Port of Tauranga expects to deliver lift in full-year earnings

The Port contributes 43 per cent of Bay of Plenty's GDP. Photo/Alan Gibson.

Buoyant 2019 first-quarter figures signal a lift in full-year earnings for the Port of Tauranga, expected to be in the range of $96 million to $101million, the listed company has told shareholders.

Full-year earnings for the 2018 financial year were $94m.

The port's annual meeting in Tauranga heard earnings in the first quarter of 2019 were up 5 per cent on the same period last year, and cargo volumes lifted 8 per cent.

Container volumes were up 1 per cent, transhipments up 11 per cent and logs 15 per cent.

Chief executive Mark Cairns said cargo and earnings growth was expected to continue. He told the Herald the 5 per cent lift in earnings was partly due to seven vessels coming to Tauranga which had been diverted from Ports of Auckland because of congestion problems.

"We are focusing our efforts ensuring that we have infrastructure and facilities in place to cater for the increase in cargo volumes we expect over the next five years," he said.

More than 40 per cent of New Zealand's exports now crossed the port's quays and the operation contributed 43 per cent of the Bay of Plenty's GDP.

Port of Tauranga chief executive Mark Cairns. Photo / George Novak

Chairman David Pilkington reflected on a record 2018 year for New Zealand's largest and fastest growing port, with cargo volumes lifting 10.2 per cent to nudge 24.5 million tonnes and group net profit rising 13 per cent to $94.3m.

The results were a direct consequence of the company's expansion programme, completed in 2016, to accommodate some of the world's biggest ships, he said.

"Australian and New Zealand shippers are now taking advantage of our fast and efficient connections to North Asia, North America and South America and transhipped containers now make up around a quarter of total TEUs."

Bigger bulk carriers and mega cruise ships were also visiting Tauranga now. Ocean liner Ovation of the Seas had brought nearly 5000 passengers three times last summer. It would call seven times this summer. The Queen Mary 2, another liner too big to tie up at any other New Zealand port, had also visited.

Tourism Bay of Plenty estimated 113 cruise ships were already booked for this season, an increase of 36 per cent on last year, Cairns told the meeting, which for the first time was webcast with 125 shareholders registering online. The liners' visits would contribute more than $90m and 1200 jobs to the region's economy.

The port company, 54 per cent owned by the Bay of Plenty Regional Council and with several subsidiaries including Northport and PrimePort Timaru, used the meeting to express its concern about the Government's planned changes to industrial relations law and the "uneconomic" investment decisions of many other ports.

Pilkington said the company was specifically opposed to the repeal of employers' ability to opt out of multi-employer collective agreement negotiations.

If the provision was repealed "we fear industrial issues at one port will potentially lead to national strikes across the total sector, something we have not experienced since the 70s", he said.

The company still hoped the Government would heed urging to endorse the voluntary nature of collective bargaining and amend the bill proposal.

The port strongly supported the Auditor General's recent advice to port companies to use fair value in their investment decisions, based on expected cashflows to be generated, Pilkington said.

The Port of Tauranga sought a minimum return of 8.5 per cent after tax on any significant investments - some port companies were earning less than 2 per cent return on equity.

The meeting also focused on the port's environmental performance.

Its biggest source of carbon emissions was its diesel consumption, Cairns said.

It had just received its certification under the Certified Emissions Measurement and Reduction Scheme which provided the platform to accurately measure carbon emissions and set targets for reduction.

The straddle carrier fleet was transitioning to electric models and cranes generated electricity which could be recycled. Rail-mounted gantries in future terminal expansion would be electric. The company was also replacing its vehicle fleet with electric or hybrid models.

The port had employed its first environmental manager this year, and stormwater management was a current priority, said Cairns.

He hoped a long-running resource application for stormwater discharges at the Mount Maunganui wharves would be resolved within the year.

"We are supporting forestry industry efforts to reduce the amount of fumigation required by debarking logs prior to arrival at the wharves....we were very pleased to hear Kaingaroa Timberlands, one of our largest log exporters, is building a large scale debarking plant at its rail exchange at Murupara. It should be operational by the middle of next year and will greatly reduce the amount of fumigation required at the wharf."