SPN
23/08/2012 14:15
FLLYR
REL: 1415 HRS South Port New Zealand Limited (NS)
FLLYR: SPN: South Port Year End Result
NZX STATEMENT
23 AUGUST 2012
Strong Result in Mixed Cargo Year for South Port
The 2012 year saw a mix of cargo volume gains and losses across the wharves
at Bluff, yet South Port New Zealand Ltd's reported after tax profit of $5.99
million is only slightly lower than the 2011 result of $6.26 million.
Overall substantial cargo volume gains for petroleum, stock food, sawn timber
and woodchips outweighed tonnage declines in other categories, particularly
logs and imported products used by NZ Aluminium Smelters.
"A number of South Port's customers encountered challenging operating
conditions in the past season and this created either slow moving inventory
or reduced margins for these businesses," said South Port Chairman, Mr Rex
Chapman.
"We were pleased to post another strong trading result aided by a primary
produce sector that has demonstrated resilience," he said. "Total cargo
volume passing through the Port was at a record level for a second
consecutive year."
The reported result included a one-off tax-paid adjustment of $270,000 from
the sale of a Liebherr mobile container crane where the sale proceeds
exceeded the book value of the asset. The plant became surplus to
requirements and was sold in January, having been replaced by a larger more
modern crane a year ago.
Excluding this adjustment 2012 normalised profit was $5.72 million, compared
with $5.98 million in the prior corresponding period.
South Port recorded revenue from port and warehousing operations of $26
million, an increase of 4% on the $25.1 million achieved in the pcp. In 2011
the Port experienced a 25% lift in cargo volume and the on-going gain in
activity has been supported by employment of additional personnel, plant and
infrastructure. The costs of the additional resources and higher insurance
premiums resulted in a 5% decline in operating profit to $8.3 million ($8.7
million).
After net financing costs of $375,000 ($339,000), South Port's surplus of
$5.99 million was 4% down on the previous financial year.
Earnings per share were 22.8 cents (23.9 cents in FY11). Total equity of
$29.6 million is after dividend payments of $5.25 million ($4.72 million).
The final dividend is 14.5 cents, taking the full year dividend to 20 cents,
consistent with 2011. The dividend payment represents a gross return of 9.4%
(net 6.6%) based on a share price of $3.05 as at 30 June 2012. The dividend
pay-out ratio for 2012 was 88%. Net asset backing is $1.13.
South Port has strengthened its balance sheet during the year. Current
liabilities were held at 2011 levels of $4.5 million but current assets were
improved to $5 million, compared with $3.4 million, thus resulting in a net
working capital improvement to $0.5 million versus -$1.1 million in the prior
year.
Total Group assets reached $34.8 million.
PORT ACTIVITIES
Containerised cargo activity was stable in the 2012 year with total TEU
volume at 32,500 (33,000 last year).
South Port Chief Executive Mr Mark O'Connor said, "the global container
shipping market sustained significant losses and this has necessitated both
schedule and tariff rate realignment."
Mr O'Connor noted that this can cause disruption and financial adjustment for
cargo providers. "Container shipping lines are entering business alliances
and vessel sharing arrangements which are designed to reduce operating costs
in what can only be described as a brutal freight market."
"This is partly attributable to the economic events occurring in Europe which
have severely impacted trade volumes flowing between that market and Asia."
"It is important that companies providing international connections are able
to maintain viable shipping services", he said.
In June Messrs Chapman and O'Connor were in China to sign a Technical
Co-Operation Agreement with Lanshan Port, the largest New Zealand export
destination for Pinus Radiata logs in eastern Shandong province. Mr O'Connor
said the Chinese market is an important export prospect and appropriate
effort must be invested by New Zealand businesses to understand the dynamics
of the market and trading opportunities.
In the latest year South Port sustained a sizeable decline in log export
activity over the final three quarters. Over the full year this trade fell by
90,000 tonnes, or around 27%. Mr O'Connor noted that the expectation of
forestry customers was that more favourable trading conditions would re-occur
in the spring. It had been fortunate that strong outflows of woodchip and
higher tonnages of sawn timber had offset the decrease in log volume.
