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Ports of Auckland delivers $54M dividend to council owner despite revenue drop

Tuesday 23rd August 2016

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Auckland Council will receive a $54.3 million dividend from Ports of Auckland after the city's port operator announced a lift in full-year profit despite even as revenue fell with container volumes.

The payout, up $12.6 million on the previous year, equates to $103 per Auckland household or 4.4 percent of the average annual residential rates bill and takes total dividends in the past five years to $212 million.  Chief executive Tony Gibson said the dividend was unlikely to be that high in 2017 with another challenging year ahead.

The Auckland Council-owned port company reported net profit of $84 million for the year ended June 30, up from $63 million a year earlier. Property revaluations delivered a $12.2 million gain, primarily due to improvements at its Wiri freight hub.

Gibson said the 2016 financial year proved as tough as anticipated, with revenue declining 3 percent to $211 million. Contributing factors included a 5.5 percent decline in bulk volumes and significantly lower ironsand exports due to reduced iron and steel prices.

This was partially offset by increased cement throughput, thanks to Auckland’s booming construction sector. Growth in new and used vehicle sales nationwide saw a 1.7 percent rise in imports of cars and other ‘high and heavy vehicles’ such as farm vehicles and machinery.

The port is likely to build a multi-storey carpark to stack imported cars within the next two years to create room on Bledisloe Wharf.

“We have to provide a better-looking port. That’s been made clear to me,” Gibson said.

The global container industry is facing continued difficulties, with too many container ships and not enough freight to fill them. Twelve of the world’s top 30 ports reported lower container volumes this year and Ports of Auckland posted a 7.9 percent drop. Still, rival Port of Tauranga had a 12 percent rise in container volumes in its latest year.

Globally, container throughput is expected to be flat in the 2017 financial year and the port expects its volumes will be flat or fall again, Ports of Auckland said.

Underlying expenses were $105 million, down $12.7 million. That included a $2.2 million recovery of the $7.3 million set aside to cover Bledisloe Wharf extensions after the High Court overturned consents granted by Auckland Council, with structural materials instead used in the Fergusson North berth project.

A study on the future of Auckland’s port concluded last month it should be allowed to extend the wharf to provide more berth space for general cargo and cruise ships, before being constrained to its current footprint. Gibson said the port has parked plans for a removable piled berth at the terminal’s northern end until the study is considered by the incoming council.

But Gibson said Auckland Tourism, Events and Economic Development is likely soon to lodge consents for a mooring dolphin that sits above the water line at the end of the terminal to handle longer cruise ships than the port can currently accommodate. Cruise ships hit 101 visits this year and are due to rise to 115 visits within two years.

Work has begun on partially automating the Fergusson container terminal, the first New Zealand port to do so. When completed in 2019, automated straddle carriers will be used to load and unload trucks and operate the container yard while manually driven straddle carriers will continue to work the yard and ship-to-shore cranes to maintain productivity levels.

Automation, along with changes to the terminal layout and the current reclamation project, are expected to increase the terminal capacity by 80 percent to around 1.6 to 1.7 million TEUs (20-foot equivalent units), though 50 stevedores will lose their jobs.

Part-automation of the terminal's existing straddle carriers has seen women stevedores lift productivity above their male counterparts as they've been quicker to use a self-guide stacking system that stops the containers banging around while being stacked while the men still prefer manually driving them despite it taking longer.

The port’s capital expenditure will more than double to $177 million in the next financial year from $81 million in 2016, as it completes the long-standing Fergusson expansion project by September next year and purchases three new key cranes to handle the extra capacity.

The rest of the spending is going on the new Waikato freight hub, part of the port’s strategy to develop a rail-connected North Island freight hub network. The port spent $23 million this year purchasing 33 hectares of land for the hub at Horotiu, north of Hamilton, and is now lodging resource consents to bring rail entry to the site and build paved areas for parking heavy vehicles.

BusinessDesk.co.nz

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