- Release Date: 23/10/14 15:28
- Summary: ADDRESS: POT: Port of Tauranga Annual Meeting: Chair & CE's Address
- Price Sensitive: No
- Download Document 16.72KB
POT 23/10/2014 15:28 ADDRESS REL: 1528 HRS Port of Tauranga Limited (NS) ADDRESS: POT: Port of Tauranga Annual Meeting: Chair & CE's Address Chairman's Address: Good afternoon Ladies and Gentlemen and welcome to the Port of Tauranga Annual Meeting. This meeting marks my first year as Chairman, and what a year it has been! With the announcement of our joint alliances with PrimePort Timaru and, more recently, Kotahi, there has been a significant shake up in New Zealand's international supply chain. Kotahi is the freight management partnership made up of a number of key export freight owners including Fonterra and Silver Fern Farms. Our alliances have cemented Port of Tauranga's position as the country's hub port, and we are already seeing numerous flow-on benefits. We are preparing for a future in which much larger ships become regular callers to our port. We will soon begin the harbour and channel-dredging that will allow us to accommodate these vessels. This $50 million investment will complete a $250 million capital expenditure programme that prepares us for the future. This programme includes an extension to our Sulphur Point wharves, an upgrading of our tug services, the addition of container cranes and straddles and our strategic investments in the South Island. Turning to our financial performance over the past year: Our underlying net profit after tax rose 1.3% to a new record of $78.3 million. Group EBITDa for the year increased 5.6% to $142.6 million, as an increase in bulk cargo transported across our wharves offset a temporary decline in container volumes. Total cargo volumes rose 3.5% to more than 19.7 million tonnes. Overall imports increased 6% and overall exports increased 2%. Mark will talk in some more detail about trends in individual cargoes. Our balance sheet remains strong, with net debt at $254 million and gearing (measured by debt to debt plus equity) steady at 29.7%. This gives us plenty of capacity to fund the $50 million we expect to spend on the dredging project at Tauranga. In the 2014 financial year, we invested a total of $61.8 million in property, plant and equipment. As outlined in our end of year announcement, the Board has declared a final dividend of 29 cents per share to lift the full year dividend by 8.7% to 50 cents per share. This represents an increase in the dividend payout ratio from 80% to 85% of earnings reflecting our confidence in Port of Tauranga's future prospects. Our investment in the joint alliance with PrimePort Timaru was $21.8 million, funded from current bank facilities. This has given us a 50% share of PrimePort Timaru, and we have taken a 35 year lease over the container terminal there. We set up Timaru Container Terminal as a wholly owned subsidiary of Port of Tauranga, and Kotahi has now taken a 49.9% shareholding in that operation. Our ten year freight agreement commits Kotahi to shipping certain volumes of cargo through both our Timaru and Tauranga Container Terminals. In other acquisitions, our subsidiary Tapper Transport purchased the assets of Priority Logistics Group, a transport and logistics company based in Mount Maunganui. That acquisition has enabled us to commence cross-docking services at Tauranga. MetroBox, our Auckland-based container storage, handling, and maintenance company, has established a new business partnership with Specialised Container Services, which already operates the MetroBox site as well as another 11 hectare site in Mangere. I would like to thank my fellow Directors. It has been my privilege and pleasure to chair this group over the past year. Today we farewell Sir Dryden Spring, who is retiring after 10 years on the Board. Sir Dryden has made a tremendous contribution in that time and his experience across a number of New Zealand's major businesses along with his wise counsel will be missed. He leaves with our best wishes and grateful thanks. We have been joined on the Board by Alastair Lawrence, who was appointed in February in anticipation of Sir Dryden's departure. Alastair has extensive expertise as a corporate advisor and banker, and brings a wealth of knowledge in mergers and acquisitions. As per our constitution, Alastair retires by rotation at today's meeting and offers himself for election. I also retire at today's meeting and offer myself for re-election. As you can see from this slide, the Port of Tauranga Group is now a large and diverse family of companies. We believe our diverse income streams, our geographical reach and the myriad of cargoes represented in this structure will together ensure our future growth. We are very grateful for the reception we have received from communities and customers in mid and South Canterbury. There is enormous potential in that part of the country, and not just in the dairy sector. I'll now hand over to Mark now to talk about some of the operational highlights of the financial year, and to bring us up-to-date with performance in the first quarter of the 2015 financial year. Thank you. David Pilkington CHAIRMAN Chief Executive's Address: Thank you David. Good afternoon Ladies and Gentlemen. Privileged to be your Chief Executive, I am proud to report on another solid Company performance for the year, underpinned by our diverse cargo sources and growing hinterland. The business environment has remained intensely competitive and the Company has retained its market leadership position as confirmed by a number of measures; trade volume, productivity and profitability. It has been gratifying to successfully achieve the milestones of the past year, whilst putting in place a number of further strategic building blocks to contribute to our future growth plans. We are pursuing new growth options by establishing a South Island presence for the first time. We took over the operations of the Timaru Container Terminal and took a stake in PrimePort Timaru in December last year, and I am pleased to report that this has brought immediate benefits and greater choice to South Island importers and exporters. Our recent agreement with Kotahi has secured a long term future for our South Island operations and given us the confidence to further progress our hub port expansion plans at Tauranga. In the South Island, our investment programme will continue with the establishment of our new inland port at Rolleston. This will be an intermodal freight hub in the mould of MetroPort Auckland. The hub is just 12 kilometres