Ports of Auckland full year profit almost doubles as volumes rise, costs kept at bay
Ports of Auckland posted a 90 percent gain in full-year profit, after lifting volumes of containers and breakbulk freight while reining in costs and using offsets to reduce its tax bill.
Profit rose to about $74 million in the 12 months ended June 30, from $38.9 million a year earlier, the Auckland City-owned port company said in a statement. Sales from services rose 18 percent to $219.9 million, while the cost of services rose a more modest 4.6 percent to $98.6 million.
Like its rival Port of Tauranga [NZX: POT], the Auckland port company has been extending its reach by developing cargo hubs elsewhere in the country to win a greater share of the nation's freight. Last week, it teamed with Napier Port and logistics firm Icepak to build a $20 million inland port and freight hub in Palmerston North. After operations were disrupted by strikes in 2012, Auckland has lifted volumes in each of the past two years and for the latest year will pay a dividend of $66.6 million, up 126 percent on a year earlier.
"Auckland is growing and so is its freight demand," said chief executive Tony Gibson. "At the same time, competition in the port sector is growing and pressure from shipping companies on pricing is becoming more intense as that industry itself undergoes significant change."
Container volumes rose about 18 percent to 968,741 TEUs in the latest year, though the company flagged it would lose volume after shipping line Maersk elected to shift one of its services to Tauranga. Ports of Auckland is buying a new tug, straddles and crane, a longer container wharf and a new truck grid to help drive productivity growth.
"While the past year has been good, the year ahead will be challenging," Gibson said. "The growth in container volumes was a one off as we recovered from a low base and we will also lose volume after Maersk moved a major service away from Auckland."
Non-containerised, or breakbulk freight rose 26 percent to 5.68 million tonnes. The number of cars that moved across its wharves rose 22 percent to 207,591, while ship visits rose 5.3 percent to 1,541.
Ports of Auckland has released its results on the same day Port of Tauranga is due to post earnings. Tauranga is expected to lift profit by 1.8 percent to $78.6 million, according to brokerage Forsyth Barr. Sales are seen rising to $267.8 million from $244 million.
Notes to Ports of Auckland's accounts show it would have paid tax of $21.7 million at a company rate of 28 percent but was able to reduce that using a "loss offset utilisation" of $16.2 million and a tax credit of $1.5 million, meaning its tax bill in the latest year was trimmed to $3.6 million from $6.4 million a year earlier.
The notes say the company, which is owned by the council's Auckland Council Investments, used losses from the wider Auckland Group of about $48 million, up from $37 million a year earlier. "A subvention payment and loss offset election with Watercare Services Limited has resulted in $42,560,000 (2013: $27,786,000) losses being purchased from Watercare Services Limited," the note says. Remaining losses came from other entities in the group.