Imports drive Ports of Auckland profit higher

The country's largest container port has responded to a report criticising its performance by announcing an underlying net earnings for the year to June of $24.4 million, up 55% on last year.Ports of Auckland managing director Jens Madsen said the result was a pleasing turnaround for the company during a challenging economic environment.

The country’s largest container port has responded to a report criticising its performance by announcing an underlying net earnings for the year to June of $24.4 million, up 55% on last year.

Ports of Auckland managing director Jens Madsen said the result was a pleasing turnaround for the company during a challenging economic environment.

He said it was ironic to be releasing increased profits on the back of a lobby group report claiming local government control of ports had stymied efficiency gains, particularly at the Auckland port.

Mr Madsen said a healthier Ports of Auckland balance sheet combined with cost cutting measures and increased volumes had led to the improved profit.

Net profit after tax was $37.2 million, up from $5.4 million last year when the port was hit by asset writedowns and revaluations.

Normalised earnings (excluding asset sales and tax changes) climbed 55% to $24.4 million in the year to June 2010.

Earnings before interest, tax, depreciation and amortisation (ebitda) rose 6.4% to $72 million, while earnings before interest and tax rose 11.9% to $51.9 million.

Ebitda for the container division, the largest port business, rose 8.8%.

The port will pay a final dividend of $7.197 million to its shareholder Auckland Regional Holdings, a subsidiary of the Auckland Regional Council.

Overall container volumes reached a new high of 867,368 TEU (twenty-foot long containers), up nearly 3%, while full import volumes were up 4.2%.

Overall breakbulk or non-containerised volumes rose 6.7% to 2.8 million tonnes.

Vehicle unit volumes increased by a healthy 17.4% after a weak 2008/09.

“It remains difficult to tell if this represents an ongoing trend or simply a restocking after plant and stock was run down during the recession," Mr Madsen said.

Cruise ship visits fell from 69 to 62 but the port has forward bookings of 77 visits for the coming year.

Costs fell 3.1% to $113.8 million.

Mr Madsen highlighted a series of strategic milestones achieved during the year, including the completion of consolidating the Fergusson and Bledisloe container terminal operations, the introduction of the Seafuels bunkering service, the opening of the Wiri Freight Hub rail exchange and the establishment of the CONLINXX joint venture with NZL Group to manage the freight hub.

During the year the port was able to reduce debt by $90 million through the sale of Queens Wharf to the government and the Auckland Regional Council, a recapitalisation and a new bank funding arrangement.

Outlook
Mr Madsen said trade was still volatile and the outlook for the year ahead remained cautious.

Import volumes typically peak in September and October, with capacity becoming scarce toward the end of the year.

Mr Madsen said importers could be shifting goods now to get ahead of that peak.

“It has been a good year financially but it comes off a very challenging 2008/09 and volatility remains the feature of the operating environment we are in. As a result our outlook for 2010/11 remains cautious,” Mr Madsen said.