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/

 

 

 

Port of Tauranga Chief Executive Announces Retirement

Port of Tauranga’s Chief Executive, Mark Cairns, has today given notice that he will retire in June 2021 after more than 15 years at the helm of New Zealand’s largest and most efficient port.

Mr Cairns says the time feels right to hand over to the next generation to continue Port of Tauranga’s success into the future.

“Port of Tauranga is in excellent shape. I’m incredibly proud of our people and the positive outcomes we have achieved for our customers and our community,” he says.

“I will certainly miss my colleagues but I am excited to see where the Company goes next, driven by the creative and innovative team we have built.”

Port of Tauranga Chair, David Pilkington, says Mr Cairns’ leadership has seen the Company grow from a regional bulk export port to New Zealand’s international cargo hub, as well as one of its most successful listed companies.

When Mr Cairns took over as Chief Executive in 2005, Port of Tauranga handled 12.6 million tonnes of cargo and 438,214 TEUs[1]. In the year to June 2020, the Port handled 24.8 million tonnes of cargo and 1.25 million TEUs.

“Thanks to Mark, we have very strong relationships with our customers and suppliers, which helps us plan for the future with confidence,” says Mr Pilkington.

“Mark has kept the Company strongly focused on future opportunities, while maintaining an industry-leading safety record and the highest productivity rates in Australasia,” he says.

He says the Company’s success has delivered wide-ranging benefits to the Bay of Plenty region. Local ratepayers own just over half of Port of Tauranga’s shares through Quayside Holdings.

“During Mark’s tenure, the average compounding Total Shareholder Return has been 19% per year, with market capitalisation increasing by $4.4 billion, from $665 million to $5.1 billion today,” says Mr Pilkington.

“Mark has built a very strong team, who will continue to take the company forward into the future.”

Port of Tauranga’s Board of Directors has a succession plan in place and Leonard Sampson has been named as CEO Designate. Mr Sampson was appointed Port of Tauranga’s Chief Operating Officer in September 2019, after six years as the Port’s Commercial Manager. Prior to joining Port of Tauranga, he held senior roles at KiwiRail, Carter Holt Harvey and Mainfreight.

Mr Cairns will retire from Port of Tauranga at the end of the 2021 financial year and intends to pursue a career in governance.

Achievements

  • Doubling in cargo volumes
  • Successful execution of Port of Tauranga’s strategy to become New Zealand’s only “big ship capable” port
  • Nearly trebling container volumes
  • More than seven times increase in market capitalisation
  • Named Chief Executive of the Year in the 2012 Deloitte Top 200 Business Awards
  • Winner of the Caldwell Partners Leadership Award in the 2019 Institute of Finance Professionals Awards
  • New Zealand’s best fisherman.

For further details, contact:
Rochelle Lockley
Communications Manager
Port of Tauranga Limited
021 865 884

[1] TEUs = Twenty foot Equivalent Units – a standard measure of shipping containers

Port of Tauranga Offers Safe Harbour in a Global Covid-19 Storm

Financial results for the year to 30 June 2020

Port of Tauranga, New Zealand’s largest port, today reported Group Net Profit After Tax of $90.0 million on 24.8 million tonnes of trade.

Despite the ongoing disruption caused by the Covid-19 global pandemic, container volumes increased 1.5% to 1,251,741 TEUs[1] for the year ended 30 June 2020.

The Port of Tauranga Limited Board has declared a final dividend of 6.4 cents per share.

