Port of Tauranga's profit edges up

Port of Tauranga's [NZX: POT] annual profit growth slowed to 1% as log export volumes declined, leaving total export volumes unchanged. Revenue growth also stalled.

Profit was $79.1 million in the 12 months ended June 30, from $78.3 million a year earlier. Profit met the guidance it gave in February. Operating revenue rose to $268.5 million from $266.5 million.

New Zealand's biggest port for commodity exports has extended its reach across the nation, aiming to become the pre-eminent hub serving what is expected to be fewer visits by larger ships in the future.

It has awarded a contract to deepen the Tauranga harbour channel to allow the next generation of 6500 TEU (20-foot equivalent container unit) ships.

It has also extended its relationship with Kotahi, the logistics group owned by Fonterra Cooperative Group [NZX: FCG] and Silver Fern Farms, in a new joint venture called Coda, which will move containers and bulk cargo to and from ports and freight hubs.

Tauranga isn't alone in expanding its reach. Ports of Auckland yesterday announced plans to open a freight hub in the Bay of Plenty, near its rival's centre of operations, in a deal with logistics firm Toll Holdings and land owner Triton Pacific.

In the latest year, the number of containers crossing Tauranga's wharves rose 12% to 851,106 TEUs, which the company says was helped by its relationship with Kotahi under which agreed volumes of containers were delivered.

Total export volumes were unchanged at 13.3 million tonnes "with strong rises in dairy commodities, meat, kiwifruit and general freight offsetting falls in logs, sawn timber, apples, onions and steel," the company says.

Imports rose 8% to 6.9 million tonnes, driven by a 55% jump in cement to 165,503 tonnes, which the company says reflects the strength of the local construction industry.

Car volumes more than doubled to 11,607 units. General cargo rose 22% to 3.2 million tonnes, although imports of grain fell 13%, bulk liquids dropped 6% and coal imports tumbled almost 100%, which it attributed to a decline in thermal coal generation.

"Trade volumes are expected to be slightly higher in 2016," chief executive Mark Cairns says. "At this stage, we are expecting log volumes to be similar to the last financial year. With the low dairy payout, fertiliser and dairy food supplement volumes are expected to decrease, but these will be offset by an increase in kiwifruit and container trade."

He said container volumes rose 19% in the first month of the current financial year.

Port of Tauranga expects dredging of the Tauranga harbour to start in October and it expects to have the infrastructure in place to handle 6500 TEU ships in late 2016. Container volumes are forecast to exceed one million TEUs in 2017.

The company will pay a fully-imputed final dividend of 30c a share on October 2, with a record date of September 18, bringing total payments for the year to 52c, up from 50c in 2014.

Its shares last traded at $17.63 and have gained 15% in the past 12 months, outpacing a 12% gain for the NZX 50 Index. The stock is rated a 'sell' based on the consensus of five analysts polled by Reuters.

(BusinessDesk)