Port of Tauranga On Track for One Million Containers (TEUs)

FINANCIAL RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2016

Half year net profit rises to $41.9 million from $38.6 million as the country’s premier freight gateway benefits from rising cargo volumes and continues to set standards for port productivity

Highlights:

  • Revenue for the six months to 31 December 2016 rises 2.8% to $125.3 million and net profit rises 8.5% to $41.9 million
  • Total trade increases 8% from 10.1 million tonnes to 11.0 million tonnes for the period
  • Container volumes rise 8% to 510,074 TEUs, reinforcing Port of Tauranga’s position as New Zealand’s largest container terminal
  • On track to handle more than one million TEUs in the 2017 financial year – a first for a New Zealand port
  • Imports increase by 7% in volume while exports increased 9% as log volumes recover
  • Interim dividend of 5 cents per share – up 8.7%[1] on the prior year’s figure

New Zealand’s largest freight gateway Port of Tauranga today announced it is on track to become the first port in the country to transport more than one million containers across its wharves in a single year.

It also announced a strong 8.5% improvement in Group half year net profit to $41.9 million from $38.6 million in the same period a year ago, as half year trade volumes grew 8% to 11.0 million tonnes and the Port continued to set new national standards for port productivity.

Half year Group revenue increased 2.8% to $125.3 million.

The Port of Tauranga Board has declared an interim dividend of five cents per share – up 8.7% on the prior year’s interim dividend1. The record date is 10 March and the payment date is 24 March 2017.

Chairman David Pilkington said: “Our results show the Port of Tauranga is continuing to reinforce its position as the country’s premier freight gateway. We have lifted revenue and earnings and moved record cargo volumes including more than 510,000 TEU containers.

“Exporters, importers and the shipping lines are increasingly recognising the benefits of our deep water port and our efficient freight handling and stevedoring operations.

“In the 2017 financial year, we expect to become the first New Zealand port to handle more than one million containers in a 12 month period. This achievement is the direct result of our now-completed five-year $350 million infrastructure investment programme, which has extended the Port’s freight  hinter-

land across the country, prepared the port for large ships and provided importers and exporters with highly-efficient routes to the country’s most important markets.

“Our world-class infrastructure will benefit the New Zealand economy for years to come,” Mr Pilkington said.

Chief Executive Mark Cairns said: “We are consolidating our position as the port of choice for international shipping lines, with ship visits in the six-month period rising 4% to 774 from 741 in the same period last year.

“Following the completion of our harbour dredging programme in September 2016, Maersk introduced a large vessel service, with Tauranga as its only New Zealand call.  The 9,500 TEU Aotea Maersk has been a regular visitor since October.

“Meanwhile, Hamburg Sud last month announced it will introduce in March a big ship, peak season weekly service, with Tauranga as its only New Zealand call. The largest cruise ship ever to visit the Bay of Plenty – the 4,700 passenger, 1,600 crew Ovation of the Seas – also made its maiden voyage to Tauranga on Boxing Day and has made a couple of further calls since.

“It is pleasing to see shipping lines take advantage of the possibilities created by the harbour dredging programme to bring in larger vessels. The economies of scale that come with larger ships drive transport efficiencies and ensure New Zealand exporters retain direct routes to international markets.

“With bigger ships calling at Tauranga, we are handling significantly larger volumes of cargo per shipment. We continue to lead the way in setting productivity standards for the New Zealand port industry and we strive to look at all aspects of the container terminal operations to ensure that we remain cost-effective.”

Ministry of Transport (MOT) figures from the fourth quarter of the 2016 calendar year show a crane rate for the quarter of 35.9 container transfers per hour, compared with the weighted national average of 33.7 moves per hour.

“Our ship service rate was 89.8 container exchanges per hour per ship, compared with the national weighted average of 76.9.   Such strong results, which rank Port of Tauranga in the top tier of Australasia’s most productive ports, are not only good for our shareholders, they are also in the best interests of the New Zealand freight industry,” Mr Cairns said.

During the half year period, Port of Tauranga invested $43.9 million in new infrastructure to further increase storage capacity and productivity. The investments included final payments on the two new gantry cranes commissioned, thirteen new straddle carriers and several property developments at the container terminal.

A new purpose-built shed is nearing completion and will be used by Oji Fibre Solutions (formerly Carter Holt Harvey) as a distribution hub, clearing the way for Oji’s former facility to be demolished and new container slots established to further enhance container terminal efficiency.

Traffic from our inland hubs continues to grow, with the numbers of containers transferred by rail between Tauranga and our MetroPort facility in Auckland increasing 20% compared with the first half of the previous financial year.

Cargo trends

Export volumes increased 9% to 7.1 million tonnes and import volumes increased 7% to 3.9 million tonnes.  Overall, trade increased 8% to 11 million tonnes. Containers handled increased 8% to 510,074 TEUs. Trans-shipped containers (containers transferred between vessels at Tauranga) increased 2% to 75,583 TEUs.

Log exports rebounded from the previous corresponding period, increasing 21% in volume to nearly three million tonnes.  Other forest products had mixed results, with pulp volumes up slightly (3%) to 291,000  tonnes but paper products were down 8% to 273,000 tonnes.

Dairy product exports increased 4% to 1,088,000 tonnes. Kiwifruit volumes increased 16% to just over 477,000 tonnes, a trend which is expected to continue for the next few years as the industry recovers from the PSA virus.

Other produce varied in volumes, with frozen meat exports decreasing by 25%, apples increased by 6%, and onions decreased by 23%.  Oil imports increased 10% in volume.

Fertiliser imports increased 10% and there was steady growth in other import categories, such as dry chemicals (up 13%), bulk liquids (up 13%), cement (up 5%) and salt (up 14%). Food supplement imports for the dairy industry decreased 10%, and grain volumes fell close to 20%.

Subsidiary/Associate Companies

Subsidiary and Associate profits were up slightly on last year to $8.04 million. In particular, Northport, and Coda had strong performances.

Outlook

Port of Tauranga is well positioned for the remainder of the financial year and beyond. The arrival of the Hamburg Sud service in March should provide a further boost to container volumes and ensure the Company reaches the milestone of handling more than one million TEUs annually by the end of the financial year in June.

Given the strong first half result, we expect earnings for the 12 months to 30 June 2017 to be at the upper end of our previous guidance of $79 million to $83 million, provided there are no significant changes to market conditions.

For more information, please contact:

Mark Cairns, Chief Executive                                     David Pilkington, Chairman

Mob: 021 978 887                                                       Mob: 021 609 635

 

Presentation to Analysts

 

Interim Accounts

 

[1] Adjusted for 5:1 share split on 17 October 2016

The Trustees of Ngā Mātarae Charitable Trust are pleased to offer the Ngā Mātarae Scholarship Programme

The Trustees of Ngā Mātarae Charitable Trust are pleased to offer the Ngā Mātarae Scholarship Programme.