Results summary:

  • Annual revenue of $302.0 million (2019: $313.3 million)
  • Group Net Profit After Tax of $90.0 million (2019: $100.6 million)
  • Subsidiary and Associate Companies’ earnings of $14.1 million (up 18.5% from $11.9 million in 2019).
  • Final dividend of 6.4 cents per share (total ordinary dividend of 12.4 cents per share)
  • Average annual compounding Total Shareholder Return of 23.34% over the last decade
  • Total trade of 24.8 million tonnes (2019: 26.9 million tonnes)
  • Container volumes: 1,251,741 TEUs (up 1.5% from 1,233,177 TEUs)
  • Transhipped[2] containers remained nearly a third of total containers handled
  • Imports decreased 7.8% to 9.0 million tonnes
  • Exports decreased 8.0% to 15.8 million tonnes
  • Reduced our overall carbon emissions[3] by 15.3%
  • Continued improvement in safety culture and safety performance with our Combined Port of Tauranga and Contractor Total Recordable Injury Frequency Rate (TRIFR) dropping 26% to 4.5[4] (2019: 6.1)
  • Remaining Australasia’s most productive container terminal with Average Net Crane Rate for the year increasing 8.8% to 35.8 moves per hour
  • Our high quality land and building portfolio increased in value by $43.5 million.

Port of Tauranga’s Chair, David Pilkington, says the results reflect the turbulent year and are a strong performance in view of an almost 22% reduction in log exports.

“Some of our customers saw record export volumes, while others were unable to operate during the lockdown,” says Mr Pilkington.

“Port of Tauranga is New Zealand’s major international hub port so it is not surprising that we have seen the effects of the global upheaval.”

The Covid-19 pandemic has had a wide-ranging impact on the business, including shipping cancellations, reduced cargo volumes, operational challenges and increased costs, and the resulting economic recession in New Zealand and the world.

“We are better positioned than most, due to our track record of strong capital discipline, our conservative balance sheet and capacity headroom,” says Mr Pilkington.

“Our diversity of cargo gives us some resilience in terms of revenue, while the strength of our people and processes has really shone through in keeping New Zealand’s most efficient port operating.”

Port of Tauranga has extended its strategic alliance with New Zealand’s biggest container exporter, Kotahi, through to 2031. The Port also has long-term freight volume agreements in place with other key exporters such as Oji Fibre Solutions and Zespri International.

“These long-term partnerships give Port of Tauranga certainty to plan for the future, and to expand capacity in a way that matches customer demand rather than investing speculatively,” says Mr Pilkington.

“It’s vital to have strong relationships with our customers to ensure we have the freight volume to attract the big ship services.”

Mr Pilkington believes shippers will increasingly seek out the lowest carbon supply chain, which they can access through the bigger ship services calling only at Tauranga. Larger vessels of 7,500 to 9,500 TEUs have a carbon footprint more than 31% lower than the average size vessels calling in New Zealand previously.

“We are the only New Zealand port able to offer the efficient, short transit time services that these larger vessels bring,” says Mr Pilkington.

Port of Tauranga has formed a joint venture with Tainui Group Holdings to develop the 30 hectare Ruakura Inland Port at Hamilton. The partnership will help Waikato-based importers and exporters to easily access the direct rail link to Tauranga.

Port of Tauranga Chief Executive, Mark Cairns, says the port team put in an outstanding performance to keep essential imports and exports flowing throughout the Covid-19 lockdown.

“Our team and partners managed a record cargo exchange on the Sally Maersk container vessel during lockdown. They transferred a total of 9,367 TEUs in two and a half days, obliterating the previous record exchange of just under 7,000 TEUs,” says Mr Cairns.

“We also commissioned our ninth container crane, which arrived in pieces in February and was in service just 11 weeks later.”

Port of Tauranga is now planning for the next stage of cargo growth and, in response to customer demand, intends to add another container vessel berth to the south of the existing Sulphur Point wharves.

“We take a long-term, strategic view of our infrastructure investment to ensure we can provide importers and exporters with the facilities they will need in the future,” says Mr Cairns.

Financial performance

Group EBITDA (earnings before interest, tax, depreciation and amortisation) decreased 8.1% to $166.5 million.

Solid performances, led by PrimePort Timaru, saw earnings from Subsidiary and Associate Companies’ earnings increase 18.5% to $14.1 million.

Dividend policy

The Board has reviewed its dividend policy in the light of the pandemic and its fallout. The special dividend scheme will be suspended, with funds reserved to accelerate capital expenditure such as the planned container berth extension. The Board has maintained the existing ordinary dividend policy of paying between 70% and 100% of Underlying Net Profit After Tax.

