Profit up 12% to $49.3 million

Media Release – 11 September 2019

Port Otago Limited’s 2018/19 financial year result of $49.3 million is up 12% on last year and represents a 10.1% tax-paid return on equity.

Shareholder equity broke the half billion dollar mark for the first time, increasing to $508 million with an equity ratio of 84% at June 2019.

Port Otago Chairman David Faulkner said he was proud of the result. "Considering Port Otago started with $20 million of equity 30 years ago, the company now has a strong financial base to take advantage of future investment opportunities."

The healthy result was driven by increased port operations revenue – specifically bulk cargo, wharfage and cruise vessels– as well as increases in investment property rentals.

Bulk cargo volumes of 1.8 million tonnes were up 5% on last year, with logs increasing 8% to another record volume of 1.15 million tonnes. Cruise ship activity also broke last year’s record: 115 ships visited Dunedin during the year – up 32% on last year’s total of 87 ships.

The EBIT contribution of Port Otago’s property investment arm Chalmers Properties Limited (CPL) to the group’s result was $22.0 million – up from last year’s $20.0 million. It was driven by investment property rentals, sales of land from the Te Rapa Gateway development ($22.7 million) and the sale of selected Dunedin ground leases. The annual revaluation of the investment property portfolio provided an unrealised gain of $22.8 million.

Presenting the financial results to Port Otago’s shareholder Otago Regional Council today, Mr Faulkner said the result reflects positively on the company’s balanced portfolio, which is a mix of property investment, cruise, bulk cargo and container services.

"The growth in our cruise business is pleasing to see – up 32% on last season and expected to be up another 13% this cruise season. Dunedin’s total of 238,000 cruise passenger numbers is second only to Auckland. Those visitors are estimated to spend $60 million in our city. As a business, we invested $23 million in extending our multi-purpose wharf at Port Chalmers – mainly to accommodate more and larger cruise vessels. To see this investment filtering through and substantially benefiting the Dunedin economy is particularly pleasing to our Board."

Mr Faulkner said the past year also included completion of the Next Generation project. "That has been a $45 million investment over 10 years and involved significant upgrades to infrastructure across the business. Our thanks to the vision and dedication of everyone who had a part to play."

Other highlights of the 2018/19 year include a significant programme of work assessing and mitigating critical risks, to improve the safety of our team. "Alongside that work, we also invested $500,000 in a new rostering system which gives us real-time insights into individuals’ rosters and improved visibility of potential fatigue events."

Looking to the year ahead, Mr Faulkner said container volumes are expected to reduce, as global conditions slow and international shipping lines optimise networks to reduce their costs. Recent pricing pressures in international log markets are also likely to negatively impact log volumes and the business.

"However, on the upside, we will welcome a record number of cruise ships and passengers to Dunedin. And Chalmers Properties is scheduled to deliver increased earnings through its industrial investments in Hamilton and further sales of developed land at Te Rapa Gateway."


Contact

Mr David Faulkner Mr Kevin Winders
Chairman, Port Otago Limited Chief Executive, Port Otago Limited
Tel 027 495 7576 Tel 027 432 1530

 

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Annual Report 2019