Port of Tauranga Limited Announces Board Appointment

Port of Tauranga Limited (NZX:POT) today appointed former Freightways Managing Director, Dean Bracewell, to the Board of Directors.

Port of Tauranga Chair, David Pilkington, said Dean’s deep transport and logistics experience would be extremely valuable to the Board.

Dean is also a Director of Air New Zealand Limited, Property for Industry Limited, the Halberg Trust and Tainui Group Holdings Limited. Port of Tauranga is currently developing an inland port at the Ruakura Superhub in Hamilton in a joint venture with Tainui Group Holdings.

“Dean is a highly regarded business leader with a proven track record. He was Managing Director of Freightways, one of New Zealand’s largest transport and logistics companies, for more than 18 years before embarking on a successful governance career in 2018,” said David.

Dean said he was looking forward to joining the Board of New Zealand’s largest and best performing port.

“A resilient and integrated international supply chain is vital to New Zealand’s ongoing prosperity and I’m grateful for the opportunity to make my contribution to Port of Tauranga’s ongoing success.”

For more information, please contact:

David Pilkington
Chair
Port of Tauranga Limited
Ph 021 609 635

 

Port of Tauranga to issue $100 million of wholesale bonds

Port of Tauranga Limited (NZX:POT) today announced that, following an institutional bookbuild for its
offer of Seven Year Fixed Rate Notes, $100 million of bonds have been allocated to participants (or
their clients). The transaction was arranged by BNZ.

The interest rate for the Fixed Rate Notes has been set at 3.552% per annum. This reflects a margin of
0.85% per annum over the underlying swap rate.

The Notes will be issued on Wednesday 24 November 2021 and will mature on Friday 24 November
2028.

Port of Tauranga Chief Executive, Leonard Sampson, said the Company was very pleased with the
strong support for the transaction.

“The seven year term is advantageous as we embark on the next stage of our cargo capacity expansion.
In the next few years we expect to commence our $68.5 million container berth extension project, a
project of national significance. We also intend to automate container storage at the terminal to increase
capacity within the current land footprint,” he said.

For more information, please contact:

Simon Kebbell
Chief Financial Officer
Port of Tauranga Limited
Ph: 07 572 8809

Port of Tauranga Sees Strong Growth in First Quarter Despite Covid Disruption

Port of Tauranga, New Zealand’s largest port, today reported a 6.9% increase in total trade to 6.8 million tonnes in the first quarter of the 2022 financial year.

Exports increased 5.3% to 4.3 million tonnes and imports increased 9.8% to 2.5 million tonnes.

Container volumes increased 8.1% to 310,997 TEUs[1].

Log export volumes increased 2.4% to 1.6 million tonnes.  Direct dairy exports increased 6.7% in volume and kiwifruit exports were also strong, up 7.1% on the first quarter of last financial year.

Port of Tauranga Chief Executive, Leonard Sampson, told the Company’s Annual Meeting of Shareholders today that the results demonstrated the impact of congestion over the last 12 months, with some cargo being shipped in the first quarter that would usually have been shipped earlier.

Container terminal productivity has improved significantly over the first quarter, although there are still delays in transferring some import cargo to Auckland, he said.

“While we are still experiencing major disruption to the international supply chain, with the majority of container ships arriving off-window, we have been able to process more vessels and larger volumes of cargo compared with the same quarter last year,” he said. Ship visits increased 7.5% to 360.

“The near future remains uncertain due to the ongoing impacts of the Covid-19 pandemic, including the effects of the extended lockdown in Auckland and labour shortages being experienced across multiple industries,” said Mr Sampson.

“Based on the first quarter’s performance, and notwithstanding any significant market changes, we expect full year earnings to be between $103 million and $110 million.”