The Trust is a partnership between the Port and Tauranga Iwi with the primary purpose to promote the wellbeing of Te Awanui Tauranga Harbour.

Applicants intending to undertake study in a discipline that will benefit the wellbeing of the harbour and who are descendants of Tauranga Moana iwi (Ngāti Ranginui, Ngāi Te Rangi and Ngāti Pūkenga) are invited to apply.

 Applications close at midday on Wednesday 25 January 2017.

 For full details, click on the link below:

Scholarship Application

2016 Annual Meeting Chair & Chief Executive’s Speeches

David Pilkington, Chairman:

The past year has seen us make excellent progress towards our strategy to develop New Zealand’s Port for the Future.  Our dredging project to deepen and widen the shipping channels of Tauranga Harbour is complete.  This will bring our five year, $350 million capital expansion programme to a conclusion.

Already, we have seen this investment come to fruition with the successful maiden visit two weeks ago of the Aotea Maersk.  This ship is 347 metres long (or three and a half rugby fields long), 43 metres wide and capable of carrying 9,500 TEUs or twenty foot equivalent units.  To put this in context, until now, the biggest ships visiting the port have had capacities of around 4,500 TEUs.

Our Chief Executive, Mark Cairns, will talk to you shortly about our operational performance for the year, but first I will touch on the financial highlights.

I am pleased to report Net Profit After Tax of $77.3 million.  Although this is 2.4% less than the previous year, it is a good result given the million tonne decline in log export volumes.  We also had a significant increase of $2.4 million in depreciation charges as a result of our investment in infrastructure.

Parent EBITDA rose 2.2% to $125.7 million.  This followed a 12.1% increase in container volumes, to a record of over 954,000 TEUs.

Our reported revenues fell to $245.5 million, due to a $32 million decrease in revenue caused by having to equity account Tapper Transport following merging it into our Coda partnership.

We have announced a final dividend of 30 cents per share, lifting the annual dividend to 53 cents per share – an increase of 1.9%.

You will also be aware of the special dividend announced in August.  This special dividend of $34 million, or 25 cents per share, is part of a capital restructure aiming to return up to $140 million to shareholders over the next four years, dependent on our requirements to fund any new future growth initiatives over and above those currently planned for.

The capital restructure will ensure that we retain a conservatively geared balance sheet, that we remain financially strong with a strong credit rating, and that we can return excess capital to you in a tax efficient manner.

On Monday this week, we undertook a five-for-one share split.

We decided on the share split based on feedback from our retail shareholders, as well as the analysts’ community, and we believe it will enhance our liquidity in the market.

I would like to comment on the year’s performances across the Group, as well as what we can expect in the short to medium future.

Our new Coda Group brings together our subsidiaries Tapper Transport, Priority Logistics, MetroPack and MetroBox, as well as Kotahi’s Dairy Transport Logistics.

Coda is making good progress at eliminating waste in the domestic supply chain, and ensuring that truck and train trips are full in both directions.  Coda has recently opened one of the country’s largest intermodal freight hubs at Savill Drive in Auckland, to consolidate export, import and domestic cargo.

Our investments in PrimePort Timaru and Timaru Container Terminal are going very well, with container volumes now having more than quadrupled since 2014.

PrimePort has recently celebrated the opening of Holcim’s new South Island cement distribution hub at the port.

Northport had yet another good year, with cargo volumes increasing 6.7% to a new record.  Northport has plenty of room to expand and is progressively developing paved storage areas.

Quality Marshalling had a good year, more than doubling earnings, and has taken a new strategic direction exiting the forestry marshalling sector and focusing on opportunities in niche cargo handling – such as at PrimePort’s new cement hub.  It has also expanded its container handling services and equipment.

We expect our long-term alliances – with the likes of Oji Fibre Solutions, Kotahi, and more recently Zespri and Tauranga Kiwifruit Logistics – to continue to drive cargo growth, especially in container traffic.  These initiatives also shelter us somewhat from swings in individual cargoes, such as last year’s significant reduction in log exports – a decline of more than one million tonnes.

Our $350 million investment programme, our extensive land holdings in Tauranga, and our rail-linked MetroPort facility in Auckland, have readied us for this future expansion.

Many of you will be aware of the future port study recently undertaken on behalf of Ports of Auckland, in a bid to address the capacity constraints on the existing facilities there.

One of the proposals outlined in the plan is that of a new mega port on the Firth of Thames to accommodate Auckland and Tauranga cargo growth over the next 50 years.

We have seen no economic justification for this idea, nor have we been privy to the assumptions that led to it.  What we do know is that we can significantly expand the volume of imports we can deliver into Auckland, without adding to traffic flows in downtown Auckland.  Ultimately, we believe the market will drive any rationalisation required, and we are about to see the efficiencies that can be had from the arrival of bigger ships.

I would like to thank my fellow Directors for their contributions this year, especially our relatively new Board members Doug Leeder and Julia Hoare.

At today’s meeting, Bill Baylis and Kim Ellis retire by rotation and seek re-election.  Both have the unanimous support of their fellow Board members.

I will hand over now to Mark to expand upon the cargo trends and operational highlights of the 2016 financial year.

 

Mark Cairns, Chief Executive:

Thank you Chairman. Good afternoon Ladies and Gentlemen. I am privileged to be Chief Executive of New Zealand’s largest and fastest growing port, and proud to report to you on another successful year for our Company.

The past year has been significant in completing the dredging project, which was the final building block in our $350 million capital investment programme, for the port to be big ship capable – a strategy that we have been planning and successfully executing over the last decade.

The strategic partnerships that we have developed with major exporters such as; Oji Logistics, Kotahi, and more recently Zespri and Tauranga Kiwifruit Logistics, have given us the assurances that we needed to commit to our expansion programme on a rational economic basis.

On that note, it has been extremely pleasing to see our new infrastructure being utilised so quickly, after the decade of planning and building the infrastructure necessary.

Port of Tauranga is the first New Zealand port able to berth ships the size of the Aotea Maersk.  The efficiencies that these larger vessels bring are significant, with the associated savings in both fuel usage and carbon emissions critical to ensuring shipping services are sustainable – both commercially and environmentally.

Being big ship-capable also enables New Zealand to be included on more mainline shipping routes.  The enhanced Maersk Triple Star service will stop in Tauranga en route from South America to North East Asia, giving New Zealand exporters express, direct access to Taiwan, China, Korea and Japan.

The dredging has not only been undertaken for container ships.  During the year, the world’s largest log ship, the Ultramax class SBI Maia, was chartered by TPT Forests and made its maiden voyage to the port.   TPT managed to load 53,000 cubic metres onto the vessel, in what is believed to be the largest single shipment of logs and lumber – around 75% more than an average sized log ship.

