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CentrePort turns to 1H profit on earthquake recovery; signals chance of FY dividend

Wednesday 28th February 2018

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CentrePort turned to a profit in the first half of its 2018 financial year as the Wellington port operator continued to recover from the damage wrought by the November 2016 Kaikoura earthquake, and signalled it may resume dividend payments this year.

The port company posted a profit of $4.9 million in the six months ended Dec. 31. That compares with a loss of $35.7 million from continuing operations in the year-earlier period, which widened to a loss of $85.7 million after including a $50 million provision for port land. Revenue in the latest period slipped 1.2 percent to $34 million but was supplemented by an extra $4.9 million of business interruption insurance, ahead of the $2 million received in the year-earlier period. Expenses rose 7.8 percent to $32.5 million.

CentrePort is recovering from the impact of the Kaikoura earthquake, the biggest adverse event in its history, which damaged many of its buildings and disrupted its services. The company said today that its financial result beat its forecast as it achieved growth in most of its key trades and its container trade returned to pre-earthquake levels after its ship-to-shore cranes were restored in September.

"It's very positive for us in terms of our result, it shows a strong bounce back and a strong recovery of the port following the November 2016 Kaikoura earthquake," acting chief executive Anthony Delaney told reporters from one of the port's temporary Portacom office buildings. Delaney noted that every area of the port was operating in a modified way, and the environment remained "demanding and challenging". 

The company earmarked 12 buildings across the port for demolition, some of which had already been tagged as earthquake-prone and others which were badly damaged by the quake, including the five-storey Statistics House. Still outstanding is a decision on the BNZ office building, which is three times the size of Statistics House and currently undergoing engineering assessments of the damage. The company said today that a decision on the future of the building is expected this financial year. 

The port has previously warned its shareholders, the Wellington and Manawatu-Wanganui regional councils, that it was unlikely to pay a dividend for three years following the quake.

Chief financial officer Kieran Sweetman said today that the port company expects to remain in profit and "should be in a good place" to pay a dividend at the end of the year.

Sweetman said the port was "making good progress" with its insurance claims, having collected $230 million over three claims to date, and expects the total amount to be more than double that.

The company has set aside $63 million to invest in making the port more resilient, strengthening its ground and key wharves to be able to handle Kaikoura-type events in the future. It's working with consultants from Germany's Hamburg Port as it formulates a master plan for the operation and expects to detail its plans in 12 months' time.


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