Port of Tauranga

Port of Tauranga Announces Record Half Year Result

Posted on 24th February 2011

Port of Tauranga has improved its half year Group net profit by 23% on the prior corresponding period, announcing a record interim result of $28.398 million.

The increased profit follows an 18% increase in trade volumes, with exports up 13% and imports up 29% on the corresponding period last year. Notable cargo increases included; fertiliser (up 150%), stock feed supplements (up 74%), log exports (up 15%), and container numbers (up 23%).

Port of Tauranga Chief Executive, Mark Cairns, says excellent performances across all business divisions and associate/subsidiary companies, including recently-acquired Tapper Transport, have contributed to the improved profit.

"We are very pleased with the seamless incorporation of Tapper Transport into the Group," says Mr Cairns. "We are already reaping the benefits of further integrating into the supply chain with our recent announcement of the MetroPack initiative."

MetroPack is a joint venture between Port of Tauranga, Tapper Transport and another associate, C3 Limited, to establish a container packing and unpacking business adjacent to the inland port MetroPort in South Auckland and has just commenced business with Carter Holt Harvey as its foundation customer.

During the reporting period, railed container volumes between Tauranga and MetroPort Auckland increased 56%.

Overall, trans-shipment volumes increased by 64% in the second half of 2010, due to several unscheduled ship diversions and also the further development of hubbing on Tauranga, with several international shipping lines and coastal shipping operator Pacifica Shipping, bringing containers from other New Zealand ports to Tauranga for export.

Ship departures increased 12% compared to the prior corresponding period.

The Company continues to focus strongly on containing costs and improving productivity. Average net crane rates are an industry-leading 34.8 moves/hour (as measured by the Australian Productivity Commission).

Port of Tauranga continued its capital expenditure programme during the period, spending approximately $16 million on infrastructure enhancements, including:

• The purchase of the former Satara coolstore building on and additional two hectares of land adjoining Totara Street.

• The delivery and commissioning of the new $2 million pilot boat, Arataki.

• More sealing of log storage areas and planning for expected large increases in volumes of logs being shipped through the port.

• Completion of the 70% expansion of the Sulphur Point on-wharf cold storage facility.

The interim dividend has been increased 11% to 10 cents per share.

Outlook

The berth at the Sulphur Point container terminal will be extended by 170 metres to increase wharf length by 28%. Port of Tauranga's Board of Directors has just approved the expansion (estimated to cost $30 million) which will allow the accommodation of more frequent and longer container ships. The Company already has resource consent for the work.

Work has also commenced on further improving productivity at the terminal by converting a second crane to be twin-lift capable. Two new twin-lift straddle carriers will be purchased in the next few months.

Meanwhile, an Environment Court hearing will be held in April regarding Port of Tauranga's application to widen and deepen the harbour channels to accommodate larger ships.

Chairman John Parker says the trading outlook is uncertain and it remains difficult to accurately forecast the remaining half of this financial year. "At this stage, we expect to post a full year result in the range of $53 to $56 million."

"We expect improved confidence to remain in the dairy sector (positively impacting on fertiliser and stock feed supplement imports) and also in log exports, with log volumes being driven by strong demand from China, which is expected to continue. However, we expect the domestic economy to be slower to recover."

"The Company's long-term diversification strategy will continue to provide a variety of earnings growth opportunities. This, coupled with the Company's strong balance sheet, should help protect the Company from the slow recovery and volatility in some trade areas and ensure Port of Tauranga remains New Zealand's Port for the Future," says Mr Parker.

Port of Tauranga is New Zealand's largest and most efficient port with an annual cargo throughput of more than 14 million tonnes.

For further information, please contact:

John Parker
Chairman
Port of Tauranga Limited
Ph: 0274 421 854

Mark Cairns
Chief Executive
Port of Tauranga Limited
Ph: 07 572 8829 or 021 978 887

 Interim Accounts (pdf)
 Presentation to Analysts (pdf)