Lyttelton Port profit boosted by insurance payments, takeover decision set for Monday

Lyttelton Port Co [NZX: LPC], Christchurch's ocean trade hub, posted a jump in annual profit and paid off its debt after settling insurance claims resulting from the 2011 Canterbury earthquakes.

Profit surged to $343.2 million, or 335.6 cents per share, in the 12 months ended June 30, from $16.9 million, or 16.5 cents, a year earlier, the port company said in a statement. The earnings were swelled by an after-tax insurance payment of $328.2 million in the latest year, compared with a gain of just $1.8 million the year earlier. One outstanding matter with a third party may result in an additional recovery, the company said, without providing further details.

The port company said it had used its insurance money to repay its debt in February. It had $30.57 million of debt in 2013.

Lyttelton Port's underlying earnings, excluding the earthquake payments, were flat at $15.1 million, the lower end of its forecast range of $15 million to $16 million, as expenses rose faster than sales. Revenue rose 4.7 percent to $115.8 million, the company said. Employee expenses jumped 11.6 percent to $47.3 million, while the cost of materials and consumables utilised increased 12 percent to $28.8 million.

In the latest year, total container volumes rose 7.2 percent to a record 376,567 twenty-foot equivalent units as the port benefited from increased dairy exports, imports for the Christchurch rebuild and the continuing strength of the Canterbury economy, the company said. Dry bulk imports rose 18 percent to a record 769,019 tonnes, reflecting increased demand for fertiliser, grain and cement. Log exports rose 63 percent to a record 601,485 tonnes, largely as a result of trees felled by storms in October last year. The number of ship visits rose 14 percent.

The port company's board will hold a special meeting on Monday to consider a takeover offer from its majority owner, Christchurch City Holdings, the city's infrastructure investment arm. It expects to make a recommendation to shareholders following the meeting, and will also decide whether to authorise dividend payments which are a condition of the takeover offer, it said.

Christchurch City Holdings, which already owns 79.6 percent of the port company, earlier this month said it had agreed to buy Port Otago's 15.5 percent holding which would comfortably take it above the 90 percent threshold to compulsorily acquire the rest of the shares. It will offer $3.95 a share for remaining stock in the port company, valuing the business at about $404 million. As part of the agreement, Lyttlelton Port would pay a special dividend of 20 cents to existing shareholders, using any imputation credits to pay the tax.

Shares in Lyttelton slid 0.7 percent to $4.11.

(BusinessDesk)