Cruise ships are always welcomed by the local community and contribute around $40 million of cash receipts to the region over the season.

We are in for another bumper cruise ship season this year, and following the dredging completion, the giant cruise ship Ovation of the Seas will be making her maiden visit on Boxing Day this year and then call another two times during the summer. This Royal Caribbean vessel is 347 metres long, 50 metres high and will bring nearly 4,900 tourists to the Bay of Plenty.  It should be quite a spectacle coming around the Mount, for Mount Maunganui and Tauranga locals.

I have mentioned that our channel dredging project was completed in August, ahead of time and under budget.   At low tide, our shipping channels are now 14.5 metres deep inside the harbour and 15.8 metres outside the harbour.

Of course, there’s not much point in expanding our capacity in the harbour without ensuring that we match our landside operations to be able to cope with much larger transfers of cargo, required when servicing larger ships.

We have increased capacity to more than 5,000 container ground slots at the container terminal, with refrigerated container connections now numbering more than 1,800.

We are demolishing Shed 12 at the Northern end of the Terminal and reconfiguring the layout to add a further 650 ground slots for containers and to provide our long term partner Oji Fibre Solutions with a new enhanced 22,000m purpose-built facility, at the southern end of Sulphur Point.

Two additional ship to shore cranes and 13 additional straddle carriers have been delivered, and following the retirement of Crane #1, the oldest Leibherr crane in the world at 38 years young, we will have an eight crane fleet servicing three berths in the container terminal by the end of the year.

The new super post-panamax cranes will allow us to continue to improve on the world class levels of productivity through the Terminal.

Our best vessel productivity over the year was achieved on the ANL Barega at a sustained 127 moves / hour over the vessels exchange.

KiwiRail are crucial business partners of the Port.  In Auckland, KiwiRail is investing $15 million in upgrading the facilities at MetroPort, which include; expanding MetroPort’s footprint, additional container reach-stackers, and installing a new entrance and gatehouse.  We’re very happy about this, as MetroPort saw a huge increase of nearly 40% in container volumes during the 2016 financial year.  We are also working with KiwiRail to implement a vehicle booking system early next year to improve truck turnaround times at our South Auckland freight hub.

It is worth noting that our partnership with KiwiRail has seen cargo volumes equivalent to more than 450,000 trucks trips transported between Auckland and Tauranga.  From a Government Paris Accord commitment perspective, this saves around 21.3 million litres of diesel and 58,000 tonnes of carbon emissions over the past year alone.

Meanwhile, in the South Island, we are also handling record numbers of containers through our associate company, Timaru Container Terminal. The Terminal handled an all-time record of more than 84,000 TEUs – an increase of 18% on the previous year and more than quadrupling the volumes since we took over running the terminal in 2014.

Our South Island-based customers can now use MetroPort Christchurch, which we have modelled similar to our MetroPort Auckland operation, and which we have successfully grown from zero business in 1999, to handling more than 260,000 TEUs this year, making it the fourth largest container terminal in New Zealand.

I will now quickly recap on the cargo trends that we observed during the 2016 year.

Total trade decreased slightly (or 0.3%) to 20.1 million tonnes, largely due to the million tonne decline in log volumes.  Exports decreased by 1.2% to 13.1 million tonnes, while imports increased over the year, by 1.4% to seven million tonnes.

As I have mentioned, container traffic continued to grow strongly, especially in imports. Sawn lumber exports held their own, and pulp and paper exports grew 5% in volume.

Dairy exports were up 22% to just over two million tonnes.  As a result of our collaboration with Kotahi, we now handle 99.5% of Fonterra’s North Island’s dairy exports.

Fertiliser base imports were down 10%, stock feed down 28%, and bulk liquids down 23%.

Kiwifruit has been a star performer, with export volumes increasing 21% and expected to continue growing at a strong rate.

During the year, we entered into a formal ten year partnership agreement with Tauranga Kiwifruit Logistics and Zespri to ensure that all parties take a long term perspective to providing the requisite infrastructure to cater for the future growth in kiwifruit. To that end, we have just let a construction contract to replace the aging 30 year old kiwifruit coolstore at Mount Maunganui.

One of my highlights for the year was the continuing improvement in our safety culture, with our Total Recordable Injury Frequency Rate reducing more than 60% to 5.6 incidents per million hours worked.

Our team’s heightened health and safety awareness has resulted in a 154% increase in safety-related observations – which signals to me a greater personal accountability for safety, with everyone looking out for themselves and each other.

We will continue to insist that safety is our number one priority at the port.  Above all else, we value human life and expect that all of our port colleagues will go home to loved ones at the end of their shifts, and in the same condition that they entered the port gate.

I am immensely proud of our Port People, who provide the Company with our greatest source of competitive advantage. Our people work around the clock, in all weathers, and thrive on the challenges presented to them. They embrace our culture of continually striving to do things better and demonstrating an enduring “can do” attitude to doing business with our customers.

Before I wrap up, I’d like to update you on our performance in the first quarter of the 2017 financial year and contrast this with the same period last year.

A reasonably positive start to the year, with trade up 5%, log volumes up 16%, dairy volumes up 12%, and container volumes up 3%.  We have Parent Net Profit After Tax up 10% and Group Net Profit After Tax up 6% on the prior corresponding period.

We expect to handle more than one million TEUs in the full year ending June 2017 and expect to see log exports recover to 2015 levels.

No matter the fluctuations in individual cargoes, we believe our diverse product mix, income sources and locations will protect us somewhat.  We also believe our long-term freight agreements with major exporters give us some certainty to our planning and infrastructure investment.

Provided there are no significant change to market conditions, we expect to achieve full year earnings in the range of $79 million to $83 million.

Finally, I would like to thank most importantly our customers. They have supported us in meeting our challenges and aspirations – by working together, we have created New Zealand’s Port for the Future.

We look forward to the remainder of the year, and the years ahead, with confidence.

Thank you Ladies and Gentlemen.

Chair Speech
 
Chief Executive Speech
 
Annual Meeting Presentation

Port of Tauranga Completes Major Five Year Expansion Programme & Targets $140 Million Capital Return to Shareholders

FINANCIAL RESULTS FOR THE YEAR TO 30 JUNE 2016

Strong container volumes offset a fall in log exports

Highlights:

  • Net Profit After Tax down 2.4% to $77.3 million following increase in depreciation charges and downturn in log volumes
  • Parent EBITDA rises 2.2% to $125.7 million as strong growth in container traffic offsets a decline in log exports
  • Container volumes increase 12.1% to just over 950,000 TEUs[1]
  • First 9,500 TEU ships to start calling at Port of Tauranga in October after channel dredging completed and landside facilities upgraded
  • Final dividend of 30 cents per share lifts total dividends to 53 cents per share – up 1.9% on the prior year
  • Special dividend of $34 million, or 25 cents per share, announced as part of a capital restructure targeting to return $140 million to shareholders over the next four years
  • Improved health and safety performance – Total Recordable Injury Frequency Rate (TRIFR) down 62% to 5.6 (per million hours exposure)

Parent EBITDA for the year to 30 June 2016 rose 2.2% to $125.7 million from $123 million in the prior year as container traffic rose 12.1% to a record of more than 954,000 TEUs – up from 851,000 TEUs in the prior year.

