Port of Tauranga posts 1.3% gain in full-year profit as container volumes fall, logs rise

Port of Tauranga [NZX: POT] posted a 1.3 percent gain in full-year earnings, excluding a year-earlier gain from an asset sale, as an increase in the volume of logs across its wharves made up for a decline in containers.

Underlying earnings were $78.3 million in the 12 months ended June 30, from $77.2 million a year earlier, the Tauranga-based company said in a statement. Net profit dropped 30 percent from a record $112 million a year earlier, when it took a one-time gain from the sale of its stake in logistics firm C3. Sales rose 9 percent to $266 million.

Both Port of Tauranga and Ports of Auckland have posted annual earnings today and the results show the impact of decisions made by global shipping lines such as Maersk, which has switched services between the two hubs. Tauranga's container volume dropped 10 percent to 759,587 TEU, which it attributed to the loss of Maersk's Southern Star service, while Auckland's container volumes rose about 18 percent to 968,741 TEUs. That's set to reverse because Tauranga has won back the service after a deal with Fonterra Co-operative Group [NZX: FCG] and Silver Fern Farms-led logistics company Kotahi.

Tauranga has ramped up its push to be the pre-eminent hub port in New Zealand, taking a 50 percent stake in PrimePort Timaru, developing a new freight hub south of Christchurch and inking the deal with Kotahi, which in turn made a 10-year commitment to ship containers with Maersk. Tauranga says the benefit amounts to 1.8 million export TEUs over 10 years.

"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," said chief executive Mark Cairns.

The company held off giving specific guidance for 2015, saying it would update shareholders at their annual meeting on Oct. 23. In the first month of the new year, log and container export volumes are up "however price pressure in the Chinese market are expected to impact on the volume of log exports in the short term," it said. It sees a rise in dairy volumes and "strong" volumes of imported fertiliser and dairy feed supplements.

The total volume of cargo across the port's wharves rose 3.5 percent to 19.7 million tonnes. In a presentation for analysts it said export logs now account for 47 percent of total exports of 13.4 million tonnes, up from 43 percent a year earlier and the biggest product by volume. Total log exports rose 12 percent in the latest year. Dairy accounted for 12 percent of exports, down from 13 percent a year earlier.

Of the 6.4 million tonnes of imports, grain/palm kernel used for dairy farm feed, made up 22 percent, up from 18 percent a year earlier. Fertiliser grew to 8 percent from 6 percent and oil imports were little changed at 20 percent of the total.

Port of Tauranga's shares rose 0.7 percent to $15.40 and have gained 4.8 percent in the past 12 months, lagging behind a 13 percent gain in the NZX 50 Index. Over five years the stock is up 140 percent, more than twice the benchmark index's advance. The company will pay a final dividend of 29 cents a share, fully imputed, making 50 cents for the year, up from 46 cents a year earlier. The record date is Sept. 19 for a payment on Oct. 2.

(BusinessDesk)