Port of Tauranga profit knocked by lower container volumes, rising operating costs

Port of Tauranga’s net profit after tax fell nearly 25 per cent to $47.2 million for the half year, as lower shipping volumes and higher operating costs buffeted the business.

Its earnings guidance for the full year remains unchanged at between $95m and $107m, compared with $117m for FY23.

The company said it expected conditions in the second half of the 2024 financial year to be mixed.

It said the New Zealand economy was challenging and international conflicts were causing shipping delays and driving up freight costs.

The NZX-listed port will pay an interim dividend of 6c a share.

Operating revenue for the six months ended December was $200m, down 5.6 per cent on $211.9 in the corresponding period in the 2023 financial year.

Operating expenses increased 2 per cent to $106.3m.

Total trade at 11.6m tonnes was 8.5 per cent down on the previous period. Container numbers reduced 15.8 per cent to 536,930 TEUs (20ft equivalent).

Chief executive Leonard Sampson expects mixed conditions in the second half of the financial year.

Imports showed a decrease of 22.7 per cent at 3.9m tonnes, while exports at 7.8m tonnes increased 0.6 per cent.

Import container volumes were down 17.9 per cent on the previous period, the result of lower consumer demand and increases in MetroPort rail costs, the company said.

The challenging trading conditions nationwide impacted joint venture and subsidiary earnings, which were down 34.2 per cent to $4.8m.

Export container volumes showed an 8 per cent decline, a result of an early end to the kiwifruit season and the dairy export season’s slow start, the company said.

Direct dairy exports decreased 4.4 per cent in volume for the six months. Log exports were up 19.2 per cent on the previous period, due to early harvesting of cyclone-damaged trees in the central North Island forests.

Due to changes in coastal shipping, container transhipments were down 25 per cent.

Ship visits at 674 showed a 3.9 per cent decrease.

Chair Julia Hoare said the port’s container terminal had eliminated delays as ships stuck to their schedules after a long period of unreliability.

Productivity rates returned to pre-Covid levels, she said.

While operating revenue was affected by the reduction in storage charges as supply chain congestion eased, a more stable shipping schedule allowed the port to be much more efficient.

Container productivity had lifted 5 per cent against the previous period, Hoare said.

Chief executive Leonard Sampson said shipping schedule reliability was expected to continue to improve, which would enable the country’s main export gateway to enhance its service levels, productivity and cargo throughput.

Kiwifruit exports were forecast to rebound and new business opportunities had been created by the opening of the Ruakura inland port at Hamilton.

The port is a partnership between Ruakura Superhub developer and landowner Waikato-Tainui and the Tauranga port.

The group’s FY24 results will be announced on August 23.

Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.