These gains were offset by a decline in bulk cargoes reflecting continuing challenges in New Zealand’s forestry and agricultural sectors. Notably, log exports fell more than one million tonnes with declines also in imported stock feed and fertiliser.

Reported revenues fell to $245.5 million from $268.5 million, due to a $32 million decrease in revenue as a result of having to equity account Tapper Transport as an associate company within our Coda partnership.

Net Profit After Tax fell 2.4% to $77.3 million as the Company’s largely completed $350 million five year investment programme resulted in higher depreciation charges, which are up $2.7 million in the current year alone.

Port of Tauranga Chairman, David Pilkington, said: “We are very pleased with the progress that has been made against our long term strategy to extend our freight catchment to become the country’s leading freight gateway and to prepare to welcome the arrival of the large ships into New Zealand waters.

“Strategic initiatives such as our alliance with OJI Fibre Solutions, Kotahi and Zespri / Total Kiwifruit Logistics continue to drive a strong increase in container volumes to the port. These initiatives have also insulated the Company from this year’s significant reduction in log exports.

“Our strategy has allowed the Company to make the significant investment required to host the next generation of big ships without compromising our commitment to deliver sustainable returns to our shareholders.

“It is also delivering benefits to the broader New Zealand economy. Following the completion of dredging to deepen and widen the port’s shipping channels, the first of these large container ships is set to visit in October. Over the long term, large ships have the potential to deliver in excess of $300 million in annual savings to the country’s exporters and importers[2].

“Port of Tauranga continues to consolidate its position as the country’s leading freight gateway. With our $350 million five year investment programme largely complete, we have capacity to continue to grow freight volumes for the foreseeable future and importantly relieve constraints now emerging elsewhere in the country’s port infrastructure.

“As signalled at our Annual Shareholder Meeting last year, the Board has reviewed our capital structure following completion of a major investment programme and today announced a return of $34 million to shareholders by way of a special fully-imputed dividend of 25 cents per share. This is the first tranche of what is targeted to be up to $140 million to be returned to shareholders over the next four years. The final amount returned is dependent on our requirements to fund any potential future growth initiatives,” Mr Pilkington said.

Directors have also declared a 30 cent fully-imputed final dividend, which combined with the special dividend lifts total payments to shareholders for the 2016 financial year to 78 cents per share. The record date for dividend entitlements is 23 September 2016 and the payment date is 7 October 2016.

Mr Pilkington said the capital restructure will ensure the Company has a more efficient Balance Sheet, remains financially strong and returns excess capital to shareholders in a tax efficient manner.

“A return of the full $140 million to shareholders would still ensure the Company retains a conservatively geared balance sheet and an investment grade credit rating,” Mr Pilkington said.

Separately, the Company today announces a share split. Shareholders will receive five ordinary shares for every one ordinary share held at 5 pm on the record date of 17 October 2016.

“The share split, which followed strong enquiry from Port of Tauranga’s retail shareholders and share market analysts, is a measure taken to enhance liquidity in the market for shares,” Mr Pilkington said

“Port of Tauranga is in a sound financial position with strong prospects. We are looking ahead to the future with confidence.”

Port of Tauranga Chief Executive, Mark Cairns, said: “The arrival of the first large ships in October will usher in a new era of sea-borne freight transport in New Zealand.

“And it is not just larger container ships that are calling at Tauranga. The 200 metre long 35,000 tonne SBI Maia, chartered by TPT Forests, the world’s largest log carrier, has also started calling and we will host Royal Caribbean International’s mega cruise ship Ovation of the Seas this summer.

“It is gratifying to see our new infrastructure, including the recently deepened and widened shipping channel, being used so quickly after so many years of hard work.

“Port of Tauranga is the first New Zealand port able to berth ships this size.  The efficiencies they will bring and the potential costs savings for New Zealand importers and exporters are significant. We have achieved this result through careful cultivation of strategic partnerships with major exporters.”

Port of Tauranga Chairman, David Pilkington, said: “It is clear that port capacity in Auckland is becoming constrained. Thanks to our investment programme, our extensive Tauranga land holdings and our rail-linked MetroPort facility in Onehunga, we can significantly expand the volume of imports that can be delivered into Auckland.

“Such an approach will have the additional benefit of reducing traffic flows in downtown Auckland and negate the need to expand the city’s port operations further into the Waitemata Harbour.

“We are willing to engage in a rigorous economic study to examine the optimal port capacity solution for the upper North Island. However, we are optimistic that ultimately, the market will drive any rationalisation required.  The arrival of bigger ships – and the efficiencies they can bring – will be a game changer.”

Operational Developments

The channel dredging project has now been completed ahead of time and below budget.  The port’s shipping channels have now been widened and deepened, to 14.5 metres inside the harbour entrance and 15.8 metres outside the harbour.

Port of Tauranga has examined every aspect of its landside operations to ensure it is able to handle the much larger transfers of cargo required when servicing larger vessels. Two additional cranes and 13 additional straddles have now been delivered.

KiwiRail is investing $15 million in upgrading its facilities at MetroPort Auckland, which saw an increase of 39% in containers volumes during the financial year. Meanwhile, in the South Island, Timaru Container Terminal reached an all-time record in container volumes of 84,402 TEUs – up 18% on the previous year.

South Island-based customers are now able to access the MetroPort Christchurch intermodal freight hub at Rolleston, which can consolidate imports and exports for rail transfer to and from the Timaru terminal.

Cargo Trends

Total trade in the 2016 financial year decreased 0.3% to 20.1 million tonnes.  Exports decreased by 1.2% to 13.1 million tonnes, while imports increased by 1.4% to seven million tonnes.

Container traffic continued to grow apace, with container throughput increasing 12.1% to 954,006 TEUs. The largest increase in containers was in imports, which increased by 34,260 TEUs.

Milk powder exports increased 21.5% in volume, to just over two million tonnes.  Kiwifruit volumes increased 21.1% and are expected to continue growing at this rate. Volumes of value-added forest products also increased, including pulp and paper exports growing by 5%.

Exports of logs decreased 18.2% in volume to 4.6 million tonnes. Dairy industry-related imports decreased, including fertilisers (down 10% to 472,000 tonnes), and stock feed (down 28.2% to 1.073 million tonnes).

Outlook

Over the last four years, the Company has managed to maintain Net Profit After Tax despite a reduction in log export volumes of more than one million tonnes and an increase in interest and depreciation charges of $9.5 million relating to the $350 million capital expenditure programme.

