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South Port FY profit falls 4.3 percent on costs to cope with higher volumes

Thursday 23rd August 2012

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South Port New Zealand, the nation's southern-most port company, posted a 4.3 percent drop in full-year profit on costs to cope with higher cargo volumes and increased insurance premiums.

Profit was $5.99 million in the 12 months ended June 30, from $6.26 million a year earlier, the Bluff-based company said in a statement. Sales rose 3.5 percent to $26 million. The port company experienced a 25 percent surge in cargo volumes in 2011, which had required more spending on workers, plant an infrastructure, it said.

"The costs of the additional resources and higher insurance premiums resulted in a 5 percent decline in operating profit," it said. Total cargo through the port was at a record level for a second year, it said. The shares last traded at $3.27 and have declined 4.1 percent this year.

Containerised cargo slipped to 32,500 TEU from 33,000. "Container shipping lines are entering business alliances and vessel sharing arrangements which are designed to reduce operating costs in what can only be described as a brutal freight market," chief executive Mark O'Connor said.

Log exports through the port fell by 27 percent and raw materials imported for Rio Tinto's aluminium smelter fell, reflecting a 15 percent decline in production capacity at the plant. A high exchange rate, low aluminium prices and uncertainty over the price of electricity drove the decline at the smelter, the port said.

The company will focus on cost containment in the current year, saying New Zealand isn't immune from global economic ills. It doesn't expect any profit growth in 2013. South Port will pay a final dividend of 14.5 cents a share, making 20 cents for the year, unchanged from 2011.

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