For more information, please contact:

Leonard Sampson
Chief Executive
Port of Tauranga Limited
Ph: (07) 572 8830

Rochelle Lockley
Communications Manager
Port of Tauranga Limited
Ph: 021 865 884

Chair Review
Chief Executive’s Review
Presentation

[1] TEUs = twenty foot equivalent units, a standard measure of shipping containers

Port of Tauranga Advises Move to Virtual Annual Meeting

Due to the ongoing uncertainty of the Covid-19 pandemic and the potential for Government mandated restrictions on gatherings at the time of the Annual Meeting, the 2021 Annual Meeting of Port of Tauranga Limited will now be held only virtually. Shareholders can attend online and will be able to view a live webcast of the Annual Meeting, ask questions online and cast votes in real time whilst the Annual Meeting is in progress.

You may attend the Annual Meeting virtually using the following information:

When: Friday 29 October 2021 at 1.00pm

Attend the meeting online: Shareholders can attend the Annual Meeting virtually via the online platform at www.virtualmeeting.co.nz/pot21.

You will require your CSN/Holder Number for verification purposes.

More information regarding online attendance at the Annual Meeting (including how to vote and ask questions during the Meeting) is available in the Virtual Annual Meeting Online Portal Guide, which is available at

https://bcast.linkinvestorservices.co.nz/generic/docs/OnlinePortalGuide.pdf

Simon Kebbell
Chief Financial Officer
Port of Tauranga Limited
Ph: 07 572 8809

Port of Tauranga Result Boosted by Increased Trade Volumes & Strong Subsidiary and Associate Earnings

Financial results for the year to 30 June 2021

Port of Tauranga, New Zealand’s largest port, today reported Group Net Profit After Tax of $102.4 million, a 15.4% increase, on 25.7 million tonnes of trade.

A 14.3% increase in log exports and a 46.0% increase in Subsidiary and Associate Company earnings were balanced by increased costs and reduced container volumes due to supply chain congestion.

Results summary:

  • Total trade increased 3.8% to 25.7 million tonnes (up from 24.8 million tonnes)
  • Container volumes decreased 4.1% to 1,200,831 TEUs[1] (down from 1,251,741 TEUs)
  • Group Net Profit After Tax increased 15.4% to $102.4 million, up from an adjusted $88.7 million the previous year[2]
  • Subsidiary and Associate Companies’ earnings of $18.6 million, a 46.0% increase
  • Final dividend of 7.5 cents per share
  • Total ordinary dividend of 13.5 cents per share
  • Imports increased 4.0% to 9.4 million tonnes
  • Exports increased 3.6% to 16.3 million tonnes

Port of Tauranga Chair, David Pilkington, says the results are very pleasing considering the well-documented supply chain challenges of the past year.

“As the world continues to grapple with the devastating effects of the Covid-19 pandemic, there has been major disruption in international supply chains. Constrained capacity in parts of the New Zealand supply chain, especially at Ports of Auckland, has exacerbated delays and restricted our ability to adapt quickly to the needs of importers and exporters,” says Mr Pilkington.

“International shipping capacity is in hot demand and costs for shippers have skyrocketed.”

Within this context, he says Port of Tauranga has proven to be strong and resilient.

“Our diversity of cargoes gives us some resilience in terms of revenue, and our long-term freight agreements with key customers give us some certainty of cargo volumes,” he says.

“However, it is not efficient to run a container terminal at more than 100% capacity and our costs, including straddle carrier diesel use and the related carbon emissions, have grown as a result of the congestion we have had to endure. In recent months, we have also experienced the labour shortages felt by many other industries.”

Temporary surcharges for long-stay containers, introduced in January to discourage inefficient cargo flows and relieve yard congestion, helped Port of Tauranga to recover a portion of the additional costs being experienced. Parent Company revenue increased 8.9% to $323.5 million, while operational costs increased more than 15%.

Port of Tauranga Chief Executive, Leonard Sampson, says the Port’s team and contractors have done an outstanding job in the face of the challenges.

“The evolving response to the Covid-19 pandemic has had a significant impact on Port of Tauranga operations. Our team has really excelled and deserves special acknowledgement.

“We saw 106 fewer container vessel visits between September 2020 and June 2021. However, the average cargo exchange increased 21.7% due to the reduced vessel frequency and shippers maximising available capacity,” he says.

