25 Feb 2004
The Port of Tauranga today announced a group net profit of $14.7 million for the six months to 31 December 2003 -- despite experiencing more difficult trading conditions -- and that it was lifting its interim dividend from 6c to 7c a share.
Directors said the result was a solid performance given the business conditions faced by the Port's export customers and the latest profit compared with the $14.5 million earned in the previous first half. Revenue in this half was $72.0 million against $71.4 million previously.
Chairman, Mr Fraser McKenzie, said that the current half year had started well and the company would benefit from the new business it was continuing to secure and the extension of shipping services using the Port.
"Management is continuing to focus on securing further customers and lifting the value the Port provides to existing customers, while continuing to refine the efficiency of the business at all levels," he said.
"Economic conditions and the New Zealand dollar exchange rate will influence the result for the full year, with ongoing challenges within the forestry sector."
"But the Board is confident that the group will again have a strong result."
He said the dividend increase is in line with the company's policy of continually seeking to improve the level of payout to shareholders and the fully-imputed dividend would be paid on 19 March 2004.
Mr McKenzie said the latest half was a difficult trading period for the Port and many of its customers, particularly those in the commodity exporting area, with forestry exports through the Port down by 18%, or 570,600 tonnes.
The reduction of log exports nationally had the inevitable flow-on effects on the profitability of The Owens Cargo Company and Northport, but these were significantly lessened by increased efficiencies within Owens.
He said that total import and export trade through the Port in the half year was 2% higher at 6,218,740 tonnes, despite the fall in forestry-related exports.
On the export side, dairy-related exports, frozen meat, kiwifruit and general cargo all recorded good gains, with kiwifruit shipments ahead by 12.3% to 292,885 tonnes.
The Port also benefited from the strong flow of imports into New Zealand, with tonnages up strongly in oil products, fertilisers and in the general cargo category, which rose from 498,000 tonnes to 720,108 tonnes, an increase of 44.6%. The agreement with Genesis Power saw coal shipments of 295,137 tonnes arriving during the half and indications were that coal shipments would continue at a high level.
Container traffic also continued to increase, rising 9.3% in the half to 185,456 TEUs (20ft equivalent units). Factors driving this increase included the higher volumes coming through METROPORT in Auckland, which is New Zealand's largest inland port, and the introduction of Mediterranean Shipping Company's service to Europe, which commenced on February 5, last year.
During the half The Owens Cargo Company experienced an 11% fall in the volume of logs at the Port of Tauranga and a 23% decline in log volumes across its national operations.
Its profit for the period declined, but not to the same extent as the fall in volume, because of the efficiency gains and lower cost operating systems put into place over the past two years.
Mr McKenzie said that the future of the forestry sector remained difficult to predict, but The Owens Cargo Company had streamlined it operations and was well placed to play its role in the shipment of the increasing volume of wood maturing in New Zealand's forests.
The fall off in forestry exports impacted on the operations of Northport during the year and that company (50% owned by Port of Tauranga) had indicated that its earnings for the full year to 30 June 2004 were expected to be less than previously indicated.
Mr McKenzie said "the five year throughput agreement with Carter Holt Harvey continues to provide the security of cash flow which the Directors had originally sought, and the decision to defer recognition of the revenue until the throughput occurs is considered prudent."
The effect on Port of Tauranga's projected after tax profit for the year to June 2004 would be approximately $578,000 less than budgeted.
During the half year the Port committed to a number of investments designed to improve the efficiency of container operations at Sulphur Point. An agreement was signed for the purchase of a fourth container crane and for the upgrading of the existing three cranes. The new Liebherr post-panamax crane would be operational by December, together with the three existing Liebherr cranes.
A further investment in Sulphur Point's efficiency had been the ordering of two new diesel/electric Kalmar straddle carriers, which were due to arrive in April.
Mr McKenzie said that the next Annual Meeting of shareholders would be his last as Chairman as he had elected to retire and would not be standing for re-election to the Board. Further details would be announced regarding the Board elections closer to the Annual Meeting in October.
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