South Port revenue up but repairs dent profit

South Port at Bluff. The Tiwai Point aluminium shelter is in the background. Photo: supplied
South Port at Bluff. The Tiwai Point aluminium shelter is in the background. Photo: supplied

South Port at Bluff has posted a revenue boost to almost $21 million for its half year trading, but repairs and maintenance costs saw its after-tax profit undermined.

Additional cargo across the wharves is expected from the recently opened Mataura Valley Milk plant in Gore, and potentially from New Zealand Aluminium Smelter, which has reinstated a fourth production potline.

Revenue for the six months to December grew 7.4% to $20.9 million, while after-tax profit declined from last year's $4.9 million and fell about 7% to $4.55 million.

South Port chairman Rex Chapman said increased maintenance expenditure on the port's infrastructure and floating plant would continue to have an impact on profitability for the rest of the year, but was confident the annual 26c per share dividend of the past three years could be met.

"Over the coming months it is expected that there will be a number of fluctuations in each bulk cargo category, however by year end the total volume is forecast to be in line with budgeted expectations,'' he said in a statement.

A five-yearly dry docking of the port's  tug Hauroko had cost $838,000.

South Port declared a fully imputed interim dividend of 7.5c per share, the same as last year.

Container volumes are tracking 10% ahead of last year and hit a record 19,800, while total cargo activity rose 1%, or 18,000 tonnes, from 1.75 million tonnes last year to $1.77 million tonnes.

Chief executive Nigel Gear said  revenue was up by 7.4% due to a favourable cargo mix, strong performance in the warehousing division and increased marine activity.

"Bulk cargoes continue to be the backbone of the business. Volumes were comparable to the same period last year with the exception of fertiliser down 34,000 tonnes and stock food, up 22,000 tonnes."

For its full year trading, South Port's issued guidance yesterday that its full year earnings should fall in the range of $8.6 million to $8.9 million, down on last year's $9.66 million.

While log volumes were similar to last season, Mr Gear said there has been a slowdown of exports to  India and recent volumes were impacted by poor ground conditions in some Southland areas which hindered harvesting.

Mr Gear said those two factors are expected to see a 10% reduction in log exports.

Operational highlights for the six months included completion of Mataura Valley Milks infant formula plant in Gore, and its initial export of through Bluff on the Mediterranean Shipping Company shipping line in November last year.

The fourth potline at New Zealand Aluminium Smelter (NZAS) was officially opened on December 6, 2018. This potline, when fully operational, will consume an additional 60,000 tonne of alumina and increase aluminium production by 30,000 tonne per annum.

"Over the coming year, South Port will be working with NZAS to determine whether there are additional services the port can provide to handle and/or pack any of this finished cargo into containers for export through Bluff,'' Mr Gear said.

There was also new exports of containerised medium density fibre board, which was packed at the port's three-year-old Intermodel Freight Centre.

During the period, there was increased handling, packing and storage of meat, fish and dairy products in both the cold store and dairy warehouses, he said.

On the dairy sector, Mr Gear said although New Zealand milk supply had increased this season, a production decline in Europe and Australia had "impacted positively'' on Fonterra's global dairy auction prices recently.

simon.hartley@odt.co.nz

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