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UPDATE: Port of Tauranga's Cairns 'relieved' to have revenue growth as capex programme ends

Thursday 23rd February 2017

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(Recasts to reflect CEO comments, updates shares)

Port of Tauranga chief executive Mark Cairns says he's relieved to see revenue growth as cargo volumes grow at New Zealand's biggest port, after the completion of a five-year, $350 million capital spending programme that included preparing for bigger ships.

Revenue rose 2.8 percent to $125 million in the six months ended Dec. 31 as export volumes climbed 9 percent to 7.1 million tonnes and imports rose 7 percent to 3.9 million tonnes, the port company said today. Growth in exports included a rebound in log volumes, up 21 percent to almost 3 million tonnes, while dairy exports rose 4 percent to 1.1 million tonnes and kiwifruit shipments increased 16 percent to more than 477,000 tonnes.

"We're relieved after having made significant expenditure for a company of our size that we're now getting revenue to match," Cairns told BusinessDesk. 

In the first half, the company invested $43.9 million on infrastructure including the final payments on its two new straddle cranes, 13 new straddle carriers and property developments at its container terminal. Such investment will abate going forward, reflecting the end of the major capex programme as the company "gets back to a period of 'stay in business' capital", Cairns said.

Harbour dredging has allowed the port to attract larger ships, such as Maersk's 9,500 TEU Aotea Maersk, which has visited the port since October in its only New Zealand stop. In January, Hamburg Sud said it would make Tauranga its only New Zealand port of call with the start in March of a weekly peak-season service with a large vessel.

Container volumes rose 8 percent to 510,074 TEUs in the first half, putting the company on track to handle more than one million TEUs for the first time in the full year, it said. The numbers of containers transferred by rail between Tauranga and the company's MetroPort facility in Auckland rose 20 percent in the first half.

"With bigger ships calling at Tauranga, we are handling significantly larger volumes of cargo per shipment," Cairns said.

Port of Tauranga shares rose 0.5 percent to $4.40. The shares have surged about 18 percent since Oct. 17, when the company conducted a one-for-five share split to bolster liquidity and ensure it remained in the S&P/NZX 50 Index. First-half revenue missed the $132 million forecast from brokerage Forsyth Barr, although profit of $41.9 million beat its estimate of $40.6 million.

The company will pay an interim ordinary dividend of 5 cents a share. It declared a special dividend of 25 cents a share with its 2016 full-year results last August, the first step in a plan to return $140 million over four years. Any decision on the next part of the capital return would be made with the full-year results, it said today.

The first-half results gave the company confidence to lift its guidance, saying full-year earnings would be at the upper end of its forecast range of $79 million to $83 million, an increase on the $77.3 million reported for 2016.

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