Near record surges of container volumes in the months of October and December, compounded by constrained rail capacity, caused significant congestion, reduced productivity and weeks-long delays transferring import containers by rail to Auckland.

Additional trains from KiwiRail since May have eased the pressure, however container vessels are still arriving “off window” and are being processed in the order they arrive.

Mr Sampson says Port of Tauranga is extremely grateful for the ongoing support of its customers, who are experiencing extraordinary disruption and uncertainty.

“I’m really pleased that the strength of our partnerships has shone through in these testing times,” he says.

Growing capacity to ease congestion

Mr Sampson says congestion is unlikely to be resolved permanently until vessels can return to schedule and Ports of Auckland is back operating at full capacity.  This highlights the need for Port of Tauranga to expand its capacity to cater for future demand.

“We have applied for resource consent to extend our container berths to the south of the existing wharves, by converting existing cargo storage land. This $68.5 million project is a vital piece of national infrastructure if we are to meet future cargo demand and have a resilient supply chain,” he says.

“We are also pursuing our plans to automate some of the container storage at the terminal to increase our capacity within the current land footprint. Our capability will be further extended with the opening of the inland port at the Ruakura Superhub near Hamilton in mid-2022.”

The inland port is being developed in a 50/50 partnership with Tainui Group Holdings.

Cargo trends

Total trade increased 3.8% compared with the previous year, growing to 25.7 million tonnes, although container numbers were 4.1% fewer at 1.2 million TEUs.

Imports increased 4.0% to 9.4 million tonnes, and exports increased 3.6% to 16.3 million tonnes.

Log export volumes bounced back from the 2020 lockdown, increasing 14.3% to 6.3 million tonnes. Sawn timber and wood panel exports decreased 12.4% in volume.

Dairy product exports decreased 1.9% to just over 2.3 million tonnes, reflecting a later-than-usual season and a reduction in tranship volumes.

Kiwifruit exports increased 10.1% in volume.

Oil product imports increased 11.6% in volume, and cement imports increased 42.4% in volume, reflecting the strength in the local economy.

Fertiliser imports decreased 16.9% in volume, grain volumes decreased 8.9% and protein and stock feed imports decreased 10.4%.

Coal imports increased significantly as a result of lower hydro energy production and declining gas production.

People and safety

Frontline workers are subject to regular Covid-19 testing and, with legislation introduced mid-July, are now subject to mandatory vaccination. They must receive their first dose by 30 September, and their second dose by 4 November. Only four of Port of Tauranga’s 49 eligible employees have not yet been fully vaccinated and redeployment options are being explored for any who do not meet the September deadline.

Port of Tauranga treats all visiting vessels as if they have Covid-19 on board and will continue to do so. The Company strongly recommends vaccination as an additional measure to the existing Covid-19 precautions.

While productivity has decreased due to the congestion, the overriding concern has been for port workers’ safety.

“We have made it very clear that safety must be our number one priority and that speed should not come at safety’s expense,” says Mr Sampson.

Sustainability

Air and water quality continues to be a major focus for the Port. The Port expects de-barking of export logs to continue to increase, which has the dual benefits of reducing the need for fumigation and minimising dust and debris.

While the Port continues to comply with all of its stormwater resource consent conditions on both sides of the harbour, we are also investigating options for additional stormwater treatment at the Mount Maunganui wharves.

Port of Tauranga has decided, after consultation with stakeholders, to insist that recapture technology is applied to 100% of methyl bromide fumigations on log stacks from 1 January 2022. This is over and above any current regional or national requirements.

Congestion in the container terminal also resulted in increased diesel consumption from straddle carrier movements, causing a 7.0% increase in overall carbon emissions. However, emissions intensity (emissions per cargo tonne) increased only slightly.

Outlook

The outlook for the next financial year remains uncertain.

Mr Sampson says he is confident that Port of Tauranga has resolved land-side congestion issues for now.

“However, the disruption to the international supply chain remains, and the challenges in Auckland are unlikely to be resolved soon,” he says.

Covid-19 precautions will continue to impact efficiency and costs as we continue to prioritise the health and safety of our team members, their whanau and the community. In recent months, we have witnessed a worsening sector-wide labour shortage that could potentially have an impact on operations.