“As previously guided, following the introduction of the new shipping services we expect to handle over one million TEUs in the year ended June 2017.  We expect to see log exports increase to 2015 levels with other export cargoes, such as kiwifruit, expected to continue their strong growth trajectory,” Mr Cairns said.

“Port of Tauranga will remain somewhat protected from severe fluctuations in trade through its diverse cargoes, income sources and locations, as well as its long term freight agreements with major exporters. We are looking ahead to the remainder of the year with confidence and expect earnings growth to recommence.”

“We will provide 2016/2017 full year earnings guidance at our Annual Shareholder Meeting on 20 October 2016, when we have a better feel for the first quarter’s trade volume” said Mr Cairns.

For further details, contact:

Mark Cairns

Chief Executive

Port of Tauranga Limited

Mob: 021 978 887                               http://www.port-tauranga.co.nz/Media-Room

 

David Pilkington

Chairman

Port of Tauranga Limited

Mob: 021 609 635

About Port of Tauranga:

Port of Tauranga is New Zealand’s largest port by volume of cargo and New Zealand’s international freight gateway. It operates wharves at 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 container handling company; Coda (50% ownership), a freight logistics group; Northport (50% ownership), which operates a deep water commercial port in Whangarei; PrimePort Timaru (50% ownership), which operates the commercial port in Timaru; Timaru Container Terminal (50.1% ownership), which leases and operates the container terminal at Timaru and PortConnect (50% ownership), which was set up to operate an online cargo management system, connecting ports to their logistics companies. For more information about Port of Tauranga please visit www.port-tauranga.co.nz

Appendix: Non-GAAP profit reporting measures

Port of Tauranga’s standard measure of profit prepared under New Zealand GAAP is net profit. The Company has used the non-GAAP profit measure of EBITDA when discussing financial performance in this document.

The Directors and management believe this measure provides useful information as they are used internally to evaluate the performance of the group. Non-GAAP profit measures are not prepared in accordance with NZ IFRS (New Zealand International Financial Reporting Standards) and are not uniformly defined, therefore the non-GAAP profit measures reported in this document may not be comparable with those that other companies report and should not be viewed in isolation or considered as a substitute for measures reported by Port of Tauranga in accordance with NZ IFRS.

[1] Twenty-foot equivalent units

[2] The Question of Bigger Ships, New Zealand Shippers Council, August 2010.

Hub Port Strategy Builds Tauranga Freight Volumes

FINANCIAL RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2015

Underlying earnings rise as strong growth in container volumes offsets drop in log exports; harbour dredging clearing the way for larger ship visits to Tauranga by year end.

Highlights:

  • Total trade for the six months to 31 December 2015 up 1.1%[1] to 10.1 million tonnes
  • Container volumes rise 10.4% to 470,928 TEUs (twenty foot equivalent units)
  • Group Net Profit After Tax of $38.6 million
  • Imports increased by 1.6% while exports increased 0.8%
  • Dairy product export volumes increase 29%
  • Kiwifruit exports up by 22.9%
  • Interim dividend up 4.6% to 23 cents per share

New Zealand’s largest freight gateway, Port of Tauranga, today reported continued growth in container and dairy export volumes for the first half of the 2016 financial year, offsetting a fall in log exports over the period.

Revenue for the six months to December 2015 was down 9.8% following the exclusion of Tapper Transport revenue, equity accounting this business as an Associate Company with its merger into Coda Group.

Reported and Underlying Group Net Profit After Tax was $38.6 million. The result was slightly ahead of the prior year’s interim Underlying Profit After Tax[2] of $38.5 million, but lower than the prior half year reported Net Profit of $42.6 million, which included a non-recurring gain on the sale of Associate Companies of $4.1 million.

The result was supported by a strong 10.4% rise in container volumes to 470,928 TEUs (twenty foot equivalent units), reinforcing Port of Tauranga’s position as New Zealand’s largest container terminal and the country’s premier freight gateway. These gains were diluted by a 16.2% decrease in log export volumes to 2.4 million tonnes from 2.8 million tonnes in the prior year.

Chairman David Pilkington said: “Port of Tauranga has delivered a strong six month result, especially in the face of the decline in log export volumes. Our strategy of extending the port’s freight catchment across New Zealand continues to deliver results for shareholders and the country’s exporters and importers.”

The Port of Tauranga Board has declared an interim dividend of 23 cents per share, up 4.6% on the prior year’s interim dividend. The record date for the interim dividend is 11 March 2016 and the payment date is 24 March 2016.

Chief Executive Mark Cairns said: “Port of Tauranga is in an excellent position to continue to grow its cargo volumes as more exporters and importers recognise the value our hub port strategy delivers with reliable, fast and cost-efficient routes to markets.

“With the Tauranga harbour channel dredging proceeding well, we are on track to complete our contractual commitments with freight and logistics management company Kotahi by July, in order to see larger vessels starting to call at the container terminal by the end of 2016. This is the final building block in our five year $350 million investment programme to prepare for larger ships, which have the potential to deliver annual savings of as much as $300 million to New Zealand shippers[3].

“In the medium term, with the arrival of larger ships, we will be handling significantly larger volumes of cargo per shipment. We are looking at every aspect of our operations to ensure that we are ready for the step change later this year.”

Infrastructure Investment

Dredging specialist Rohde Nielsen is more than a third through the work to dredge Tauranga harbour’s shipping channels to a depth of 14.5m inside the harbour entrance and 15.8m outside the harbour entrance. It is on track to complete the work under budget and ahead of schedule in July.

The Port has expanded landside capacity at the Tauranga Container Terminal and also ordered two new container cranes and thirteen new straddle carriers, which are scheduled for delivery by September and will significantly enhance the Port’s “best in class” terminal productivity.

The Port has also focused on improving efficiency in the rail connection between the Tauranga Container Terminal and the inland freight hub at MetroPort Auckland. These efforts have been rewarded with a 24% increase in the volume of containers carried on the rail corridor compared with the same period a year ago.

Chief Executive Mark Cairns continued: “We are increasing efficiencies in the supply chain by ensuring the north and southbound trains are fully utilised. Coda (our freight and logistics partnership with Kotahi) has been making good progress in securing significant domestic freight to provide southbound backhaul loads to balance the northbound dairy trains from the lower North Island. Port of Tauranga is now handling more than 90% of the North Island dairy export volumes. Coda has commenced work on expanding its intermodal freight hub in Otahuhu to handle these increased volumes. This intermodal operation is expected to remove approximately 5,000 truck movements per year.”

Meanwhile, the Port has agreed a ten year freight deal with kiwifruit exporters Zespri International and Tauranga Kiwifruit Logistics, which will see a long term approach taken to investing in cool storage and port operations to cope with the expected growth in the kiwifruit industry.

