Cost-cutting helps Ports of Auckland

By Phil Boeyen, ShareChat Business News Editor

Tuesday 20th February 2001

Port company Ports of Auckland (NZSE: POA) has had a slight increase in interim profit and is predicting the second half of the year will also provide a steady result.

Its profit for the six months to the end of December was $20.9 million, up 2% on the previous year, although sales dropped by $4 million to $75 million. A fully imputed dividend of 9 cents per share has been recommended.

Container volumes, which the company says is its main revenue driver, grew by 9.5%, reflecting strong imports and steady export volumes.

Operating revenue from all port and cargo-handling services increased from $67.9 million to $68.9 million, while operating costs fell $1.3 million to $41.2 million. Earnings before interest and taxation in these port activities were up 9% to $27.9 million.

"This is a very strong result, and extremely pleasing. Our core cargo-handling business continues to demonstrate solid growth," says chairman, Neville Darrow.

However Mr Darrow says earnings before interest and tax in the company's property segment, which includes marinas, was $4.4 million, compared with $6.9 million the previous year.

"Revenue from marinas was down compared to the previous half year, which was boosted by activity associated with the America's Cup."

Mr Darrow says the company's financial strength and ability to invest in infrastructure are important elements in its competitive positioning, especially with the prospect of larger container ships due to begin calling at the port.

"Ports of Auckland is in a strong position to invest in the infrastructure and facilities required to handle these larger vessels, which are at least a third bigger than any regular callers to New Zealand ports.

"They will need deeper berths, larger areas of back-up land for container handling and bigger cranes. Above all, they will demand much higher rates of productivity as more containers will be handled on fewer ships.

"Having said that, the board will not start spending the money until it is clear that the investment is supported by market developments, and we have confidence in the returns that will be generated."

In December POA announced it planned to spend more than $20 million to dredge the Rangitoto Channel and the approach to its Axis Fergusson container terminal to help accommodate the larger ships

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