Port of Tauranga

Port of Tauranga Announces a Strong Result for the Year Ended 30 June 2009

Posted on 20th August 2009

Port of Tauranga has announced a net profit of $45.185 million for the year ended 30 June 2009 - a 7% increase of $3.068 million on last year.

Chairman John Parker said, "Given the parlous state of world financial markets over the past year, to be able to report a profit is pleasing and to be able to report an increase in profit, very pleasing indeed."

He further commented that, together with total trade being down 1% and operating revenue being down 4%, the 7% increase in earnings was particularly gratifying. This increase in earnings can be attributed to: a general reduction in costs across the board; improvement in dairy and log exports; and increased property income from the additional 13.7 hectares of land purchased over the last 17 months; and lower interest costs and a lower corporate tax rate.

Directors have declared a fully imputed final dividend of 18 cents per share, on top of an interim payment of nine cents per share - an 8% increase over the 2008 dividend. "We are pleased that the earnings growth has allowed us to deliver on our policy of striving to increase dividend distributions to shareholders."

Parker said the Company's balance sheet remained very strong, with a debt/debt plus equity ratio of 29.4% after payment of $33.509 million in dividends and investment of $38.533 million in capital expenditure. "In the current climate, we are very pleased to retain a conservative balance sheet and to have bank facilities negotiated at very favourable rates prior to the current credit crisis and running through to December 2010. We have commenced discussions with our bankers and are confident of securing new debt facilities with effect from 30 June 2010."

"This result represents another record year," said Chief Executive Mark Cairns. "In the current continuing, and increasingly challenging, economic climate, that should be seen as a clear demonstration of the Company's resilience. Port of Tauranga continues to lead the New Zealand market in terms of trade volume, productivity and profitability. Latest Statistics New Zealand data shows the Port of Tauranga handles 56% more international cargo than any other port, and 236% more export cargo."

Cairns said that total trade for the year was down slightly (0.5%) at 13.458 million tonnes - a decrease of 66,346 tonnes on the previous year. Noteworthy variances in trade were as follows: log exports increasing 27%; dairy exports increasing 24%; meat exports increasing 17%; and coal imports increasing 68% (off a low FY08 base). Negative variances included: processed forestry exports decreasing 5%; kiwifruit exports decreasing 4%; palm kernel and grain imports decreasing 10%; steel exports decreasing 6%; oil imports decreasing 6%; and fertiliser base imports decreasing 23%. The lift in dairy and log exports was particularly encouraging, he said.

With the drop-off in imports associated with the recession, container volumes decreased 6% during the period. Over the last ten years, container throughput has compounded at an average growth of 19.2% per annum.

"The Company's positioning strategies have insulated the Company to a degree and our increasingly diverse trade mix is relatively defensive. On that note, it is pleasing to see a strong increase in forestry exports over the last six months, with sustained demand from China. MAF have recently published some excellent forecasting on Central North Island wood availability and the key takeouts from this analysis suggest it is time to start planning to provide port infrastructure to handle annual export volumes of five million tonnes over the medium term. This has been confirmed in recent discussions with our forestry exporter customers" said Cairns.

The Company has acquired an additional 13.7 hectares of land over the last 17 months, which now builds its strategic landholdings to 185 hectares. "This further future-proofs our capacity to continue to provide for growth in both bulk and containerised cargoes, without the need for costly reclamation or expensive high stacking gantry systems."

One strong driver of port rationalisation going forward will be the rapidly increasing size of vessels and the cascading of larger container vessels into our waters. The Company notes Fonterra's recent calls for New Zealand to be ready to accommodate container vessels in the 6,000-7,000 TEU (twenty foot equivalent units) range as soon as practical. On that note, the Company has lodged a resource consent application to be able to widen and dredge the harbour channels and sitting basins to provide for 14.5 metres draught (all tides). Once these resource consents are secured, dredging could then be initiated in a timely manner, as and when required by market demand.

Parker said "Larger vessels require very expensive infrastructure in terms of deep harbour channels, container cranes, considerable land area and very good intermodal connections to the ports. New Zealand can only justify one or two ports making this investment. More importantly, the tonnages that such vessels can economically load or discharge will mean that they will only want to call at one or two ports. Therefore a hierarchy of ports must emerge with feeder services from other ports. If local authority port owners don't see the economic necessity for their long suffering ratepayers and for New Zealand, then reform is likely to be imposed - not necessarily by Government as a recent decision by Fonterra to concentrate their exports on fewer ports indicates frustrated shippers may well force the issue.

"Whilst the economy looks to have found a floor and many positive signs are emerging, there remains significant uncertainty of the outlook and speed/shape of any recovery which makes it very difficult to provide guidance for FY10" Parker said. "However, the buoyant forestry export market and the positive factors underpinning the long-term future of the Company - land and physical expansion options at minimal relative cost, best in class cargo-handling productivity, and strong business fundamentals - allow us to remain confident of maintaining earnings at a similar level to this year."

 Chief Executive's Review
 Chairman's Report
 Financial Statements and Audit Report 2009
 Analyst Presentation

 

For further information:

Mark Cairns
Chief Executive
Port of Tauranga Limited
Telephone 07 572 8829
021 978 887
http://www.port-tauranga.co.nz

John Parker
Chairman
Port of Tauranga Limited
Telephone 06 364 2322
0274 421 854