Cargo Trends

Despite the 16.2% decrease in log volumes, exports still increased 0.8% overall to nearly 6.5 million tonnes. Processed forestry products saw some growth, including the introduction of a new export category, square lumber.

Kiwifruit exports increased 22.9% to 413,102 tonnes. Dairy product exports increased 29% compared with the previous year, as the long-term freight agreement with Kotahi entered its second year.

Imported volumes continued their steady increase, rising by 1.6% overall to nearly 3.7 million tonnes. Imported grain and stock feed supplements decreased by 14.2%, and fertilisers by 9.7%, while oil product imports increased by 14.2%.

Associate Companies

Associate profits were up 8.5% to $8.0 million. The largest increases came from strong performances by Quality Marshalling and PrimePort Timaru.

Outlook

Port of Tauranga’s diverse operations, locations and income streams continue to provide some protection from fluctuating cargo volumes in commodities such as log exports. The Company reconfirms its full year earnings guidance to be in line with last year’s underlying after tax profit of $79.0 million.

For more information, please contact:

Mark Cairns
Chief Executive
Mob: 021 978 887

David Pilkington
Chairman
Mob: 021 609 635

About Port of Tauranga:

Port of Tauranga is New Zealand’s largest port by volume of cargo and New Zealand’s international freight gateway. It operates wharves at 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 forestry and container handling company; Coda (50% ownership), a freight logistics group; Northport (50% ownership), which operates a deep water commercial port in Whangarei; PrimePort Timaru (50% ownership), which operates the commercial port in Timaru; Timaru Container Terminal (50.1% ownership), which leases and operates the container terminal at Timaru and PortConnect (50% ownership), which was set up to operate an online cargo management system, connecting ports to their logistics companies. For more information about Port of Tauranga please visit www.port-tauranga.co.nz

Appendix: Non-GAAP Profit Reporting Measures

Port of Tauranga’s standard measure of profit prepared under New Zealand GAAP is net profit. The company has used the non-GAAP profit measure of underlying profit when discussing financial performance in this document.

The Directors and Management believe this measure provides useful information as they are used internally to evaluate the performance of the group. Non-GAAP profit measures are not prepared in accordance with NZ IFRS (New Zealand International Financial Reporting Standards) and are not uniformly defined, therefore the non-GAAP profit measures reported in this document may not be comparable with those that other companies report and should not be viewed in isolation or considered as a substitute for measures reported by Port of Tauranga in accordance with NZ IFRS.

Definition:

Underlying profit: Reported net profit excluding one-off items.

GAAP to Non-GAAP Reconciliation of  

 

Six months to 31 December 2015

$M

2014

$M

Reported profit after tax 38.564 42.571
Fair value gain recognised on loss of control of Subsidiary (4.731)
Impairment of goodwill in MetroBox Limited 0.668
Underlying profit after tax 38.564 38.508

Extracted from audited financial statements

[1] Unless otherwise stated all comparisons are between the six months to 31 December 2015 and the prior comparative period.
[2] Underlying profit after tax is a non-GAAP measure of financial performance. For a comprehensive definition and reconciliation to the GAAP measure of net profit refer to page 3 of this release.
[3] The Question of Bigger Ships, New Zealand Shippers Council, August 2010.

Nga Matarae Scholarship for 2015

Posted on 11th November 2014

The Trustees of the Nga Matarae Charitable Trust are pleased to offer the Nga Matarae Scholarship Programme.

Applicants intending to undertake study in a discipline that will benefit the wellbeing of the Tauranga harbour and who are descendants of Tauranga Moana iwi are invited to apply.

For full details, click on the links below.

Application Form

Whakapapa Form

Port of Tauranga Annual Meeting 2014

Posted on 23rd October 2014

To view the Chairman’s and Chief Executive’s speeches and Powerpoint presentation, please click on the icons below.

Chairman’s Review

Chief Executive’s Review

Presentation

Consent Granted for Canterbury Intermodal Freight Hub

Posted on 16th October 2014

Port of Tauranga Limited announced today that resource consent has been granted for its intermodal freight hub at Rolleston. In January 2014, the Company purchased 15 hectares of land in the Izone Industrial Park at Rolleston for development as an intermodal freight hub. The Izone development is a 180 hectare industrial park 12 kilometres south of Christchurch. The establishment of the intermodal freight hub will enable the receival, packing and distribution of containerised cargo along with providing empty container depot services.

Port of Tauranga owns a 50% shareholding in PrimePort Timaru and operates its container terminal. Establishing an intermodal freight hub at Rolleston will provide South Island exporters with the option to efficiently access Timaru and similarly, importers in the Christchurch area will have the option to ship through Timaru.

Granting of the consent will allow the construction of the rail siding, pavements and site infrastructure to commence, enabling the freight hub to be operational early in 2015.

Port of Tauranga Underlying Profit Up After Watershed Year

Posted on 21st August 2014

Highlights
• Underlying Group Net Profit After Tax reaches new record, rising 1.3% to $78.3 million
• Group EBITDa up 5.5% to $142.5 million
• Total trade volume increases 3.5% to more than 19.7 million tonnes
• Purchase of 50% of PrimePort Timaru and execution of a 35 year lease to operate Timaru Container Terminal
• Purchase of 15 hectare inland port site at Rolleston
• Establishment of long term alliance with freight management and logistics provider Kotahi
• Final dividend of 29 cents per share, increasing full year dividend 8.7% to 50 cents per share

Port of Tauranga, New Zealand’s pre-eminent freight gateway (NZX: POT), today reports an improved financial result for the year to 30 June 2014 and a strong outlook following a successful year extending its freight catchment across the country.

Group EBITDa increased 5.5% to $142.5 million from $135.0 million as an increase in bulk cargo transported across the Company’s wharves offset a temporary decline in container volumes. Total cargo volumes rose 3.5% to more than 19.7 million tonnes from 19.1 million tonnes a year earlier.

Reported Net Profit After Tax fell 30.2% to $78.3 million from $112.1 million a year earlier as the prior year included a $34.9 million one off gain from the sale of an associate company.

Port of Tauranga Chairman, David Pilkington, said, “The 2014 financial year represents a watershed for Port of Tauranga. During the year, we took a 50% stake in PrimePort Timaru and took control of its container terminal, began the development of a new freight hub in Christchurch and struck an alliance with freight management and logistics provider Kotahi, which will deliver up to 1.8 million export TEUs to the port over the next ten years.

“These strategic initiatives, combined with the significant investments we have made in prior years, have put in place a platform for long term growth and will deliver significant gains for importers and exporters across the country.

“Reflecting our confidence in the Port’s prospects, and our certainty over forecast container volumes following the Kotahi alliance, the Board has today declared a final dividend of 29 cents per share, lifting the full-year, fully-imputed dividend to 50 cents per share, representing an 8.7% increase over the prior year’s 46 cents per share,” Mr Pilkington said.

