SPN
07/02/2013 16:25
HALFYR
REL: 1625 HRS South Port New Zealand Limited (NS)
HALFYR: SPN: South Port Interim Result
NZX - MEDIA STATEMENT
7 February 2013
Storage Revenue Lifts South Port Half
The diversified trading activities of South Port New Zealand Ltd have
contributed to higher first-half earnings by the operator of the Port of
Bluff.
"Despite processing a lower cargo tonnage for the six month period ended 31
December 2012, the Company has recorded an increased interim net profit after
tax of $2.90 million," said the Chairman, Mr Rex Chapman.
The result compares with the 2012 interim of $2.54 million, and matched the
previous record interim profit set in December 2010.
Mr Chapman said "The half-year was boosted by the addition of the former
Southland Cool Stores cold storage operation (with effect from 1 September
2012) and increased fish cargo being stored at South Port's Island Harbour
cold storage facility."
The Chief Executive, Mr Mark O'Connor said, "Cargo activity for the six
months was 1,268,000 tonnes, a decrease of 9% in volume terms on the prior
interim period which produced first-half cargo volume record of 1,390,000
tonnes.
"The decline in cargo was due primarily to weaker export activity while
overall import movements largely maintained their momentum," he added.
Reduced volumes for petroleum products, NZAS import / export cargo, woodchips
and logs were partially offset by volume gains for fertiliser, stock food and
fish.
The performance of the port operator reflects that of the economy of the
southern region. The forestry sector continued to encounter trying conditions
with the Japanese market for softwood chips being extremely weak while demand
for Southern logs was spasmodic. Fertiliser tonnages were notably buoyant
although South Port's customers in this sector expect reduced throughput
during the second half of the financial year.
The past six months provided a lift in deep-water fish catch being discharged
into South Port's cold store in Bluff. During the quieter part of the season,
a number of vessels were either based at the Port or transferred their catch
at the closest discharge location. In addition to generating extra cargo,
this activity also provided incremental storage volume for South Port's
Island Harbour cold store division.
"As the half-yearly result shows, the cold storage activities of South Port
are an important part of the business," said Mr O'Connor. "Accordingly,
since the acquisition of the Bluff based Southland Cool Stores business, in
September 2012, South Port has taken steps to integrate this business with
its existing Island Harbour cold storage operation. This has been
successfully achieved with both locations now forming an enlarged single cold
storage division within the Company."
An additional 5,900 m2 dry warehouse is under construction at the west end of
the Bluff Island Harbour. This new structure to accommodate bulk cargoes
(such as stock feed and fertiliser) will be a useful addition to South Port's
warehousing resources.
Prior to Christmas, South Port acquired 0.63 ha of bare land adjacent to the
Invercargill rail-head area where containerised cargo is transferred and is
exploring warehousing options for this site. The Company also aims to
establish a packing/devanning operation there.
The renegotiation of the long-term electricity supply contract with Meridian
Energy by New Zealand Aluminium Smelters remains unresolved. "Of all the
rationalisation strategies being applied by NZAS, the outcome of the
electricity contract renegotiation is likely to have the most significant
impact on the long term future of NZAS."
(NZAS operates the aluminium production facility located on Tiwai Peninsula
alongside Bluff Harbour and leases the Tiwai Wharf infrastructure from South
Port).
Mr O'Connor says that in the fourth quarter of 2012, South Port marine pilots
conducted a simulation exercise at the modern "Smartship" simulator facility
in Brisbane, to assess whether the Port of Bluff could safely accommodate
larger 260 metre length container vessels.
MSC Shipping Line is considering introducing such larger vessels into the
current Capricorn Service rotation. "The testing carried out during the
simulation exercise confirmed that, subject to certain operating conditions,
the larger container vessels could safely transit the port," said Mr
O'Connor.
South Port and regional stakeholders continue to interact with oil and gas
exploration companies and remain optimistic about the energy potential
available in the Great South Basin (GSB).
The most significant exploration licence in the GSB is held by a consortium
comprising Shell NZ (50%), OMV NZ (18%), PTTEP NZ (18%) and Mitsui E&P
Australia (14%). Once 3D seismic data acquired in early 2012 is analysed - by
mid-2013 - a decision on a potential exploration drilling project will be
made by the consortium.
Should an exploration well be committed to, the timing of this project is
expected to be in the summer months of 2014-2015.
Three of the above consortium members have been awarded an additional
exploration permit (PEP54863) in the Great South Basin.
South Port has been working with Solid Energy and its consultants to provide
meaningful data in relation to a full feasibility study to assess the
viability of a potential lignite-to-urea conversion process in the region.
Solid Energy has access to approximately 1.4 billion tonnes of lignite in
Eastern Southland. Renewed emphasis has been placed on completing this study.
OUTLOOK
Looking to the remainder of the current financial period, South Port's
Chairman has again noted the unique global environment that persists. "While
encouraged by the strong start to the 2013 year, there are currently a number
of testing factors affecting a range of cargo generating businesses in
Southern New Zealand," said Mr Chapman.
These factors include subdued off-shore demand, a high exchange rate, the
need to maintain international competitiveness and lower commodity prices.
The reduced cargo volume in the first half was directly attributable to these
factors. As a consequence the second half of the current financial year is
likely to be a more challenging period for the Company and its customer base.
Based on all known factors at the date of releasing its 2013 interim result
South Port estimates that its full year earnings should fall in the range of
$6.0 million to $6.4 million.
DIVIDEND
After assessing the anticipated year end result, the Directors have declared
an improved fully imputed interim dividend of 6.5 cents per share (2012 -
5.50 cents) payable on 4 March 2013. The Company's aim is to maintain the
same full year dividend pay-out level that it has achieved over the past two
financial years (20.0 cents per share).
FOR FURTHER INFORMATION PLEASE CONTACT:
Mr Mark O'Connor
Chief Executive
South Port New Zealand Ltd
Tel 03 212 8159
Mobile 0272 560 401
End CA:00232720 For:SPN Type:HALFYR Time:2013-02-07 16:25:47
