Log ship vacuum eats into revenue

CP Nanjing (top left) approaches Port Chalmers as Rio Madeira is worked on yesterday. PHOTO:...
CP Nanjing (top left) approaches Port Chalmers as Rio Madeira is worked on yesterday. PHOTO: LINDA ROBERTSON
Lower prices caused by weaker demand from China has seen log export volumes drop by 30% at Port Otago in the first half of the financial year.Yesterday, the Otago Regional Council-owned company released its half-year results to December 31, 2021, which showed log volumes dropped to 441,000 tonnes compared with 626,000 tonnes in the same period in 2020.

That was caused by weaker demand from China before Christmas, chief executive Kevin Winders said.

During November and December, there was almost a "complete shutdown" of the log market."

There were virtually no log vessels through that period."

It picked up again in the new year and it was forecast the log market would recover some of its lost ground in the next six months, he said.

The port’s total profit for the period dropped by 64% to $6.5million, compared with $18.2million the year before.

Mr Winders attributed the drop to an unrealised investment property revaluation of $12.5million that occurred in the first half of the past
financial year.

Operating profit — total earnings from core business functions — rose 0.5% to $8.45million.

Operational challenges due to Covid-19, such as global shipping delays, had become "part and parcel" of how the port operated and was not expected to change soon.

Container volumes for the six-month period were down 13% to 73,900 20-foot equivalents due to vessel disruption and a lack of empty containers.

Chairman Paul Rea said shipping reliability had never been so low — at present about 32% compared with the 80% mark typical for this time of year.

Mr Winders hoped once the peak of Omicron passed, there might be "some light at the end of the tunnel" and the company could start looking at a post-Covid way of operating.

With the Government’s plan to reopen the borders, it was hoped cruise ships would return next summer, he said.

The result

Port Otago Ltd’s half year results to December 31, 2021.—

Profit down 64% to $6.5m

Revenue down 3% to $41.6m

Property rentals up 13% to $15.2m

Dividend to ORC up 33% to $6m  


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