Port Otago posts another solid result

Media Release – 28 September 2022

Port Otago Limited today announced a 2021/22 profit of $70.5 million and an annual dividend of $13 million to its shareholder, the Otago Regional Council (ORC).

The financial result is down $24 million on last year's record $94.5 million profit; the dividend is up, from $10 million last year.

Included in this year's result was a $60 million unrealised investment property revaluation increase, down from $82 million last year.

Shareholder equity increased 9 per cent, to $694 million. The equity ratio remains strong at 82 per cent at 30 June 2022, which is towards the top end of the Statement of Corporate Intent range of 70% to 85%.

Port Otago Chairman Paul Rea presented the financial results to the ORC this afternoon. He says the board is pleased with the result, given the year's challenges. "Alongside ongoing shipping and supply chain disruption, we also faced the impact of inflationary cost pressures and New Zealand's labour and skills shortage."

The underlying profit for the year was $17.6 million – down 18 per cent on last year's $21.4 million – with two warehouse developments constructed, compared to three last year. Port Otago uses the underlying profit measure to assist understanding of business performance, due to revaluation changes potentially distorting financial results and making it difficult to compare profits between years. Underlying profit is calculated as profit for the year before property revaluations, adjusted for the margin on current property development projects.

Mr Rea says bulk business volume was 1.7 million tonnes – down 11 per cent on last year's record volume. "This decrease directly reflects the 16 per cent decrease in log exports, as New Zealand exporters managed in-market price fluctuations, particularly in China."

Container throughput was down 5 per cent on last year. "Export and import volumes were similar to the previous year, so we are seeing a consistent flow of cargo in and out of our region. The 5 per cent drop relates to fewer transship containers passing across our wharves."

Cruise income was again zero for the entire financial year, Mr Rea says. "But we are looking forward to reporting favourably on this aspect of the business in a year's time, when we've serviced the 100-plus cruise vessels booked for this season."

Port Otago also released its integrated report. Mr Rea says "This is our third year of integrated reporting and, each year, our approach to decision making becomes more considered and thorough. Integrated reporting has given us a framework to meaningfully build sustainability into our thinking as a board, and how we act as a company. I would not have believed such a step change was possible in three short years and I'm very proud to be part of the team that's embraced this significant change."

Part of the integrated reporting process is identifying the company's highest priorities. "Safety will always be at the top of the list. Sadly, that became front of mind during the year, with two fatalities at other ports. These deaths underlined the responsibility we all have to ensure a safe workplace."

Port Otago's Total Recordable Injury Frequency Rate (TRIFR) – an across-industry measure that combines several injury metrics – halved, from 10.5 per million hours worked last year, to 5.1 for 2021/22. "Safety can never be ticked off, but improving lag indicators reflects our investment in management of critical risks. During the past year, we launched an in-house Safety Leadership Programme to upskill our frontline leaders and safety reps. It gives our leaders skills to improve safety in our workplace, speak up and act preventatively."

Late last year, Port Otago undertook a series of face-to-face workshops with the entire workforce, to better understand what it is like to work for the company and to identify improvements. "This was extremely worthwhile and has provided us with specific ‘work ons' that will make Port Otago better for our team. Key areas for attention included improving work-life balance for our rostered teams and an increased focus on wellness and communication."

The Te Rauone Beach project would have been completed during the financial year, if not for global supply chain issues holding up delivery of new pumping equipment, Mr Rea says. "But sand renourishment work is about to start and we are looking forward to the beach being ready for the upcoming summer holidays.

"Looking ahead, the welcome return of cruise will make for a busy summer and positive contribution to our bottom line. Global shipping congestion is finally beginning to ease and container shipping reliability should steadily improve. Bulk cargo volumes are expected to track at current levels. On the property front, we will continue our investment in Hamilton's Te Rapa Gateway development to generate future rental income and meet our strategic objective of delivering an appropriate and consistent dividend to the ORC, year on year."

Mr Rea thanked the company's 290-strong kaimahi for their continued professionalism. "We're a leaner company than we were pre-Covid, but the calibre and competency of the individuals within our team now is higher. I've noticed a greater sense of purpose and pride, and this is evident in the quality of our service to customers and interactions with other stakeholders."

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Annual Report 2022