South Port is reporting a 19.7% lift in net profit after tax to $12.8 million for its full-year result in spite of supply chain disruption to containerised trade and an ongoing fluctuation in the log trade.
Operating revenue for the Bluff-based port operator was up 2.7% to $48.5m with cargo volumes up 2.8% to 3.5 million tonnes.
The port handled 44,000 TEU during the year, down 18.5% compared to 54,000 TEU in the previous year.
Bulk cargo volumes were up by 6.1% at 3.1 million tonnes led by a 148,000 tonne increase in stock food volumes imported into the region.
Log and timber volumes collectively were down 13.9% at 667,000 tonnes.
Bulk cargoes supporting the NZAS aluminium smelter and the southern region’s agricultural sector have shown growth.
Volatility in shipping movements was reflected in a 24% reduction in calls at Bluff by container vessels.
While overall vessel calls dropped back to 305 calls, compared with 331 in FY21, South Port experienced an increase in bulk cargo trade.
The board confirmed a final dividend of 19.5 cents which brings the full-year dividend to 27 cents per share, the same as last year.
The port estimates that FY223 earnings will be down by 12.9% on the FY22 result. However, after removing the one-off items that occurred this year, underlying profit will be consistent with FY22 at approximately $11.2 million.
Port operations
Chief executive Nigel Gear says the port industry has come under scrutiny in recent times due to two tragic fatalities, most notably in the stevedoring sector.
“Safety first is our most important core value and is still very much front of mind in everything we do at the port,” he says.
South Port does not operate a stevedoring company; however it does contract local stevedores for a container service calling at the port.
“As a result, we are reviewing our operation to determine whether any additional changes need to be made to this activity in light of these tragic events.”
Gear says disruption in the container supply chain is continuing.
“The significant increase in demand for goods during the initial peak of the COVID-19 pandemic led to a shortage of container vessels, containers, and labour resources in the supply chain to handle these volumes. This resulted in containers being stranded worldwide, with no foreseeable resolution to this.
“COVID-19 continues to disrupt the China market where lockdowns are continuing in an effort to eradicate the disease creating major bottlenecks at container ports in this region,” he says.
“Log activity has similarly been impacted by a downturn in the construction sector and the COVID-19 lockdowns in the China market, the main destination for New Zealand radiata pine,” Gear says.
“This has led to a decrease in demand for logs shipped from New Zealand, which is expected to last until the end of the 2022 calendar year.”
All other bulk cargoes were either in line with expectations or slightly up on the previous period.
The NZAS at Bluff represents approximately 32% of the port’s cargo volume and 20% of NPAT.
Gear says South Port has enjoyed a close and valued working relationship with NZAS for 51 years.
NZAS and Meridian have announced that they are open to extending the life of the smelter beyond 2024 and are currently engaged in negotiations for an electricity supply contract.
The consensus appears to be that there is room for the NZAS to continue operating longer term and for a hydrogen plant to be established in the region.
The construction of the Town Wharf fuel berth accessway, pipeline corridor, and discharge platform has been completed, providing security for the fuel import sector and the other berth users for a minimum of the next 50 years, the company says.
In the past 24 months, significant work has been carried out in the container terminal to service this industry, including a new reefer tower, expansion of the storage footprint, and the construction of a new container wash area.
“The port has struggled with sufficient capacity to store containers and, to provide clear areas to safely repair containers in the depot operation. This expansion will provide breathing space for the coming 12 months,” Gear says
Cold store facilities provide refrigerated storage for meat and fish processing companies in Bluff and the surrounding region. This operation underwent a significant upgrade during the past 12 months.
The company is currently working through the consent process to deepen the port channel, swinging basin, and berth pockets from 9.7 metres to 10.7 metres and is now waiting for a decision, which is expected to be received later this year.
