Port of Tauranga in new Kotahi joint venture as first half sales fall

Profit rose to $42.6 million in the six months ended Dec. 31.

Port of Tauranga [NZX: POT] posted an 8.2 percent gain in first-half profit as a gain on the sale of a stake in Timaru Container Terminal to logistics group Kotahi made up for weaker sales. It doesn't expect earnings to grow in the full year because of a downturn in forestry.

Profit rose to $42.6 million in the six months ended Dec. 31, from $39 million a year earlier, the Tauranga-based company said in a statement. Sales fell to $136 million from $137 million. Sales were below brokerage Forsyth Barr's forecast of $147 million.

Port of Tauranga lifted container volumes by almost 12 percent to 426,512 TEUs, a standard container size, in the first half, and dairy and meat export volumes also rose, although the gains were offset by a drop in log volumes.

The company separately today announced a 50-50 joint venture with Kotahi, the logistics company owned by Fonterra Cooperative Group and Silver Fern Farms, extending a relationship that includes joint ownership of the Timaru facility and agreements on freight volumes through Tauranga.

The new venture, called Coda, will include Tauranga's Tapper Transport unit, container packing firm MetroPack and 37.5 percent stake in MetroBox, which stores empty containers. Kotahi will pour its Dairy Transport Logistics business into the venture as part of transactions scheduled to settle on May 1. Coda is forecast to move more than 5 million tonnes of containerised and bulk cargo a year to and from ports and freight hubs, said chief executive Scott Brownlee, who was formerly CEO at DTL.

Shares of Port of Tauranga fell 1.5 percent to $17.35, having climbed 26 percent in the past 12 months, outpacing the NZX 50 Index's 16.5 percent gain.

Trade volumes are expected to improve over the second half of the year, the company said. "However, given the downturn in the forestry sector, we expect our full-year group net profit after taxc to be in line with last year's result," it said. Full year profit was $78.3 million in 2014.

In the first half, it made a $4.1 million one-time gain , relating largely to the sale of the stake in Timaru Container.

Total cargo rose 1.2 percent to 10 million tonnes in the first half. Growth in container volumes was offset by a decline in throughput of logs, which fell to 2.8 million cubic metres JAS equivalent from 3.4 million. Dairy volumes climbed to 842,000 tonnes from 771,000 tonnes. Fertiliser volumes rose to 325,000 tonnes from 273,000 tonnes, grain dairy dairy feed volumes rose to 704,000 tonnes from 590,000 tonnes.

Port of Tauranga has delivered a strong result for the first half, despite the drop off in log volumes," said chairman David Pilkington. "The 2014 alliance we struck with Kotahi is already driving increased freight volumes through the port."

The company will pay a first-half dividend of 22 cents a share, fully imputed, from 21 cents a year earlier, on March 20 with a record date of March 6.