HomeInfratil News2006Port of Tauranga Results for the Year to 30 June 2006

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Port of Tauranga Results for the Year to 30 June 2006

24 Aug 2006

The Port of Tauranga has announced a net profit for the year to 30 June 2006 of $31.032 million, a 7.8% decline over last year.

Both years included some one-off adjustments, amounting to $2.181 million this year and $4.456 million in 2005. Excluding these, the comparative operating profit indicates
a reduction of 1.2% in 2006. Parent earnings before interest, tax, depreciation and amortisation (EBITDa) increased $987,000 - a satisfactory result under the difficult trading conditions of the year.

The reduction in revenue was caused partially by reduced volumes but more particularly by the accounting treatment of our associate company Toll Owens Limited. Toll Owens was formed by merging our 100%-owned Owens Cargo Company with Toll Logistics and is now equity accounted and as a result, the revenue for Toll Owens was not recorded in the Port's group accounts.

"As anticipated at the outset of the year, and acknowledged
in our interim results, the industry has experienced substantial challenges in the trading environment," says Chairman John Parker.

"Forestry in particular has been under considerable pressure, exacerbated by the effect of both the base cost of oil and the lower NZ/US dollar exchange rate, adding a further premium to fuel prices. It should be noted that, in addition to volumes through the Port being affected in any forestry downturn, our associate Toll Owens is also disadvantaged."

Total trade for the year, at 12.278 million tonnes, was 344,800 tonnes less than last year, with the main contributors to the reduction, as expected, being logs and other forestry-related products. The exception in the forestry-related products mix was paper product, which increased 61,000 tonnes. In total, forestry exports (at 4,166,300 tonnes) were 246,700 tonnes (5.6%) less than last

Import volumes, especially fertiliser bases, were down on the previous year by 161,600 tonnes (26.3%).

"On the more positive side, we have experienced an increase
of 59,600 tonnes (7.6%) in dairy exports, to 840,300 tonnes, frozen meat increasing 86,600 tonnes (38.1%) and apples up 127.7% at 81,400 tonnes," said Parker.

"The most significant improvement in import volumes was the throughput of coal imported from Indonesia to supply the Genesis power station at Huntly. This amounted to 1.130 million tonnes, which represents an increase over last year's of 28.5%. Other increases in import volumes included cement (23,000 tonnes), and grain (31,000 tonnes)."

On the container side of the business, total for the year was 423,138 TEU - a reduction of 15,076 TEU (-3.4%) on the 2005 container throughput.

Capital expenditure was confined to $7.8 million, $1.595 million less than depreciation. The bulk of that expenditure related to capitalised dredging and the completion of deepening of berths used by Genesis for the importation of coal.

Directors have declared a final dividend of 13.0 cents per share, payable on 6th October 2006, bringing the total payment to shareholders for the year to 20.0 cents, unchanged over 2005.

"The Company has a strong balance sheet, and well-controlled operating costs, with significant productivity increases being recorded this year," says Parker.

"After this difficult year, we can look ahead to some very positive signs. The beginning of 2006/7 has shown improved performance in the forestry sector. The weakening in the NZ currency, despite its effect on fuel imports, benefits exporters generally.

"Recent performance in the container sector is also encouraging, with consecutive record months through the terminal during April and May 2006 and throughput for the last three months of the financial year (119,600 TEU) being 12,000 TEU more than any other quarterly period - 11.4% more than the comparable quarter last year.

"Management's increased efficiency in utilisation of the Company's infrastructure and systems, together with the Port's location and assets ensures we are competitively positioned and well-placed to maintain and increase volumes into the future and gives an overall positive outlook for 2006/7."

Chief Executive Mark Cairns, in his first year's report to shareholders, said the Company had actively focused on improving operational performance, particularly at the Sulphur Point container terminal.

"We have seen a 9% improvement in net crane rates, to 34.4 moves per hour on average across all vessels. This compares
with 27.7 moves per hour across all Australian ports. At the same time, the variable cost per container has been reduced. The vessel throughput rate of more than 100 moves per hour with three cranes is also unmatched in Australasia.

"The Port's infrastructure, both strategic and physical, has stood us in good stead over this difficult period and we are in a strong position to benefit from the expected upturn within the next five years, of which we have seen some evidence in the final quarter's trading."

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