Port of Tauranga plans $140 million capital return

Port of Tauranga posted a 2.3% drop in full-year profit, missing some estimates while announcing plans to return $140 million to shareholders over four years and a five-for-one share split to boost liquidity.

The first instalment of the capital return is by way of a fully imputed special dividend of $34 million, or 25c a share, and the share split has a record date of October 17.

"Port of Tauranga chairman David Pilkington says the company will retain a strong balance sheet while returning excess capital in a tax-effective manner.

"A return of the full $140 million to shareholders will still ensure the company retains a conservatively geared balance sheet and an investment grade credit rating," he says.

The share split "follows strong inquiry from Port of Tauranga's retail shareholders and share market analysts" and is "a measure taken to enhance liquidity in the market for shares," Mr Pilkington says.

Profit fell to $77.3 million, or 56.8c a share, in the June year, from $79.1 million, or 58.2c, a year earlier.

Operating revenue fell to $245.5 million from $268 million, which the company says partly reflected having to equity account Tapper Transport as an associate company within its Coda partnership.

The port company has been reviewing its capital needs because its five-year, $350 million capital expenditure programme, which has included dredging its shipping lanes to accommodate bigger ships as soon as October this year, adding cranes, straddle carriers and tugs, expanding its wharf and marshalling areas, and buying property, comes to an end in 2017.

“It is in a sound financial position with strong prospects," Mr Pilkington says. "We are looking ahead to the future with confidence."

The company will pay a final dividend of 30c, also tax paid, lifting ordinary payments for the year by 1.9% to 53c. Including the special dividends, payments are 78c.

Port of Tauranga has 136 million shares on issue and a market capitalisation of $2.6 billion. TrustPower, which has a market cap of about $2.57 billion, has 316 million shares outstanding.

The company's shares rose 2.2% to $19.75 on the news, even though full-year profit missed forecasts of about $79.8 million.

Container volumes rose 12% to 954,006 TEUs (twenty-foot equivalent units) in the year, and MetroPort alone recorded a 39% increase in volumes to 248,309 TEUs. Total cargo throughput slipped to 20.1 million tonnes from 20.2 million, reflecting a drop in bulk cargo to 9.4 million tonnes from 10.6 million tonnes.

The port recorded a decline in log export volumes, meat, fertiliser bases, grain and dairy food supplements, while volumes of sawn timber, paper products, dairy products, kiwifruit and oil products rose.

The company plans to provide guidance for the 2017 year at its annual meeting on October 20.

(BusinessDesk)