Port of Tauranga will provide earnings guidance for the 2022 financial year at its Annual Shareholders’ Meeting on 29 October 2021.

For more information, please contact:

David Pilkington
Chair
Ph: 021 609 635

Leonard Sampson
Chief Executive
Ph: 021 281 2377

http://www.port-tauranga.co.nz/category/current-news/

Click here for the 2021 Integrated Annual Report and here to view the presentation to Analysts

[1] TEUs = twenty foot equivalent units, a standard measure of shipping containers
[2] The adjustment in FY2020 Group NPAT was due to revaluations of Associate Companies Northport and PrimePort Timaru

Rio de la Plata Update: Tuesday 10 August

We have not received any official information from the Ministry of Health but have been advised informally that 109 negative tests have been received so far in this round of urgent testing.

Almost all of our own frontline staff are vaccinated, but there are dozens of companies that work on the port. Vaccinations have been available at Port of Tauranga since March but the border order making vaccination compulsory was only introduced on 14 July. Frontline port workers must now have their first dose by 30 September. We strongly support vaccination and have provided information sessions and vaccination centres on site. We are hosting another two vaccination clinics on site over the next two weeks. Vaccination is another useful tool in the fight against Covid-19, but we will continue to follow all our other precautions that have worked for the past 18 months: frequent cleaning, use of PPE, physical distancing from ship’s crew and regular Covid-19 testing.

These precautions were followed by all workers who boarded the Rio de la Plata last week. Port of Tauranga treats all vessels as if they have Covid-19 on board.

The ship was tied up at Port of Tauranga from 6pm on Wednesday 4 August to 2pm on Saturday 7 August. On Tuesday, 3 August, Port of Tauranga received an alert from Maritime NZ that the ship had been boarded two weeks ago by an Australian pilot, who had tested positive for Covid-19. Maritime NZ subsequently cleared the ship for pilot boarding. The ship was also cleared to berth by the Medical Officer of Health at the local Public Health Unit as part of the normal free pratique process.

A Port of Tauranga pilot boarded the vessel at approximately 5pm on Wednesday and brought the ship in to the Tauranga Container Terminal. At about 9pm, Customs NZ unexpectedly shut down operations on the ship and the local Public Health Unit advised Port of Tauranga that our pilot and the stevedores unloading the ship should go home and isolate while awaiting further instructions.

On Thursday morning, Government agencies have clarified the situation and the Public Health Unit advised us that operations can resume on the vessel and there was no need for workers to isolate.

Our primary concern is for the port workers, including our pilots, who have been put in a very stressful situation. Victim blaming and abuse is not helpful.

The container terminal is still operating at about 50% capacity until the stevedores are formally advised they can return to work. Some workers will be re-tested today and we expect them to return to the port over the next few days.

Port of Tauranga Reports Improved Profits Despite Widespread Disruption to Cargo Volumes and Operations

Port seeks consent for an additional berth to help alleviate Upper North Island supply chain congestion

Port of Tauranga, New Zealand’s largest port and international freight gateway, today reported increased profitability for the first six months of the 2021 financial year, despite volatile cargo volumes and congestion issues being experienced at Ports of Auckland.

Group Net Profit After Tax for the six months to December 2020 was $49.4 million, a 2.3% increase on the same period the previous year, despite a 1.3% decrease in total trade volumes, to 13.1 million tonnes. Container numbers decreased 4.6% compared with the previous corresponding period, to 612,988 TEUs[1].

Highlights and Challenges

For the six months to 31 December 2020:

  • Group Net Profit After Tax increased 2.3% to $49.4 million
  • Total trade decreased 1.3% to nearly 13.1 million tonnes, down from 13.3 million tonnes the previous year
  • Container volumes decreased 4.6% to 612,988 TEUs
  • Transhipment of containers also decreased, by 5.1% in TEUs
  • Subsidiary and Associate Company earnings increased 22.3%
  • Imports increased 5.0% to 4.9 million tonnes
  • Exports decreased 4.8% to 8.2 million tonnes
  • Log export volumes were 2.1% lower than in the same period last financial year, at nearly 3.3 million tonnes
  • Dairy exports were down 10.8% to 1.1 million tonnes
  • Interim dividend of 6.0 cents, the same as last year

Port of Tauranga Limited Chair, David Pilkington, said the mid-year financial results were very pleasing considering the volatility in cargo volumes over the period and reflected the stability offered by the diverse companies in the group.

