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Lyttelton Port annual profit falls as higher costs outweigh increased revenue

Thursday 23rd August 2018

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Lyttelton Port Co's annual profit fell as strike action and costs of hiring additional staff outweighed higher revenue.

The port company, owned by Christchurch City Council's investment arm, said net profit fell to $12 million in the year ended June 30, from $14.4 million a year earlier. Operating earnings were flat at $14 million while revenue lifted 7 percent to $122 million, lagging behind the $126 million flagged in its statement of intent.

Chief executive Peter Davie said the revenue increase was mainly driven by the port's container terminal and MidlandPort, its inland port at Rolleston. Profitability was impacted by strike action in the latter part of the year, hiring additional staff in the container terminal to meet customer demand, and more investment in health and safety, he said.

Employee expenses lifted to $57 million from $51 million, materials and consumables costs rose to $28 million from $25 million, rail costs increased due to the success of MidlandPort, and rises in fuel prices were much more significant than anticipated, the company said.

The port company didn't say whether it would pay a dividend to the council. It paid $8 million in dividends in 2017 and had targeted a 2018 payment of $1 million in its SOI.

Lyttelton Port embarked on a long-term redevelopment plan after the 2011 earthquakes, shifting its port operations on reclaimed land to the east, and said today it gained resource consents that will allow the infrastructure development required to manage the forecast doubling of Canterbury freight volume in the next 15 years.

"This consolidates the port’s positon as the South Island’s trade gateway and supports Canterbury’s growth and prosperity,” Davie said. 

“It was vital we obtained the resource consents that permit dredging of the harbour shipping channel to deepen and extend it, as well as the expansion of the container terminal land area at Te Awaparahi Bay. These two developments are crucial for the port to grow Canterbury’s trade. The dredging programme means larger container ships, which have virtually doubled in size during the last 10 years, will be able to call at Lyttelton.

“At the same time we will expand the reclamation by 24 hectares and construct a new 700-metre container wharf. A key focus of our long-term plans is to move our operations to the east, away from the local community. The additional reclamation also facilitates this shift."

In July, the company started construction on a new cruise berth, which it said is New Zealand’s first ever custom-built cruise ship facility and will bring the world’s largest cruise ships to Canterbury. The cruise berth is expected to be completed for the 2020/21 summer cruise season.

It has also invested in a $12.5 million Liebherr crane, replacing its oldest crane.

In the past year, Lyttelton Port said it achieved record container volumes and strong export and import growth, with imports rising to $4.67 billion from $4.1 billion, while exports rose to $4.84 billion from $4.7 billion.

Container volumes rose 5.7 percent to 424,560 TEUs (20-foot equivalent units) and would have been even higher but industrial action in March and April reduced TEUs by about 10,000, it said.

The port said the number of motor vehicle imports rose to 60,789 from 55,488, while bulk fuels imports remained steady at 1.13 million tonnes, and log exports slipped to 431,291 tonnes from 490,000 tonnes.

(BusinessDesk)

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