Napier Port expects slowdown in log exports after coronavirus outbreak

Logs at Napier Port. Photo / File

Napier Port said it expects to see a slowdown in log exports through the port because of the coronavirus outbreak that has hit the forestry sector's biggest market - China.

The company - which is heavily dependent on the forestry sector - said its trading performance in the year to date had been in line with expectations, with log export volumes increasing by 2.9 per cent on the prior year comparable period.

"However, given the current market conditions and uncertainty regarding its duration, we expect a slowdown in log exports from levels seen for the financial year to date and possible impacts on other cargo trades," Napier Port said in a statement.

"While we are unable to quantify the potential financial impact at this time, these conditions represent a materially increased risk to the achievement of previous earnings forecasts," the company, which listed on the NZX last year, said.

Log exports continued to sail from Napier Port, but there had been reductions in log harvesting while current log inventory levels on Chinese ports remained high, it said.

In the meantime, export log prices had fallen back to where they were during last year's sudden slump.

"We understand port operations in China are rebuilding towards normal operating capacity but it is uncertain how quickly this will occur," the port said.

"The trade outlook remains uncertain, and dependant on the speed of recovery in China, and other countries taking measures to manage the coronavirus risk and any resulting supply chain impacts," the port said.

Napier Port is expected to report its interim result for the six months to March 31 in late May.

A net profit of $19.7 million for the September 2020 year was forecast in the company's pre-float offer documents, compared with a proforma net profit of $19.8m in the 2019 financial year.

Napier Port shares closed at $3.15, down 20c from Thursday's close and compared with $4.25 at the end of last year. The stock debuted last August at $2.91, up 12 per cent on its initial public offer price.

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Last week, the country's biggest port, the Port of Tauranga, reported an 8.4 per cent fall in log export volumes in the six months to December 31 following a period of lower international prices and demand.

Port of Tauranga said the trade outlook for the second half remained uncertain and dependent on the duration of the market shutdown in China and any slowdown in the other countries taking extreme measures to manage the coronavirus risk.

The company cut its full-year profit guidance range from $96m-$101m to $94m-$99m.

Ports of Auckland, in its first-half result, said its second half would also be impacted by the coronavirus.

"While we expect the impact to be temporary, we can't estimate the quantity of it yet," the Auckland Council-owned company said.

Wellington's port company - CentrePort - said last month that it was bracing for a sharp downturn in log and meat exports as a result of the coronavirus outbreak.