The Board has declared a final dividend of 6.4 cents per share, bringing the full year ordinary dividend to 12.4 cents per share (90% of Underlying Net Profit After Tax).

The average annual compounding Total Shareholder Return has been 23.34% over the last decade.

Cargo trends

Exports decreased 8.0% in volume to nearly 15.8 million tonnes and imports decreased 7.8% to just over 9.0 million tonnes for the year ended 30 June 2020.

In the first half of the financial year, log volumes were hit by lower international prices and demand. By March positive signs were emerging in China, New Zealand’s major log export market, as business there returned to normal and demand increased.

However, forestry was deemed a non-essential industry during New Zealand’s Level 4 lockdown from late March. Log inventory stored at the Mount Maunganui wharves could be shipped to make way for essential cargoes, but cart-in did not resume through the port gates until early May.

Overall, log volumes decreased 21.5% compared with the previous year, to 5.5 million tonnes. Sawn timber exports decreased 10.4% in volume. Pulp and paper exports increased slightly over the full year.

Dairy product exports increased 1.7% to nearly 2.4 million tonnes. Meat products increased 15.4% in volume.

Kiwifruit export volumes remained steady, with a continuing trend towards containerisation.

Imported fertilisers remained steady in volume compared with the previous year, while protein and feed imports increased 20.1% in volume. Grain imports increased 26.1% in volume.

Oil product imports decreased 12.3% in volume, reflecting the economic conditions.

Transhipment volumes remained steady, despite the overall decline in cargo volumes. Transhipped containers represent nearly a third of all containers handled.

Ship visits decreased by 9.7%, from 1,678 to 1,515 for the year.

People and safety

Mr Cairns says the Port of Tauranga team demonstrated strength, resilience and fortitude in dealing with the Covid-19 pandemic and the wide-reaching impacts on the Port’s operations.

“Our systems, processes and people were tested in a myriad of ways, and the effects are ongoing,” he says.

“Our people’s health and wellbeing is more important than ever. Since the beginning of the outbreak, we have supported our frontline workers to keep them safe from Covid-19. They continue to operate at Level 4 standards, with temperature checks, wearing of masks and gloves, social distancing, attention to hand hygiene and frequent surface sanitisation,” says Mr Cairns.

Meanwhile, safety performance during the year improved again, with the combined Port of Tauranga and contractors’ injury rate improving 26%. There is strong evidence of a proactive safety culture through lead indicator reporting.

Sustainability

Measuring, understanding and reducing our carbon emissions is a big focus and we are proud to report that the Company has cut its overall emissions by 15.3% compared with the previous financial year.

Much of the decrease has come through a waste minimisation programme that reduced the volume of waste going to landfill from the Mount Maunganui wharves by 48.5%.  Significantly more waste is being recycled instead, and we believe we can still generate further improvements in this area.

All of our business units reduced emissions compared with the previous year. We achieved a 4.2% decrease in Scope 1 emissions, and the intensity (Scope 1, 2 and 3 emissions per cargo tonne) decreased 7.9%.

Our emissions are certified through the Certified Emissions Measurement and Reduction Scheme (CEMARS) and audited by Toitū Envirocare.  It is important to us that our emissions reduction strategy is not based on hollow promises or greenwashing.  Our approach is to break down every part of our business to ensure we are making lasting and tangible change.

The Port’s focus on air and water quality continues, with significant progress in dust suppression. The international move to low sulphur fuel for shipping (or the use of exhaust scrubbers) has had an immediate effect on air quality.

The amount of methyl bromide used at the port for container and log export fumigation dropped 36.6% as a result of log de-barking and other alternatives. Fumigation contractors Genera now utilise recapture technology to recapture close to 90% of log fumigations and 100% of container fumigations.

Outlook

Mr Cairns says the short and medium-term impacts of the Covid-19 pandemic are still uncertain.

