Property, export industries buffer port result from crisis

Kevin Winders (left) and Paul Rea. PHOTO: SUPPLIED
Kevin Winders (left) and Paul Rea. PHOTO: SUPPLIED
Port Otago has posted a near-record profit — despite declines in key port activities such as containers, logs and cruise ships.

The port company’s property arm led the way with investments growing in value by $27.9million (including Dunedin properties that rose $19.5million), and that was what pushed the after-tax profit to $50.5million for the year ending in June 2020.

Chairman Paul Rea described the property revaluation as "funny money".

"It has to be reported because of our property activity."

Overall, it was a full-year result Mr Rea was happy to deliver to the company’s shareholder, the Otago Regional Council, alongside his chief executive Kevin Winders yesterday.

"The important thing of course is the underlying profit before the property revaluation and even that, given what we’ve been through in the last 12 months, is a damned good result," Mr Rea said.

"We reacted to the changes that were coming, we worked on reducing our costs and we ended up with a sustainable level of operating."

Port Otago was able to pay a $10million dividend to the council, up $1.5million on last year.

"We’re trying to be predictable with our dividend because our shareholder needs some sort of predictability," Mr Rea said.

Its balance sheet was "super solid" compared with other ports around the country, he said.

Shareholder equity had increased to 84% at $549million, and debt increased by $17million to $72million.

No cruise ships in the near future (about 20% of the port’s earnings) was the biggest disruption and Mr Rea did not foresee a general decline in international demand. The port also forecast its property business to continue to do well; that would again help make up for losses in cruise business.

Port-related business dropped 9% compared with last year.

Containers were down 8% because of Covid-19 restrictions and Maersk changing its network, leading to reduced volumes going through Port Chalmers.

Bulk cargo was down from 1.8million tonnes to 1.5million tonnes, and logs were down to 0.89million JAS (Japanese agricultural standard) from 1.15million JAS last year.

Cruise ships were down on last year by just three despite bad weather and Covid-19 ending the season early. Passenger numbers dropped from 229,000 to 204,000.

Mr Winders said despite the disruption Covid-19 brought, "our natural export base" thrived in May and June, which meant port-related business did not drop off too much from the previous year.

"Effectively the meats, dairy, fish and processed timber continued to flow right through ... which was a good recovery for us.

"The result of our export base and limited exposure to imports that enabled out earnings to be relatively stable."

Land sales from the port’s Te Rapa Gateway Industrial Park project brought in $13.9million.

Port Otago’s property is dominated by warehouses and distribution centres, which helped as a significant number of tenants were essential service providers and continued working up to Alert Level 4.


Port Otago full-year

Compared with 2019
191,900 TEUs, down 8%
$50.5m profit, up from $49.3m
$10m to the Otago Regional Council, up from $8.5m
$39.8m capital expenditure, up from $21.8m
Bank indebtedness up $17m to $72m
Shareholder equity 84%  at $549m

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