Port Otago half-year profit up 69%

Work is on time and on target for Port Otago's $21 million wharf redevelopment at Port Chalmers. Photo: ODT files
Work is on time and on target for Port Otago's $21 million wharf redevelopment at Port Chalmers. Photo: ODT files
Port Otago's strong half-year result and profit has been marred by expectations an asbestos shed demolition will cost $2 million to $3 million - coming off its full-year bottomline result.

In its half year to December presentation to 100% owner the Otago Regional Council yesterday, Port Otago chairman Dave Faulkner said first-half trading results were ''excellent'', but went on to caution the ORC that second-half trading would be impacted negatively in dealing with the shed demolition.

''Its hard to see the second half being as good as the first half ... we're going to incur significant costs which will have to be included at the end of the year,'' Mr Faulkner said.

Total revenue for the half rose from $37.4 million to $52.3 million, while after-tax profit was up 69% from $6.1 million to $10.3 million.

Port Otago will pay the ORC a $3.5 million dividend - the same as last year - bringing total dividends paid to council since 1988 to just under $160 million.

No financial guidance for full-year expectations was offered to the ORC, nor mention of any impact on the year-end dividend.

Port Otago chief executive Kevin Winders said a recent contractor's report on the shed meant it could not be repaired and would have to be demolished.

Port Otago trading for the half was helped by container trade rising 25% to 97,300 TEU (twenty foot equivalent units). Favourable spring conditions boosted export volumes 17% and imports, especially for agriculture, were up 24%.

Conventional cargo volumes rose 15% to 907,000 tonnes and log exports were up 19% to 580,000 tonnes.

Mr Faulkner expected that at the current rate, log exports should hit a record 1 million tonnes for the full year.

Subsidiary company Chalmers Property settled $8.8 million of land sales at its Te Rapa Gateway commercial building precinct near Hamilton, which after costs delivered $2.5 million to Port Otago.

Also noted by Mr Winders and Mr Faulkner was changes to shipping lines' visiting schedules, following consolidation and mergers of global shipping companies during the past two years.

Mr Faulkner said while Port Otago was ''a small part of the network'' of commercial ports in New Zealand, he was confident the attraction of deep water channels and proximity to the shortest passage to Singapore remained an attraction.

When questioned about the depth of the Victoria Channel, between Port Chalmers and the upper harbour, Mr Faulkner said even if dredged, access for bigger container ships and larger cruise liners was restricted, because of manoeuvrability issues, and also by the narrow passage between Goat and Quarantine Islands.

Of Port Otago's $26 million in capital expenditure, the present $21 million wharf extension at Port Chalmers was on time and on target for completion in October next year.

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