had come off somewhat, which Dawson said was part of the sector’s ebb and flow.

“For us, post cyclone, we are seeing logs that would otherwise go to the Pan Pac mill - which shut down - come straight to the port for export,” he said.

In the central North Island, about 2 to 3 million (JAS) tonnes of wood had been felled by windthrow from the cyclone.

“Whilst we are seeing a slowdown in log exports generally, actual log volume through the port is very steady,” he said.

Dawson said the Hawke’s Bay forest sector had not seen the “vast swathes” of waste timber that caused so many problems further north.

“For the remainder of the financial year, we certainly expect to see a subdued level of cargo and that will flow through to earnings,” he said, adding insurance claims may provide some offset.

“For most of the trades, we would expect by the beginning of the next financial year to be back to normal volumes,” he said.

“Horticulture has obviously had more of a setback, and I think we will not really know until the springtime as to how many trees have been lost,” he said.

Dawson expected horticulture could take up to three years to recover.

In the lucrative cruise ship trade, Gabrielle effectively truncated the season by 14 visits.

Next year, Napier Port expects to see 90 or more calls from luxury liners.

In its result, container services revenue for the half year increased 14.5 per cent to $34.5m, with a 5.7 per cent increase in container volumes to 119,000 TEU (twenty-foot equivalent units).

Bulk cargo revenue for the half year increased 7.5 per cent to $20.6m, despite a 9.3 per cent decrease in bulk cargo total volume.

As a result of intense cost pressures, operating expenses increased 17.8 per cent on the same period last year, the company said.

But these costs were comparable to the second half of the 2022 financial year, the company said.