“We have managed to maintain income throughout a challenging six months. Port of Tauranga handled near record volumes of containers in the months of October and December. However, lower-than-previous demand from June to August, and vessel delays in November, dragged down the year-to-date container volumes,” he said.

“It’s a similar story when we look at overall cargo tonnes. Volumes decreased 1.3% for the six month period, yet volumes in December 2020 were 15.1% higher than the same month in 2019.”

Mr Pilkington said severe vessel delays out of Auckland since September had significant flow-on impacts on Port of Tauranga.

“We have done our best to accommodate diverted import and export cargoes from Auckland. However, we have had to limit our assistance as we have been constrained by the lack of availability of additional rolling stock and train drivers for the rail link between Tauranga and Auckland.”

The average cargo exchange per container vessel was 21% higher in December 2020 compared with December 2019, due to the cargo bypassing Auckland.

Late arriving vessels have been slow to pick up exports, exacerbating container yard congestion.

Port of Tauranga Chief Executive, Mark Cairns, says the January 1 introduction of penalties for shippers rolling cargo or leaving their containers on the wharf for excessive time has provided some relief from yard congestion. The peak export season is now in full swing.

“We need all parts of the supply chain to do their bit and we are very grateful for the cooperation of importers and exporters in improving terminal productivity. Unfortunately, the threat of congestion remains and is unlikely to dissipate until Ports of Auckland sorts out its operational problems,” said Mr Cairns.

“We accommodated a container vessel at our Mount Maunganui bulk cargo wharves in December to try and alleviate the pre-Christmas stress for retailers. New Zealand’s ability to absorb the worldwide disruption caused by Covid-19 has been severely constrained.”

Port of Tauranga has applied for the Covid-19 recovery fast-track resource consenting process for its proposed berth extension at the Tauranga Container Terminal. The fourth berth will be created by converting 220 metres of cargo storage land to the south of the existing wharves.

The $68.5 million project will create an estimated 368 jobs through the construction phase and more than 81 permanent jobs after completion. No Government funding is sought for the project and it is frustrating that the consent process takes so long.

Mr Cairns said the project could help ease congestion in the Upper North Island supply chain, especially with the prospect of the Ruakura Super-hub and inland port at Hamilton coming on stream. The inland port, being developed in partnership by Port of Tauranga and Tainui Group Holdings, is due to open in 2022.

Financial results

Revenue increased 3% to $159.5 million due to greater income from the container terminal and strong performances from Subsidiaries and Associates, which saw a 22.3% increase in earnings.

Overall costs increased 5.2%. Net Profit After Tax increased 2.3% to $49.4 million.

During the period, Port of Tauranga completed the acquisition of Kotahi Logistics’ 50% shareholding in Timaru Container Terminal. The terminal is now being operated by Port of Tauranga’s subsidiary, Quality Marshalling.

Cargo trends

Log exports in the six months to December 2020 decreased by 2.1%. There is strong demand from China as it recovers from Covid-19 and the outlook is positive for the second half of the financial year.

Sawn timber and wood panel exports decreased 16.8% in volume. Pulp and paper exports decreased 9.3% in volume.

Dairy exports decreased 10.8% for the period but volumes look positive for the second half of the financial year.

Transhipped containers declined 5.1% measured by TEUs, consistent with the overall decrease in containerised cargo.

Kiwifruit volumes were up 5.4%, while meat product exports increased 1.6%.

Oil product imports increased 12.1% in volume.

Fertiliser imports were down 17.1% in volume due to lower demand from the farming sector. Protein and feed imports increased 7.4% in volume. Grain imports remained steady.