The record date for entitlements to the dividend is 19 September 2014 and the payment date is 3 October 2014.

Mr Pilkington noted upcoming changes to the Port of Tauranga Board.

“Sir Dryden Spring has indicated his intention to retire at the Annual Meeting in October after 10 years on the Board. Sir Dryden has been a significant contributor around the Board table and his experience and wise counsel will be missed.

“Our new independent director, Alastair Lawrence, was appointed in February in anticipation of this move. His knowledge of mergers and acquisitions has been particularly welcome in the past year.

“As well as strong growth in the dairy sector, we see significant potential in other primary produce sectors including forestry. We believe our diverse cargoes and income streams ensure the Port of Tauranga Group will continue to achieve steady growth, as we consolidate our position as the country’s largest port.”

Port of Tauranga Chief Executive, Mark Cairns, said, “Port of Tauranga seeks to profitably grow cargo volumes while providing an efficient and cost effective service to our customers.

“We successfully executed a number of further strategic building blocks during the year, and we are now reaping the benefits, most notably in the form of our long term alliance with freight and logistics management company Kotahi.”

“We now have the certainty to invest in the infrastructure needed to accommodate the next generation of 6,500 TEU (twenty foot equivalent unit) ships and to do so in a way that will deliver efficiencies for New Zealand shippers and appropriate returns to shareholders.

“We expect cargo volumes to increase in the coming year; reflecting: the agreement with Kotahi; the investments we are making in our freight handling infrastructure across the country and the return of the Maersk Line’s Southern Star service to the Port of Tauranga this month.”

Financial performance
Underlying Net Profit After Tax reached a new record, rising 1.3% to $78.3 million from $77.2 million in the prior period.

Subsidiary and associate companies generally delivered strong results despite some tough challenges. Northport reported a strong financial performance on the back of log export growth.

Tapper Transport performed well in a very competitive environment, while successfully integrating a new subsidiary.

Quality Marshalling had a tough year following the loss of a major contract which was put to competitive tender. The company is now rebuilding, pursuing new lines of business to replace revenue.

Port of Tauranga’s balance sheet is strong with net debt at $255 million and gearing as measured by debt-to-debt plus equity steady at 29.7%, giving plenty of capacity to fund the $50 million expected to be required to dredge Port of Tauranga’s shipping channels. This dredging is due to commence in 2015 and the alliance with Kotahi will help ensure that an acceptable return is achieved on this investment.

In the 2014 financial year, $61.1 million was invested in property, plant and equipment.

Trade trends
Imports increased 6.4% to nearly 6.4 million tonnes from 6.0 million tonnes in the prior period. This increase was driven primarily by imports for the buoyant agricultural and construction sectors. Total exports rose 2% to 13.4 million tonnes from 13.1 million tonnes in the prior period driven by dairy and forestry exports.

Container volumes fell 10% to 759,587 TEUs from 848,448 in the prior year, primarily due to the loss of the Maersk Southern Star service. The service resumed its Tauranga calls in August and, based on previous container volumes associated with this service, we expect it to deliver an additional 70,000 TEUs per annum.

Transhipped cargo increased by nearly 5% over the year. Transhipped containers now represent 26% of the containers handled.

Operational highlights
In Tauranga, the Company continued to invest in new infrastructure as traffic through the port grows. The Tauranga Container Terminal commissioned its seventh twin-lift gantry crane this year and two new tug boats have been ordered for delivery in early 2015. The two new vessels will be powerful enough to handle the increasingly large ships visiting the port.

Port of Tauranga took control of the Timaru Container Terminal in December to deliver greater choice of cost-effective routes to South Island importers and exporters. Container volumes have already increased and a new harbour mobile crane has been ordered to handle the greater volumes.

Good progress is being made in establishing an intermodal freight hub on the 15 hectares of industrial land the Company acquired in Rolleston, south of Christchurch. The hub, modeled on the proven MetroPort Auckland operation and due to open in early 2015, is just 12 kilometres south of the city and enjoys excellent road and rail connections. It will allow exporters to aggregate cargo bound for the Timaru Container Terminal, and similarly allow importers to efficiently access the Christchurch domestic market. It will eventually provide capacity for up to 100,000 TEUs per year.

In Auckland, the MetroBox container handling service was expanded to a second location in Mangere, in partnership with Specialised Container Services. The purchase of the 6.8 hectare Gateside Industrial Park next door to MetroPort has also provided expansion options in the long-term.

Safety
Port of Tauranga’s safety record is strong with the lowest level of Accident Compensation Corporation claims of any port in the country. However, any claim is one too many, so the Company has been working on improving safety culture and employee engagement and this is delivering significant improvements in safety outcomes with a 92% improvement in Total Injury Frequency Rate.

Outlook
Mr Cairns said, “The first month of this financial year has shown continued growth in container and log export volumes from the previous year, however price pressure in the Chinese market is expected to impact on the volume of log exports in the short term. Dairy volumes handled by the port are expected to increase, and imported fertiliser and dairy feed supplements also to remain strong. At this stage, container volumes are expected to exceed the previous record volumes in FY13 and an update will be provided to shareholders at the Annual Meeting on Thursday 23 October 2014, once the first quarter’s trade volumes are available.”

The Port’s freight alliance with Kotahi has given the Port the certainty to proceed with investment plans to ready Tauranga for the arrival of larger ships. It will be able to accommodate vessels of up to 6,500 TEUs within a few years.

“We are making excellent progress reinforcing our position as New Zealand’s pre-eminent freight gateway,” Mr Cairns said.


The key differences between underlying profit and reported profit in 2013 relate to the sale of Port of Tauranga’s investment in C3 Limited and the derivative contracts closed out that related to debt repaid from the consideration received from the sale.

Delivering a Step Change for New Zealand International Trade

Posted on 26th June 2014

Freight and logistics management company Kotahi and New Zealand’s freight gateway Port of Tauranga have struck a strategic ten-year freight alliance. This, along with a separate long-term agreement between Kotahi and Maersk Line, the world’s largest container shipping company, will deliver a ‘step-change’ for New Zealand’s $95 billion international trade sector.

Kotahi Chief Executive Chris Greenough said Kotahi is focused on helping keep New Zealand competitive on the world stage, by paving the way for the new generation of container vessels to call in New Zealand’s waters, delivering significant efficiencies for exporters and importers .

“New Zealand doesn’t have a big ship capable port and now is the right time for key players to work together to build a capability within New Zealand to receive these large vessels with all the efficiencies they will bring to New Zealand. These ships will ensure New Zealand does not become a spoke to the larger hubs across the Tasman, which would add 7-10 days to export transit times.

“We can help level the playing field for New Zealand in international markets. Increased collaboration will smooth out the peaks and troughs of our agriculture-driven export sector and drive a step change in efficiency for the Kiwi export supply chain. These larger vessels will also be a catalyst for further efficiencies in land-based transport and the better co-ordination of truck and rail movements,” Mr Greenough said.

