Port Taranaki ceo Guy Roper forecasted stable future after challenging year.
Despite a $3 million drop in revenue in the past 12 months Port Taranaki remains optimistic about its prospects in the coming year.
Profits dropped 6.5 per cent in the 2016-2017 financial year and total trade dipped by 1.4 per cent resulting in a $3 million loss in revenue, from $44.7m to $41.7m, it was reported at the annual general meeting.
Reduced shipping activity, lower oil commodity prices and a fall in the stock feed market all contributed to the lower revenue and profit, Port Taranaki Ltd ceo Guy Roper said.
Increase in log exports from Port Taranaki will help shareholder returns
However, a record year for log revenue – which was up almost 30 per cent on the year before – is expected to continue and would boost the dividend paid to sole share holder the Taranaki Regional Council, Roper said.
Dividends were expected to grow by more than 60 per cent, from $4.9 million to $8m, in the next financial year and would help offset regional rates.
Cruise ships and logs vital for Port Taranaki
Roper said the past financial year had been “challenging” for the company.
The number of ships arriving at the port dropped 10 per cent due to the international trend of larger vessels exchanging bigger parcels of cargo, which meant fewer visits, while lower LPG production also meant less ships arrived in port.
As well, the stock feed market dropped and customers reduced costs by sharing cargo space.
But the outlook for the new financial year was stable and revenue, profit and cargo volumes were forecast to be in line with the 2016-2017 results across all sectors, he said.
Roper said the company would benefit from the investment in the former Chevron tank farm, which it bought in 2015.
Under an agreement with BP New Zealand, to start in October, larger amounts of petrol and diesel could now be shipped in, stored and distributed throughout the region to reduce costs, he said.
The oil and gas industry remained Port Taranaki’s largest sector, and the ongoing challenging oil commodity price environment impacted on port business, Roper said.
Methanol volumes were strong during the year while crude, condensate and LPG volumes were weak. However, there were positive signs for future offshore exploration, he said.
Roper said log volumes were projected to lift in the coming year after another record 12 months, which saw a 36 per cent increase in industry standard log tonnage through the port and a 29 per cent increase in log revenue.
A combination of favourable market conditions, low inventory levels in China, and large numbers of harvest-ready trees in the port’s catchment area saw 460,000 JAS (Japanese Agricultural Standard) logs exported. JAS is an industry standard measurement approximately equal to 1 tonne.
The port company planned to stack logs higher and look at developing more land to accommodate growth, Roper said.
“We are also examining means to extend our forestry catchment area and service the growing demand by developing a combined road-rail transport mode for logs.
“With rail facilities direct to the Blyde Wharf we are exploring ways to make this practical and economically viable.”
The company would remain flexible and adaptable with a focus on making a return on shareholder’s funds to make a real difference to the Taranaki economy, Roper said.
“To achieve this in the current climate, we need to carefully review our costs across the business and this is something we will be assessing in the coming months.”
The forecasted lift in the milk price, to more than $6 kilogram/milksolids, would help boost dry bulk trade and the local economy.
Outgoing chairman John Auld said the dividend increase reflected the company’s view on the retention of capital versus returning capital to the shareholder.
Port Taranaki was vital to the Taranaki economy, he said.
”This includes providing an appropriate return on our shareholder’s investment for the betterment of the Taranaki community.”
Port Taranaki financial results 2016-2017:
Revenue down 6.7 per cent, or $3m ($44.7m to $41.7m)
Net profit before tax down 6.5 per cent to $11.5m
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) down 3.3 per cent, or $0.6m ($19.6 million to $19.0 million)
Operating costs down 6.5 per cent ($29m)
Total trade down 1.4 per cent (5.2m/t to 5.08m/t).
Exports up 1 per cent.
Imports down 15 per cent.
Dairy dry bulk volume 17 per cent down, down 25 per cent revenue.
Oil and gas bulk liquids down 2 per cent .
Exploration related work down 38 per cent
– Taranaki Daily News