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Ports Of Auckland Recapitalised, Latest Trading Better

Fuseworks Media
Fuseworks Media

Wellington, Sept 15 NZPA - Ports of Auckland's council shareholder has put $40 million in equity and $20m in loans into the port, which may be starting to reflect an economic recovery.

The largest container port in the country today reported a 74 percent fall in net profit in the year to June 30 to $5.4m, including a $6.7m writedown on an investment in Northland Port Corp and $2.4m writedown on investment property required by international accounting standards.

Normalised earnings before taxation fell to $15.7m from $22.3m.

Nearly all of the 3.5 percent fall in revenue was due to a 36.2 percent fall in the number of car imports due to the economic downturn and changes to car emission laws last year.

Managing director Jens Madsen said car import figures had been higher than the port expected in July and August.

"I think it will take time and we will probably go into 2010 before we will see a more steady recovery," he said.

The port handled a record 843,590 TEU, or standard sized containers, in the year to June 30, an increase of 0.3 percent on last year. Trans-shipment volumes rose 10 percent.

Mr Madsen said container volumes in July and August had got off to a "pretty promising start compared to what was expected".

"It would appear to us that there are some early signs of some more confidence at the consumer level. We've seen quite promising figures for cargo coming through," he said.

But the balance sheet story was the one to grab attention with Auckland Regional Holdings, the commercial arm of Auckland Regional Council, agreeing to buy $40m worth of new shares and another $10m of new shares have been issued but not called.

A shareholder loan of $20m has also been put in place.

ARH chief operating officer Peter Casey rejected the suggestion that a council was subsidising a port, which created a distortion in the marketplace.

He said the recapitalisation was an investment decision made by an investment organisation. Confirmation for the investment was received from the Auckland Transition Agency.

Mr Casey said ARH's commitments to Auckland Regional Council stood and were being met.

Between June 2005 and December 2008 Ports of Auckland paid $522.5m in dividends and in-specie distributions to ARH.

Port of Tauranga chief executive Mark Cairns said he did not want to comment on the result but his port had held the view for many years that port rationalisation would occur naturally if ports invested to ensure a return on the cost of capital.

Ports of Auckland is keeping its 19.9 percent shareholding in Northland Port Corporation .

Ports of Auckland received $40m from the sale of Queens Wharf on August 18 and will record an accounting gain of around $20m on the sale in the 2009/10 financial year.

Industry observers said it was odd that port investment property had been written down when this property had been sold in excess of book value.

Earnings before interest, tax, depreciation and amortisation for the container division rose 1.4 percent on 2007/08.

Mr Madsen said the port had increased its share of the upper North Island container market from 59 percent to 61 percent.

He did not want to comment on individual customers. The increase is understood to be mostly volume from dairy company Fonterra. Ports of Auckland expects to be shuttling trains early next year between the sea port and its inland site at Wiri where construction of rail sidings and hard surfaces is currently under way.

The port handled 69 cruise ships in the year to June 30. It will continue to handle cruise ships while no longer owning Queens Wharf and expects the number to fall to 63 or 64 ships next year.

But when the wharf is redeveloped and economies recover the cruise ship business would grow.

"I think the sky is the only limit, you will see a boom in the industry going forward. We are welcoming new facilities in Auckland," Mr Madsen said.

Mr Madsen said productivity continued to improve, with average crane rate up 6.6 percent, straddle carrier moves per hour up 4.6 percent and staff hours per container down 7.7 percent.

Cost savings of $5m are expected to be delivered by the end of the new financial year .

All the funds received from ARH had been used to reduce bank debt and further renegotiation of bank debt facilities were well advanced. At no stage did the port breach bank covenants, he said.

While Ports of Auckland anticipated an improved financial result in 2009/10, the market remained volatile and the port was cautious about the overall outlook, Mr Madsen said.

The port has concentrated container handling at its Fergusson container terminal, freeing up the Bledisloe terminal for a range of uses, including handling cars. A car stacker may be built at Bledisloe.

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