Acceptable half-year result for Port Otago

Media Release – 23 February 2022

The Port Otago Group today announced a half-year profit of $6.5 million for the six months ended 31 December 2021.

The comparable 2020/21 result was $18.3 million. However, this included a $12.5 million unrealised net change in the value of investment property. A more meaningful comparison is last year's underlying profit of $10.2 million, which is $3.7 million higher than the comparative six-month period this year. The difference is due to the timing of property developments, with two projects completed before 31 December 2020, while all 2022 projects were still works in progress at 31 December 2021.

Port Otago Chairman Paul Rea says the result is acceptable, given the ongoing impact of Covid-19 and consequent shipping disruptions. "Global shipping reliability has never been so low – currently around 32% reliability, compared to the circa 80% mark typical of this time of year. Our team has done extraordinarily well, as we enter a third year of unpredictability. Everyone has kept their eyes on our core business and that collective momentum has seen the company deliver an acceptable profit."

Revenue from marine and cargo services was down 12% on the comparable period, due to a slowdown in log exports and reduced container TEU (Twenty-foot Equivalent Unit) throughput. Container volumes were down 13% – to 73,900 TEU, from 84,500 – related to the global vessel disruption and a lack of empty containers.

Export volumes dropped 4%, but are expected to recover in the second half of the financial year. During the six months, 441,000 tonnes of logs were exported – 30% down on the 626,000 tonnes exported during the last comparative period. This reflects lower log export prices and slowed demand from China, pre-Christmas.

Mr Rea says the Group's investment property portfolio again buffered the company from the full impact of shipping disruptions. "Property rentals increased 13% to $15.2 million. Alongside this lift in cash flow, interest in our design/build/lease projects continues to be strong. Three new projects were signed for office/warehouses at the Te Rapa Gateway Industrial Park in recent months. These are due for completion early next year and then become part of our investment portfolio that generates earnings into the future."

Mr Rea says three significant projects warrant mention. "Purchase of the Maclaggan Street Warehouse building – to be the Otago Regional Council's new head office – was settled in August. The Te Rauone Beach breakwater groynes were almost completed pre-Christmas, with only a handful of weeks' work left. By April, the stage will be set for our marine plant to begin building up the new beach with sand dredged from the harbour. Finally, work on the replacement office building/Port Chalmers Maritime Museum extension commenced."

Looking ahead at the six months to 30 June 2022, Mr Rea is realistic. "Container flows and shipping will continue to be disrupted in the medium term. Because of our agricultural bias in the south, export volumes should be similar to last year, while bulk volumes – predominantly logs – are forecast to recover some of their lost ground. Within the property portfolio, completed builds will translate into new rental income. Alongside market movements in rental growth, this will see property earnings increase in the second half."

Directors declared an interim dividend of $6 million – up from $4.5 million last year – which will be paid this month.


Contact

Mr Paul Rea Mr Kevin Winders
Chair, Port Otago Limited Chief Executive, Port Otago Limited
Tel 021 993 700 Tel 027 432 1530

 

InterimDec21

Interim Report to 31st December 2021