Difficult spring conditions impact on port result

Media Release – 26 February 2020

The Port Otago Group today announced a half-year profit of $7.0 million for the six months ended 31 December 2019. The result is 16% down on the comparable period of the 2018/19 financial year.

Port Otago Chairman Paul Rea said the result is solid, given the cold wet December quarter experienced across many parts of Otago and Southland. “This impacted on export milk and meat production, which flowed on to have a direct impact on port operations. There was simply less export product to be shipped.”

“So, while total revenue was 2% higher due to increased sales of property inventories, revenue from marine and cargo services reflected those lower export volumes.”

Total container throughput for the period was 89,000TEU (Twenty-foot Equivalent Units) – down 4% on the same period last year. Full export chilled/frozen container volumes were up 10%, but offset by a 5% reduction in export dry containers, which generally contain dried milk powder and timber products.

Total bulk cargo volumes were 1% lower, at 860,000 tonnes, as export log volumes reduced by 5% to 528,000 tonnes.

“However, volume was a relatively pleasing result, given the significant fall in export log pricing in the early part of the season,” Mr Rea said.

The cruise aspect of Port Otago’s business was flat for the six-month period, with 42 cruise vessel arrivals, compared to 43 over the same period last season. This was the direct result of weather conditions, which saw four ships cancel. In Fiordland over the same period, 23 cruise vessels were piloted by Port Otago pilots, down from 29.

Total operating expenses were $36.2 million – up 8% – reflecting higher staff costs, increased marine maintenance, higher fuel costs and container yard maintenance.

Overall, the group EBITDA was $16.3 million, compared to $17.3 million for the previous comparable period. Shareholder equity increased to $515 million from $508 million at June 2019. The group’s equity ratio is a healthy 81%, with bank debt at $83 million – $8 million lower than the same time last year.

Looking forward, Mr Rea said the company remained focused on understanding critical risks and developing improved mitigations to keep people safe. “Good progress has been made in the first half of the year, with hard concrete barriers installed at the Port Chalmers container depot and improvements around the truck exchange area that remove the risk of man and machinery meeting.”

“Behind the scenes, our TimeTarget rostering system continues to be developed. It is being introduced to improve visibility of rosters for staff and to manage fatigue.”

Mr Rea said the second half of the financial year would be challenging, with the impact of the Coronavirus slowing the export of commodities and impacting supply chains. “However, Chalmers Properties Limited is forecast to deliver another stable result, with several land sales settling in thesecond half of the financial year.”

Port Otago Group directors declared an increased interim dividend of $4.5 million – up from $3.6 million last year. The dividend reflects the board’s confidence that future property earnings are expected to buffer the impact of forecast lower earnings from port operations.


Contact

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

 

Interim2020

Interim Report to 31st December 2019