He said NZAS (now part of the Pacific Aluminium Group of six Australian and
New Zealand assets of Rio Tinto) reduced production capacity by around 15%.
This action was necessary due to the deterioration of market conditions,
including the uncertainty around electricity market pricing, the high
exchange rate and low aluminium prices.
"A resilient dairy sector offers a growing range of import and export
cargoes", said Mr O'Connor. Fertiliser tonnages remained at all-time highs,
linked to general economic activity in the region and petroleum matched the
record cargo levels of 2005.
Cold storage contributed to the overall result. Sluggish market conditions
saw higher levels of customer inventory for meat and fish.
OUTLOOK
"It is unlikely that New Zealand will be immune from the economic ills being
suffered by a wide range of countries", said Mr Chapman. "An unhealthy
European zone does not bode well for our Asian trading partners who rely on
Europe for consumption of their manufactured goods."
"The US market is stuttering with no real upward economic trends evident and
China's superior growth levels are finally beginning to wane, although
indicators suggest that the slowing in China's growth may have stabilised."
"Should conditions in the US and Europe deteriorate further, the Chinese
authorities will need to consider other measures if they are to meet the
current 7.5% growth target."
"Some sectors will be buffeted around while others will continue to perform
well. For a number of South Port's customers it will be a matter of bracing
themselves for the bumpy road that lies ahead."
South Port management considered that risks to business growth lie firmly on
the negative side of the ledger. "Whilst New Zealand is better placed than
many other nations, it is likely to be some time before economic growth
returns to stimulatory levels."
South Port will focus on cost containment and prudent management in the year
ahead and is optimistic of a stable profit result for FY13.
FOR FURTHER INFORMATION PLEASE CONTACT:
Mr Mark O'Connor Mr Rex Chapman
Chief Executive Chairman
South Port New Zealand Ltd South Port New Zealand Ltd
Tel: (03) 212 8159 Mob: 027 454 8455
Mob: 0272 560 407
COMPANY PROFILE
South Port New Zealand Ltd (South Port) is the southern most commercial port
in New Zealand, located at Bluff and operating on a year round, 24 hour
basis. It is situated in the rich productive province of Southland which is
responsible for generating a sizeable proportion of New Zealand's total
exports by value. The region's major cargo producing sites are situated
within 30 to 80 km of the Port.
The Port of Bluff has been operating since 1877 while the Company was formed
in 1988 having taken over the assets and liabilities of the former Southland
Harbour Board.
South Port was listed on the NZ Stock Exchange (NZX) in 1994 and has
Environment Southland, the region's local government environmental agency, as
its 66% majority shareholder.
SOUTH PORT FACTS
o Owns and manages assets which have a book value of $35 million
o Directly employs more than 65 full time equivalent staff
o Is the only Southland based company listed on NZX - market capitalisation
as at 30 June 2012 equates to $80 million
o Handles in excess of 2.6 million tonnes of cargo in a normal trading year
o Offers full container, break-bulk and bulk cargo capability and services
the following main cargoes:
- import - alumina, petroleum products, fertiliser, acid, fish, stock food
and cement
- export - aluminium, timber, logs, dairy, meat by-products and woodchips
o Has split its land-based operating resource into four main divisions -
warehousing & packing, containers, cool & cold storage and dairy
o Undertakes its primary port operation on a 40 ha man-made Island Harbour
situated at Bluff
o Operates a separate dedicated fuel berth at Bluff Town Wharf plus provides
the Tiwai Wharf facility to NZAS under a long term licence
o Services vessels carrying approx 1.0 million tonnes of cargo destined for
movement across the Tiwai Wharf each year, of which 2/3 is raw material
imports while 1/3 is finished aluminium product
o Has approximately 8 ha of on-port land available for further port
development or industry establishment
End CA:00226369 For:SPN Type:FLLYR Time:2012-08-23 14:15:18
