Port of Tauranga posts 7.3% profit rise; calls for rationalisation

Port of Tauranga has posted a $45.2 million annual profit, up 7.3% on last year despite a 3.5% fall in revenue, but is calling for a “port hierarchy” to head off falling revenues in the port industry.

Net profit for the year ending June was up more than $3 million on 2008’s result, although total operating revenue fell 3.5% to $143.6 million as the amount of cargo coming through the port dropped.

A final dividend of 18 cents per share brings the total for the year to 27 cents, up 8% on 2008.  

Container throughput was down 4% to 546,521 TEUs (twenty-foot equivalent units) while total trade fell to 13.5 million tonnes, although the company has noted a “substantial increase” in dairy and log exports.

In his chairman’s report, John Parker said the result was “very pleasing” considering the circumstances.

“The financial market collapse caused a commodity boom to turn to bust and for Port of Tauranga, meant considerable change to trading patterns with overcapacity, especially in container shipping.”

Mr Parker said the past year had shown the urgent need for port rationalisation, with the expenditure of hundreds of millions of dollars on infrastructure required to accommodate newer and larger container ships which want to begin servicing New Zealand.

“That cost and the requirements of these vessels to make at most two New Zealand port calls and to discharge and load big tonnages quickly means that New Zealand cannot afford or service more than two such ports. A port hierarchy must develop where other ports feed in cargoes to the two primary ports by road, rail and sea.”

He said this would lead to substantially lower costs for shippers and that port owners needed to move now or falling revenues and market forces will dictate change.

He cited the recent move by Fonterra to start consolidating their exports on fewer ports, including Port of Tauranga, as part of that process.

While he remained cautious about the coming year, Mr Parker said the port’s strong balance sheet, operating efficiency and diverse cargoes left it well-placed to ride out the uncertain short term and participate strongly in any export-led recovery to the economy.

With $33.5 million paid out in dividends and investment of $38.5 millioin capital expenditure, the company now has a gearing of 29.4%.

Mr Parker said its bank facilities had been negotiated at “very favourable rates” prior to the current credit crisis and running through to December 2010, while discussions had begun with its bankers over new debt facilities with effect from 30 June 2010.

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