Tauranga port income stream changes

Port of Tauranga's loss of container trade is being offset by a rise in bulk cargo. Photo supplied.
Port of Tauranga's loss of container trade is being offset by a rise in bulk cargo. Photo supplied.
The shape of Port of Tauranga's earnings is changing, as accelerating bulk volumes offset a near-term fall in container numbers, Forsyth Barr broker Suzanne Kinnaird says.

The greater contribution from the Mount Maunganui bulk wharf was offsetting the fall in containers at Sulphur Point.

''Our earnings revisions conclude little change in profitability in the 2014 financial year but a changing composition.''

Ms Kinnaird said $1 million of revenue of bulk cargo was worth more to profitability of the port company than $1 million of container revenue.

The port incurred costs in loading and discharging containers but the stevedoring and marshalling of bulk goods was undertaken by the shipper.

The net $1.6 million fall in Forsyth Barr's port operation revenue estimate for 2014 equated to just a $400,000 fall in group operating earnings forecast, she said.

Bulk cargo volumes, led by increased log exports, were booming at Port of Tauranga. Log ship departures during the first half of the financial year totalled 173, according to shipping stem data on the company's website, up 12% on the previous corresponding period.

International trade - exports and imports - accounted for nearly 95% of bulk volumes at the port, with exports accounting for the majority.

Port of Tauranga was losing a share of the container market to Ports of Auckland. In the three months to September, Port of Tauranga's container numbers were down 13%.

''In part, we suspect the Fonterra - a key shipper of export product through the port - food safety scare impacted performance as dairy exports slowed through August.''

In contrast, Ports of Auckland increased its container throughput by 11%, Ms Kinnaird said.

Port of Tauranga was expected to continue to lose share to Ports of Auckland through the rest of the financial year. Ports of Auckland had significantly improved its productivity rates which had helped restore shipping line confidence in the port.

On the other side, Port of Tauranga was attempting to secure volume commitments from shippers, notably Kotahi, which would allow it to start dredging but also retain volume that may have naturally reverted back to Auckland, she said.

Forsyth Barr's 12-month share price target for Port of Tauranga increased slightly from $13.80 to $14.10 with a hold recommendation on the shares. Yesterday, the shares were trading at $13.58.

Port of Tauranga had historically traded at a material premium to the market and that was expected to continue, Ms Kinnaird said.

 

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