Port of Tauranga first-half profit falls on drop in log volumes

Port of Tauranga [NZX: POT] had a 9% drop in first-half profit as export log volumes fell and after the year-earlier result was inflated by a one-time gain.

The company’s guidance is for flat full-year earnings.

Profit fell to $38.6 million, or 28.3c a share, in the six months ended December, from $42.6 million, or 31.3c, a year earlier, which included a $4.1 million gain from an asset sale,

Profit about matched brokerage Forsyth Barr's forecast. Operating income fell 9.8% to $121.9 million.

The company warned shareholders at its annual meeting last October that earnings growth may stall in 2016 because of uncertainty about log and dairy export volumes, which could counter the benefits of increased container traffic.

Port of Tauranga has affirmed full-year profit is likely to be unchanged at about $79 million.

In the first half, log exports fell 16% to 2.4 million tonnes, although dairy volumes were up 29% and container volumes rose about 10% to 470,928 TEUs (twenty foot equivalent units).

The company is aiming to be the key hub port in the North Island servicing a future shipping trade with fewer, larger vessels that need deeper berths.

Freight will be brought around the coast from smaller ports to fill the big ships or to be carried by rail or road.

To accommodate bigger ships, the company is about a third of the way through its project to dredge Tauranga's harbour channels to a depth of 14.5 metres inside the harbour and 15.8 metres outside the entrance, work that's expected to be completed in July.

Port of Tauranga was the first in the sector to pioneer inland freight hubs, with its Metroport facility in Auckland, which helped a 24% increase in container volumes railed to Tauranga from Auckland.

Overall export volumes across its wharves rose 0.8% to 6.5 million tonnes, while import volumes rose 1.6% to almost 3.7 million tonnes.

The company will pay a first-half dividend of 23c a share, up 1c from a year earlier but below the 25.3c payment forecast by Forsyth Barr. The dividend will be paid on March 25, with a record date of March 11.

The shares last traded at $18.05 and have gained 2.6% in the past 12 months. The stock is rated a “sell” based on the consensus of five analysts polled by Reuters.

(BusinessDesk)