South Port has posted a total net profit of $7.3 million for its full-year result, down 37% from $11.7m the year prior.
The NZX-listed bluff-based port says the result came amid “very subdued trading conditions” across all its major cargo categories, particularly forestry and agriculture.
The port’s total revenue was down 4.2% y/y to $56.2m for the 12 months to June 30. Earnings per share were 28.1 cents, against 44.6 cents last year.
The port welcomed two major developments in FY24 that it says will contribute to “financial stability and business growth in the longer term”.
This includes the commitment by New Zealand Aluminium Smelter (NZAS) to a 20-year electricity agreement which “will underscore a significant segment of the port’s annual revenue”.
Completion of project Kia Whakaū, the dredging of the Bluff Harbour, is also set to position the port for ongoing trade growth and larger vessels.
“It is particularly encouraging that these positive events reaffirm the potential for our regional port envisaged by local government and private investors when South Port listed on the New Zealand Stock Exchange 30 years ago this year,” chair Philip Cory-Wright says.
“The NZAS agreement will provide ongoing stability for a third of our cargo volume, enabling the smelter, the port, and the community to plan and re-invest with confidence.”
Following recent dredging of Bluff Harbour, the new draft of 10.7m, once formally declared, will provide an extra metre of draft, enabling larger ships to bring their supply chain efficiencies to South Port.
South Port’s result was negatively impacted by the Government’s recent decision to remove tax deductibility for depreciation on commercial buildings. This tax change resulted in a one-off deferred tax expense of $2.27m for the 2024 financial year.
Normalised net profit after tax (NPAT), excluding one-offs, was $9.96m.
The board declared a final dividend of 19.5 cents, representing a full year dividend of 27 cents per share amounting to $7.08m.
The dividend payment represents a gross return of 6.7% (net 4.8%), based on a share price of $5.61 as of June 30, 2024.
Cargo Result
The 2024 result reflected a 7.7% decrease in overall cargoes at 3,213,000 tonnes (2023 – 3,479,000 tonnes).
However, the year had a stronger finish, highlighted by a 24.5% increase in container volumes, the second highest on record at 51,900 TEU (2023 – 41,700 TEU), despite a similar number of calls (39 vs 38).
Core bulk cargo volumes were down by 12.2% at 2,673,000 tonnes (2023 – 3,043,000 tonnes), reflecting decreases in logs, fertiliser, and woodchip volumes.
Outlook
The agricultural and forestry-based sectors continue to face “particularly challenging conditions”. These are expected to be reflected in the volumes of bulk cargo being handled through the port.
“Demand in offshore markets remains subdued,” Cory-Wright says. “Supply chains continue to be disrupted, particularly around regions where conflict is present. These variables are out of our control and are not expected to improve in the near future.”
However, the company remains optimistic about future opportunities.
The NZAS extension is a major boost in providing consistency in vessel calls and base cargo that can now be factored into future planning.
A large majority of the project cargo associated with wind farm development activity is expected to be handled through the port in coming years, including Mercury NZ’s recently confirmed Kaiwera Downs Stage Two project.
There are also applications to the Fast Track Advisory Group for aquaculture projects in Murihiku including the Hananui ocean Salmon Farm, the Impact Marine land-based Salmon Farm and the Kelp Blue ocean kelp farm.
“The company’s diversity of cargoes provides us with resilience and helps to smooth out fluctuations in the market,” Cory-Wright says.
South Port estimates that FY25 earnings will be in the range of $9.3m to $10.3m.
