Lyttelton Port commits to Otago merger talks; earnings slip

Thursday 26th August 2010

Lyttelton Port has reiterated its commitment to merger talks with Port of Otago while posting weaker full-year earnings that it says masks a second-half recovery.

Profit fell to $9 million in the 12 months ended June 30 from $10.1 million a year earlier, the company said in a statement. Earnings before interest, tax, depreciation and amortisation (EBITDA) slipped 1.1% to $29.2 million, which it said could be explained away by higher finance and dredging costs which together amounted to an additional $1.1 million

The South Island’s biggest port company, recently singled out in a Shippers’ Council report as one of two that should be readied for bigger ships, has been in extended talks with Port of Otago over an operational merger. Both sides have been silent on the detail, having commissioned independent analysis.

Lyttelton “continues to work through the feasibility of a merger with Port Otago,” the company said in a statement. The ports board and management “are fully committed to the negotiations as it remains our belief that amalgamation

is crucial for the long-term viability of New Zealand ports.”

Container volumes rose 5.3% to a record 273,789 TEUs in the latest year. After a challenging first half, volumes of containers picked up in the second and the port had growth across all its businesses.

“We’re seeing volumes starting to come back after a drop off in the first half of the year,” Peter Davie, chief executive, told BusinessDesk. Fertiliser, cars and to a lesser extent oil had dropped away and have recovered again.

Davie said he has seen a pick-up in economic recovery particularly around exports. Export containers of dairy products surged 97%, reflecting the enhanced volume deal with Fonterra, and contracts with Westland Milk and Synlait.

Coal export volumes fell 2.7% to about 2 million tonnes though the port is preparing for an influx of hard coking coal from Pike River, and longer term making sure it has enough storage space for when the Buller Coal Project is started.

Dredging costs rose because of infill caused by “unusually large and long easterly swells,” chairman Rodger Fisher said. The company will pay a final dividend of 2.9 cents, making 4.4 cents for the year, which is down from last year’s payment of 4.9 cents.

Revenue was the only line of its results summary that showed growth, rising 3.4% to $87.3 million. Operating costs increased by 5.9% in the same period.

Shares of Lyttelton last traded at $2.40 and hadn’t changed hands today.

Businesswire.co.nz

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