Napier Port net profit sinks 12pc to $20.4m, sees better year ahead

Cruise ships have returned to Napier Port. Photo / Paul Taylor

Napier Port chief executive Todd Dawson is cautiously optimistic that this year will see a return to more normal trading conditions after the last two were hit by Covid-19 and supply chain disruptions.

He told the Herald that while the signs were encouraging, it looked like high inflation would persist throughout the year.

The company earlier said higher financing and depreciation charges following the completion of the new Te Whiti wharf helped drive its net profit down 12 per cent to $20.4m in the September year.

The company - New Zealand’s fourth-biggest port by container volume - said its underlying net profit, which excluded unrealised property revaluation gains, was $18.6m, down from $22.0m in the prior year.

The result from operating activities of $40.1m fell by 8.4 per cent, with inflationary cost increases and investment in capability offsetting an increase in revenue. The operating result was around the middle of an earlier guidance range.

Dawson said the company felt the impact of the Omicron variant of Covid-19 and supply chain constraints in the first and second quarters.

“Some of those things could rear their heads again,” Dawson said, adding inflation was becoming more embedded.

“We are seeing some better signs around supply chain pressures easing.

“Locally, there are still a lot of issues in the northern ports - in particular Auckland and Tauranga - around congestion, which is impacting on scheduling and vessels arriving throughout all ports in New Zealand.”

Dawson said the log trade was steady but there was still a lot of uncertainty around China, which takes about 90 per cent of the harvest.

Revenue for 2022 came to $114.5m, up 4.6 per cent, despite an 8.1 per cent fall in total tonnage across the port’s wharves.

Container volumes were down 7.9 per cent on the prior year to 254,000 twenty-foot equivalent units (TEU), while bulk cargo volumes fell by 7.6 per cent to 3.65m tonnes.

Looking ahead, the company’s earnings guidance for 2023 was for an underlying result from operating activities of between $42m and $48m.

The company said the increase in revenue reflected Napier Port’s move to recover the significant rise in operating costs it faced throughout the year and its programme of infrastructure investment.

“We have made significant progress on our goals to continue to put in place the infrastructure and capabilities that will underpin the success of Napier Port and the economy of Hawke’s Bay and the central and lower North Island of New Zealand,” Napier Port chairman Alasdair MacLeod said.

The centrepiece of this achievement was the opening of Te Whiti, a new wharf aimed at alleviating congestion at the port.

“Through its opening, we have delivered on the commitments we made when we launched our initial public offer and NZX listing in 2019,” MacLeod said.

“Against this, labour constraints and pandemic-related absences have limited the productivity of our customers.

“These challenges were exacerbated in the first half of the year by adverse weather events impacting upon local production and ongoing shipping disruptions.”

Cruise ships had returned to Hawke’s Bay after a two-year, Covid-19-induced hiatus.

The port has already welcomed three cruise vessels and a further 85 are booked from now until April 2023.

Napier Port declared a fully imputed final dividend of 4.7 cents per share, taking the total to 7.5 cents per share, unchanged from the prior year.

Shares in the company debuted on the NZX in August 2019 at $2.91, a 12 per cent premium to their $2.60 issue price.

The shares traded today at $2.86, up 6 cents.