Council-owned Port Otago has posted $49.3 million net profit after tax for its 2018/19 financial year with some headwinds expected for the year ahead.
Net profit was up 21% year-on-year while revenue was $121.7m compared to $109.4 in the previous year.
Increased bulk cargo, cruise vessels and container services plus increases in investment property rentals, helped lift operation revenues.
Looking ahead, 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.
Sales of $22.7m of developed land from the Te Rapa Gateway development in Hamilton was recorded, up from $19m last year.
Excluding the cost of sales of investment property inventories, operating expenses increased by 8% from $64.8m to $70.2m, driven by the increased activity through the port. Before unrealised revaluations and tax, the group operating profit was up $5.4 million on the previous year to $35.3 million.
Shareholder equity increased to $508 million with an equity ratio of 85% at June 2019. Bank borrowings reduced to $56 million, down from $78 million last year.
Port Otago chairman David Faulkner says he is 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,” he says.
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 with 115 ships visiting Dunedin during the year – up 32% on last year’s total of 87 ships.
Faulkner says 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.”
Faulkner says 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 significant work to improve the safety of port workers.
“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,” Faulkner says.