The new arrangements are founded on the following:

• Kotahi has committed to provide up to 1.8 million TEU export cargo containers to the Port of Tauranga over the next 10 years, commencing 1 August 2014;
• Kotahi has committed significant export cargo to Timaru Container Terminal (TCTS), for the next 10 years commencing 1 August 2014;
• The Port of Tauranga has committed to investment in infrastructure to enable visits from the larger 6,500 TEU container ships within the next few years;
• Port of Tauranga will, subject to certain conditions, issue shares to Kotahi and Kotahi will take a stake in TCTS; and
• Kotahi has committed to provide up to 2.5 million TEU export cargo containers to Maersk Line for the next 10 years, commencing 1 August 2014.

“A key aspect of the agreements outlined today is the continuing support for the long term viability of New Zealand’s regional ports. Reflecting the strong growth of dairying exports from the South Canterbury region over the past three years it has been possible to resume container ship calls to the Port of Timaru while also retaining significant volumes through Port of Lyttleton and maintaining, long-term, container ship calls at a number of other regional ports,” Mr Greenough said.

“We recognise that ports play a key role in the livelihoods of local communities and believe the changes outlined today will help regional communities stay connected as we enter the era of bigger ship visits to New Zealand,” he said.

Port of Tauranga Chief Executive Mark Cairns said: “The agreement with Kotahi will be immediately earnings accretive for Port of Tauranga and will transform the New Zealand supply chain.

“The cargo commitments give Port of Tauranga the certainty to proceed with the infrastructure to accommodate the 6,500 TEU ships. This will in turn spur the development of New Zealand’s coastal shipping industry as freight consolidates on Port of Tauranga as a hub port for the country.

“The agreement recognises Port of Tauranga’s long-term investment programme in freight marshalling facilities across the country including: MetroPort in Auckland and more recently PrimePort Timaru and our new freight hub in Rolleston, Christchurch. Port of Tauranga will continue to provide shippers across the country the most efficient freight options to markets thanks to these investments.

“Our ability to accommodate the next generation of large ships will also address New Zealand’s disadvantages in international export markets, including the country’s distance from major transport routes and its relatively small and dispersed freight volumes.

“We are looking forward to expanding our already highly-productive relationship with Kotahi and to increased visits from the Maersk Line fleet,” Mr Cairns said.

Kotahi and Port of Tauranga are continuing to explore and negotiate other operational efficiencies.

Maersk Line New Zealand Managing Director Gerard Morrison said: “The new long-term contract with Kotahi represents a new model of collaboration for our business and provides certainty for Maersk Line to build on our 17 year track record of providing premium services to the New Zealand market.

“Reflecting this, and due to the guaranteed freight volumes, Maersk Line has committed to introducing a new 4,500 TEU service from October 2014, to Tanjung Pelepas in Malaysia, to provide additional capacity, and complement, the current Northern Star and Southern Star services.

“We now have a clear path to work on the introduction of Maersk Line’s 6,500 TEU vessels to New Zealand. These ships are significantly more fuel efficient on a per-container basis and will reduce the carbon footprint of the ocean freight component of New Zealand exports by approximately 22% per container unit, compared to the existing New Zealand industry average,” Mr Morrison said.

Details of the agreements:

Volume and container commitments:  Port of Tauranga will issue two million shares to Kotahi, representing 1.5% of Port of Tauranga’s issued share capital, in two tranches. Kotahi’s rights to the shares, including dividends, are subject to Kotahi delivering on certain freight volume commitments over a ten year period.

Timaru Container Terminal (TCTS):  Kotahi has agreed to commit export traffic to Port of Tauranga subsidiary TCTS, which holds a 35 year lease over the 10 hectares of terminal operating area at PrimePort Timaru. In exchange for the commitment, Kotahi will get a 49.9% shareholding in TCTS. Operations at TCTS will be managed under a management contract with Port of Tauranga. As a result of this agreement between Kotahi and Port of Tauranga, TCTS plans to invest in port infrastructure including another mobile harbour crane to handle the increased container traffic.

Maersk Line: Kotahi has agreed to commit a significant volume of export cargo to Maersk Line for New Zealand coastal and South East Asia trans-shipment ports. This gives Maersk Line volume certainty to plan for the introduction of 6,500 TEU ships to New Zealand. Further information on the new services to be introduced will be provided when details are confirmed.

About Kotahi
Kotahi, New Zealand’s leading freight and logistics management company, specialises in matching freight requirements for export and import businesses with ocean, rail, and road transport providers to ensure New Zealand remains competitive in international markets.

Kotahi, a joint venture between Fonterra Co-Operative and Silver Fern Farms, launched in 2011, currently provides freight management services for more than 30 customers from sectors including meat export, wool, dairy, timber, pharmaceuticals, horticulture and seafood. Kotahi’s name means ‘standing together as one’. For more information about Kotahi please visit www.kotahi.co.nz

Australasian advisory firm Cranleigh provided transaction structuring and financial advice to Kotahi on the freight agreement with Port of Tauranga.
About Port of Tauranga

Port of Tauranga (NZX.POT) is New Zealand’s largest port. It operates wharves at Sulphur Point and Mount Maunganui in Tauranga, MetroPort, a rail-linked inland port in South Auckland, PrimePort Timaru and is developing a new intermodal freight hub in Rolleston southwest of Christchurch.

The Port of Tauranga Group includes: Tapper Transport, New Zealand’s largest wharf cartage company; Quality Marshalling, a forestry materials handling company; Northport, which operates a deepwater commercial port at Marsden Point; MetroPack, a container packing and unpacking facility based in Auckland and Tauranga; MetroBox, a container cleaning, repair and storage facility, and New Zealand freight specialist Cubic Transport Services. For more information about Port of Tauranga please visit www.port-tauranga.co.nz

About Maersk Line

Maersk Line is the world’s largest container shipping company, serving customers all across the globe. Maersk Line has 32,000 employees across 362 offices in more than 125 countries. As a leading provider of container shipping services, it is Maersk Line’s mission to deliver second-to-none services enabling our customers to keep the promises they in turn make to their customers.

Maersk Line sources goods from anywhere in the world, creating efficiencies in our customers’ supply chains, and making it possible for commodities to reach new markets more quickly. Maersk Line is a part of the Maersk Group and based in Copenhagen, Denmark. The Maersk Group employs 89,000 people, and generated 47 billion US dollars in revenue in 2013.

In New Zealand, Maersk Line currently operates five 4,500 TEU vessels on the Southern Star Service and five 2,900 TEU vessels on its Northern Star service. It also operates five of the 10 vessels on the America (OC1) service sized between 3,500 and 3,700 TEU. For more information about Maersk Line please visit www.maerskline.com

Presentation to Analysts