ContainerCo weighs up funding options for 'significant growth opportunities'

ContainerCo (NZL) is weighing up options to fund "significant growth opportunities" to beef up the container depot operator's level of automated equipment and potentially see it expand overseas.

The Auckland-based company hired investment bank Cameron Partners to advise on its options and spent $377,402 on initial public offering related costs in the year ended March 31, its annual report says. Since the March 31 balance date, ContainerCo has "commenced preparatory work to raise additional capital and list on the NXT board of the New Zealand Stock Exchange," it said.

Managing director Ken Harris said a listing is one of several options to fund what he calls "significant growth opportunities" and is very much a live issue for the company. In its latest financial year, the company took advantage of lower interest rates to reduce its finance costs, with a 3.75 percent nominal interest rate on $11.2 million of debt with Westpac New Zealand. In the previous year it paid 4.85 percent-to-5.43 percent on $11.1 million of loans.

"A big chunk of what we want to do in the future is to actually respond to the supply chain needs of our customers by becoming more efficient, and that means using different types of plant," Harris told BusinessDesk. "What we are finding is that there's more than one way to skin that cat, and because it's heavy plant, there are funding options available that give us more opportunities to weigh up the risk and cost factors in our planning."

ContainerCo is jointly owned by Harris's NZL Group and COSCO Shipping Lines (New Zealand), a subsidiary of shipping giant China Ocean Shipping (Group) Co. It was formed through the 2013 merger of NZL's $5.1 million container depot business with United Containers and the $787,000 purchase of CentrePort's Transport Systems 2000 hire and sales business.

Harris said the new equipment would enable more automation at its sites and allow 24-hour operations to meet increased container movements. However, he doesn't expect that to cut headcount because the extended operating hours will require a human element and he anticipates staff to increase to 200 from 180 over the next few years.

"Our growth is really linked to the overall growth in the container trade and at this point, we have offshore opportunities we're investigating as well and that's to do with some of the innovation we're applying in terms of technology and some of the efficiency drives," Harris said. "We think the employment side will be relatively stable - we'll actually have an increase in employment and there'll be new skill requirements in our business, but we're well used to training for that kind of thing."

The strength of the New Zealand dollar makes it a "good time to buy" while the upbeat economy helps drive container use as well, he said.

The company generated a profit from continuing operations of $3.2 million in the year ended March 31 on revenue of $42.8 million, compared to a profit of $3.8 million on revenue of $41.6 million a year earlier. ContainerCo sold its fumigation unit to NZL Group after the balance date, the business generating a loss of $414,393 in the 2016 year.

ContainerCo declared dividends of $4.5 million in the 2016 year, up from $3.3 million a year earlier. The operational cash flow shrank to $4.4 million from $5.2 million, and an outflow of almost $401,000 after investment and financing activities left the company's bank overdraft at $98,257 as at March 31.

(BusinessDesk)

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