South Port lifts annual profit 16% on bigger volumes, says 2016 earnings will fall

South Port New Zealand [NZX: SPN], the Bluff port operator, lifted annual profit 16% as stronger cargo flows bolstered the hub's volumes, though the company anticipates the slowing economy will sap earnings in 2016.

Net profit rose to $7.7 million, or 29.5c per share, in the 12 months ended June 30, from $6.7 million, or 25.5c a year earlier, the Bluff-based company said in a statement. Revenue rose 11% to $34.6 million as total cargo grew 5% to a record 2.86 million tonnes on increased movements of fertiliser, stock food and dairy-related products.

"A more negative sentiment seems to have settled on the New Zealand economy since mid-2015 and anecdotal evidence in the market suggests a challenging trading period lies ahead for exporters," the company said. "Taking into account the more subdued market conditions, South Port is forecasting a lower level of tax-paid profit for the 2016 year."

Last month, the company said it beat its guidance for annual profit on the strength of the cargo flows, having earlier warned a lower dairy payout would weigh on movements in the future.

The board declared a final dividend of 17c per share, payable on November 9 with an October 28 record date.

The shares, of which the Southland Regional Council holds about 69%, last traded at $4.65, and have gained 18% this year.

South Port said the extension to NZ Aluminium Smelters' electricity contract with Meridian Energy provided greater certainty for the Tiwai Point smelter operator, and supported "any initiatives developed by the NZAS directors and management which will enhance this operator's prospects of being globally competitive."

Smelter-related cargo and petroleum contributed positively to the port's performance, with slightly higher volumes than a year earlier.

(BusinessDesk)