Port positions for growth after torrid year

Friday 20th February 2004

Lyttelton Port's latest half-year result suggests the company is heading for calmer waters.

The trouble is the water might be a little too calm, given the company's modest earnings growth outlook.

The company said last year that earnings would be flat over the next year as it upgraded its facilities.

There is still no tangible evidence of a turnaround in performance and the upgrade has already taken longer and cost more than expected.

December first-half profit rose 25% to $5.5 although last year's figure was deflated by a $2.9 million union settlement. Revenues for the six months to December slipped 4%, reflecting fewer ship visits and lower coal revenues.

While pricing has stabilised, operating costs continue higher than anticipated and margins remain weak. The company said costs for the full year continued to be affected by higher insurance, electricity and maintenance costs.

On a more positive note, Lyttelton Port seems to be winning back the support of the shipping lines with the return of P&P Nedlloyd's NZAX service to Asia.

There is still some uncertainty surrounding Lyttelton Port's industrial negotiations, despite last year's payout. The company said it has started discussions with unions over the employment contract. It was not seeking any significant change to terms and conditions.

The company projected full-year ebitda (earnings before interest, tax, depreciation, and amortisation) of $24.3 million, down from $26.5 million in the June 2003 year. With only modest earnings growth in prospect, retention of the current dividend was key to share price performance, First NZ Capital noted.

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