South Port profit falls 4.3% on costs to handle higher volumes

The port company experienced a 25% surge in cargo volumes in 2011, which required more spending on workers, plant and infrastructure. 

BUSINESSDESK: South Port New Zealand, the nation's southern-most port company, posted a 4.3% drop in full-year profit on costs to handle higher cargo volumes and increased insurance premiums.

Profit was $5.99 million in the 12 months ended June 30, from $6.26 million a year earlier, the Bluff-based company says. Sales rose 3.5% to $26 million.

The port company experienced a 25% surge in cargo volumes in 2011, which required more spending on workers, plant and infrastructure.

"The costs of the additional resources and higher insurance premiums resulted in a 5% decline in operating profit," it says.

Total cargo through the port was at a record level for a second year, it said. The shares last traded at $3.27 and have declined 4.1% this year. Containerised cargo slipped to 32,500 TEU from 33,000.

"Container shipping lines are entering business alliances and vessel sharing arrangements which are designed to reduce operating costs in what can only be described as a brutal freight market," chief executive Mark O'Connor says.

Log exports through the port fell by 27% and raw materials imported for Rio Tinto's aluminium smelter dropped, reflecting a 15% decline in production capacity at the plant.

A high exchange rate, low aluminium prices and uncertainty over the price of electricity drove the decline at the smelter, the port says.

The company will focus on cost containment in the current year, saying New Zealand is not immune from global economic ills. It does not expect any profit growth in 2013.

South Port will pay a final dividend of 14.5 cents a share, making 20 cents for the year, unchanged from 2011.