“We expect cargo volumes to slowly recover over the next three years, with dairy product and kiwifruit exports likely to be the strongest performers in terms of growth.

“We are still confident of growth over the long-term and, given the lead time required for any investment, we continue to pursue capacity expansion,” he says.

“Our track record means we have a strong credit rating and we believe we are well placed to weather the Covid-19 storm.”

Port of Tauranga Limited will provide an update on the first quarter’s trade, and earnings guidance for the full year, at the Annual Shareholders’ Meeting on 30 October 2020.

For further details, please contact:

David Pilkington                                              Mark Cairns
Chair                                                               Chief Executive
Ph: 021 609 635                                             Ph:  021 978 887

 

About Port of Tauranga

Port of Tauranga, headquartered in the Bay of Plenty, is New Zealand’s largest port and international freight gateway. It operates wharves in Tauranga, Mount Maunganui and Timaru, as well as MetroPort Auckland, a rail-linked inland port in South Auckland and MetroPort Christchurch, an intermodal freight hub in Rolleston. The Port of Tauranga Group includes: Quality Marshalling (100% ownership), a cargo services company; Coda (50% ownership), a freight logistics group; Northport (50% ownership), the deep water commercial port in Whangarei; PrimePort Timaru (50% ownership), the commercial port in Timaru; Timaru Container Terminal (50.1% ownership), which leases and operates the terminal at Timaru; and PortConnect (50% ownership), an online cargo management system. For more information, please visit www.port-tauranga.co.nz

 

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

[2] Transhipment is when containers are transferred from one ship to another at Port of Tauranga

[3] Scope 1, 2 and 3 emissions, audited under the Certified Measurement and Reduction Scheme (CEMARS)

[4] Per million hours worked

Revised Rules for Port Workers’ COVID-19 Testing

The Government has revised its health order regarding compulsory testing of port workers. ​Testing is now only compulsory for “higher risk” workers, and must be done by midnight on Thursday, August 20.

Higher risk workers are:

  • ​​Pilots and stevedores carrying out work on or around ships
  • Anyone who has boarded a ship at Port of Tauranga or Ports of Auckland since 21 July (eg ships’ agents or welfare workers)
  • Anyone else who has been at Port of Tauranga or Ports of Auckland who has symptoms.

Employers must identify their team members and contractors that need to be tested and arrange for them to get the test before the deadline.

We are liaising directly with stevedoring companies. Any other contractors or individuals who are affected by the order should contact us now for a test appointment.

Email POT.Reception@port-tauranga.co.nz with your details.

Workers can continue to work while they await their results, as long as they have no symptoms. The updated Government order can be found here:

http://www.legislation.govt.nz/regulation/public/2020/0210/latest/LMS393521.html

Update on COVID-19 Testing at Port of Tauranga

By Government order, all workers who have visited Port of Tauranga or Ports of Auckland since 11.59pm on 21 July must be screened for Covid-19.

At Tauranga, this affects up to 6,000 individuals. We have set up a facility on site for the DHB to use as a testing station. Their resources are limited so testing will be by appointment only. We will contact employers with testing times.

Here’s what you need to know:

  • If you have any Covid-19 symptoms, stay home and contact your GP to arrange a test​
  • If you are well, please wait for further instructions about testing at the Port. There’s no need to seek a test elsewhere if you live in Tauranga
  • Priority will be given to those workers who may have had contact with ships’ crew. You will be notified via your employer about when to come in for a test
  • You can continue to work while you wait for your test, and while you are waiting for the results
  • The test will be free
  • You won’t be penalised if you don’t meet the Government’s deadline. See Dr Ashley Bloomfield’s statement here: https://www.scoop.co.nz/stories/GE2008/S00081/reassurance-for-port-of-tauranga-workers-from-ministry-of-health-and-bopdhb.htm
  • You will need your NHI number and photo identification for testing on site. Your GP will know your NHI number if you don’t have it
  • Please don’t turn up for testing at the Port without an appointment.

We are very grateful for port users’ patience and understanding.​