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South Port eyes extra Tiwai trade; reiterates FY guidance

Tuesday 12th February 2019

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South Port says it will work with New Zealand Aluminium Smelters this year to see if it can provide additional services for the extra production expected from Tiwai Point.

The aluminium smelter is Bluff port’s biggest customer, accounting for about a third of all its cargo last year. In December the plant formally re-opened its fourth pot line after a six-year break.

South Port chief executive Nigel Gear says that new capacity should increase the smelter’s use of imported alumina by about 60,000 tonnes a year, and its exports of aluminium by about 30,000 tonnes.

“Over the coming year, South Port will be working with NZAS to determine whether there are additional services the port can provide to handle and/or pack any of this finished cargo into containers for export through Bluff,” he said.

South Port yesterday reported a 1 percent increase in first-half cargo to 1.77 million tonnes. Revenue for the six months ended Dec. 31 climbed 7.4 percent to $20.9 million, benefiting from a good mix of cargo but also aided by a strong performance from the firm’s warehousing division and increased marine activity.

Net profit fell about 7 percent to $4.55 million, reflecting increased spending on infrastructure and maintenance, the company said. The five-yearly dry-docking of the tug Hauroko in August had cost about $838,000, it noted.

South Port, like many of the country’s ports, is facing increased expenditure to meet a jump in freight volumes, particularly logs. In October the company warned that that spending could see current year profit fall about 10 percent compared with the record $9.66 million reported for the June 2018 year.

“Based on all known factors at the date of its 2019 interim result, South Port estimates full-year earnings should fall in the range of $8.60 million to $8.90 million,” chair Rex Chapman said yesterday.

The company will pay a 7.5 cent interim dividend on March 6, unchanged from a year earlier. A full-year result within the forecast range will see total dividends for the year kept at 26 cents, consistent with the past three years, Chapman said.

South Port made its earlier profit warning just as trade tensions between the US and China were increasing, and when the outlook for the current dairy season pay-out was much lower.

Gear noted that New Zealand dairy supply has increased this season and the firm handled its first exports from Mataura Valley Milk in November.

Log volumes, which reached a record 671,000 tonnes last year, are similar to last season but shipments to India have slowed, he said.

“Volumes have also been impacted by poor ground conditions in certain areas within Southland affecting the ability of logging crews to harvest their forestry blocks,” Gear said. “These two factors are expected to lead to a reduction in throughput by year-end of approximately 10 percent compared with last season.”

Log and wood chip exports exceeded a million tonnes last year, and became the largest contributor to the port’s volumes and profitability for the first time.

Gear said the 13,500 square-metre paved log storage area on the Island Harbour has been operating for nine months, improving utilisation and safety.

Container volumes in the period were about 10 percent higher than a year earlier, while expectations of dry conditions had seen an additional 22,000 tonnes of stock feed imported in the period.

Fertiliser volumes, down 34,000 tonnes from a year earlier, should be only slightly down by year-end, the company said.

Meat, fish and dairy volumes handled and packed in the firm’s cold stores increased during the period, Gear said. New exports of containerised medium density fibreboard, handled and packed in the intermodal freight centre in Invercargill, also contributed to the result, the company said.

Gear said the centre, established three years ago and served by rail, is now taking about 7,000 trucks off the region’s roads annually. 

South Port shares ended Monday at $6.50, up 8.2 percent in the past year.


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