Ship visits declined by 15.3% to 661 for the six month period. Although there were vessel diversions from Auckland, there were also delays and cancellations and no cruise ship visits (compared with 34 the previous corresponding period).

Outlook

The outlook for the second half of the financial year remains uncertain.

“We are confident we are managing any congestion challenges at our locations. However, the situation in other parts of the supply chain is far from resolved,” said Mr Cairns.

“Covid-19 precautions continue to have a big impact on our costs, as we continue to prioritise the safety of our team members and the community. There is still much uncertainty as to what the second six months of the year will bring, but we are confident we are in a strong position to tackle any challenges.”

Port of Tauranga expects full year earnings to be between $94 million and $100 million.

 

For further details, contact:

Mark Cairns, Chief Executive
Port of Tauranga Limited
Ph: 07 572 8829

(Click here for the Market Update and here to view the presentation to Analysts)

[1] TEUs = twenty foot equivalent units, a standard measure of shipping containers

First Quarter Cargo Volumes Impacted by Covid-19

Port of Tauranga, New Zealand’s international hub port, today reported flat earnings in the first quarter of the financial year, as Covid-19 continues to have an impact on supply chain efficiency and the global economy.

From 1 July 2020 to 30 September 2020, Port of Tauranga handled nearly 6.4 million tonnes of cargo, a 5% decrease on the same period last year.

Containerised cargo decreased by 8% to 287,670 TEUs. Imports were the same as the first quarter last year, and exports were down 8%.

Log exports are performing in line with forecasts of 6.2 million tonnes for the full year, but remain vulnerable to variable international demand.

Dairy product exports decreased about 12% compared with the same period last year, which we believe is due to seasonal variations. Kiwifruit exports increased 9% for the quarter.

Port of Tauranga Chief Executive, Mark Cairns, told the Company’s Annual Meeting of Shareholders today that the unaudited Group Net Profit After Tax for the first quarter was $21.5 million, compared with $21.7 million in the previous corresponding period.

“Based on the first quarter’s performance, and notwithstanding any significant market changes, we expect full year earnings to be between $86 million and $93 million,” said Mr Cairns.

Mr Cairns said that Port of Tauranga was still planning for long-term cargo growth.

“Port of Tauranga is a long-run infrastructure company and we will continue to pursue capacity expansion and greater efficiencies, to avoid the bottlenecks and congestion currently being experienced in the Upper North Island supply chain,” he said.

“We have a demonstrable track record and a very strong A- credit rating renewed last month by Standard & Poors. We believe we are well placed to weather whatever the Covid-19 storm throws at us next.”

 

For more information, please contact:

Mark Cairns
Chief Executive
Port of Tauranga Limited
Ph: 07 572 8829

 

http://www.port-tauranga.co.nz/category/current-news/

Chair Review
Chief Executive’s Review
Presentation

Shareholders Invited to Annual Meeting

Port of Tauranga invites all our shareholders to our Annual Meeting at Trustpower Baypark on 1 pm on Friday 30 October 2020.

Unfortunately, due to Covid-19 concerns, we have cancelled our usual port tours after the meeting.

We still hope to host our usual summer tours, Covid-19 alert levels permitting. Please keep an eye on our Facebook page or website for updates.

 

 

Port of Tauranga to issue $100 million of wholesale bonds

Port of Tauranga Limited (NZX:POT) today announced that, following an institutional bookbuild for its offer of Five Year Fixed Rate Notes, $100 million of bonds have been allocated to participants (or their clients). The transaction was arranged by BNZ.

The interest rate for the Fixed Rate Notes has been set at 1.02% per annum. This reflects a margin of 0.90% per annum over the underlying swap rate.

The Notes will be issued on Tuesday, 29 September 2020 and will mature on Monday 29 September 2025.

Port of Tauranga Chief Executive, Mark Cairns, said the Company was very pleased with the strong support for the transaction.

 

For more information, please contact:

Mark Cairns
Chief Executive
Port of Tauranga Limited
Ph: 07 572 8829

http://www.port-tauranga.co.nz/category/current-news/