south of Christchurch, with very good town planning, having excellent road and rail connections as you can see from this map here. It will have a 500 metre rail siding, big enough for 75 TEU trains. Exporters will be able to aggregate cargo bound for our container terminal at Timaru, and importers will be able to efficiently access the fast-growing Christchurch domestic market from this well located site also. We were pleased to receive advice last week that our resource consent to proceed with the site development has been approved by Selwyn District Council and we expect to be open for business here in early 2015, with space for up to 100,000 TEUs per year once it's completed. We will build a two hectare warehouse for container packing, devanning and cross-docking operations, and also incorporate an empty container servicing depot. As the Chairman has mentioned, we are progressing the harbour dredging programme in Tauranga. By 2016, we will be able to accommodate the next generation of ships, in the range of 5,000 to 6,500 TEUs in size. We will shortly be calling for tenders to undertake this work. I should point out that it is not just container ships that are growing in size. We are also seeing increasingly larger cruise ships and bulk cargo vessels that will also be able to utilise the deeper draft following the completion of our dredging programme. In March, we commissioned our seventh container crane - another twin-lift Liebherr model. We now have four twin-lift capable cranes. We currently have two new tug boats under construction due for delivery early next year, to cater for the larger ships that will soon be regular callers to the port. Each will have bollard pulls of 74 tonnes, compared with the current tugs' bollard pulls of 50, 40 and 28 tonnes. The new tugs will replace the 36-year-old Kaimai and the 21-year-old Te Matua. Since 1997, we have seen the average length of container ships calling here increase from 170 metres to more than 207 metres, with a significant number of callers now longer than 260 metres and this trend accelerating over the last year. Last month, we had a record 4308 TEU exchange in a single vessel call over 24 hours through the Port. The sustained vessel rate of 116 moves per hour allows us to hold our head up high when compared with global benchmarking standards. As the Chairman has mentioned, we expanded our MetroBox container handling service to a second location in South Auckland, in partnership with Specialised Container Services. We also completed the purchase of the 6.8 hectare Gateside Industrial Park, located immediately adjacent to our MetroPort and MetroBox sites at Southdown. This site is also nearby to Tapper Transport's freight hub and already includes our MetroPack operation, so this purchase future-proofs our Auckland Intermodal Freight Hub and provides us with future growth options. Looking now to major cargo trends over the past year. Total cargo shipped across the port increased 3.5% during the financial year. We didn't quite reach the 20 million tonne mark, but we will certainly exceed that milestone in the 2015 financial year. Overall, imports increased 6% to nearly 6.4 million tonnes. This was mostly due to the confidence in the primary sector, with imported fertiliser volumes up 28% and grain and stock feed supplements also up by 28%. We experienced the effects of growth in the domestic construction industry with cement imports increasing 14%. Total exports increased by 2% to 13.4 million tonnes. Log exports grew 12% to nearly 6.3 million tonnes. Over the year we completed paving of all of our current log storage areas, and we are developing some further marshalling space alongside the berths to cater for future growth. Log exports have however slowed in the last quarter, as construction activity in China has contracted, along with the building of significant inventories, which has seen a 25% reduction in market pricing. Log prices have recovered approximately 10% in recent months (the red and black lines on this chart) and returns will also be helped by the falling NZ dollar (the olive line on this chart), but our log export customers remain cautious with their outlook whilst inventories still remain high in China. Kiwifruit volumes decreased slightly, by 2%, but are expected to start to increase again from the 2014/2015 financial year as the recovery from PSA continues. Zespri's slide here graphically illustrates the effects of PSA over the last few years, but on more positive note, Zespri are forecasting a near doubling of exports to 170 million trays over the next decade. We are working closely with Zespri and Tauranga Kiwifruit Logistics to ensure that we put in place the appropriate infrastructure to cater for this future growth. Dairy exports decreased 7% in volume. However following the recent conclusion of the Kotahi long term agreement, we expect a significant increase in dairy exports over the coming year. Fonterra has advised that its milk production in New Zealand is currently running just over 4% ahead of last season and we remain confident that Kotahi will deliver against their contracted volume commitments. In terms of overall container numbers, we saw a decrease of 10% with the loss of the Maersk calls. The Southern Star service resumed its Tauranga calls in August this year, and based on previous performance, we expect an extra 70,000 TEUs per annum attributed to this service. This slide demonstrates the choppiness of shipping lines moving between ports on a transactional basis and highlights the strategic importance of the Kotahi deal, in locking in a base shipper volume across our quays, to have the confidence to rationally commit to a $250 million capital expenditure programme. The last slide showed Port of Tauranga growing container volumes at around a 10% compounding aggregate growth rate over the last decade - despite the choppiness. This is more than double the global container growth rate of 4.7%, which indicates the trend to hubbing that is occurring in New Zealand. Transhipped volumes (transferred from one ship to another at Tauranga) are the key indicator of hub port emergence and transhipped volumes increased by nearly 5% over the year. Transhipped containers now represent 26% of all the containers handled at the terminal and we expect this trend to increase significantly over the next few years. A key component of our hub port strategy is the utilisation of our multi-modal terminal at MetroPort Auckland and rail continues to be an integral part of the Port of Tauranga's business model, with approximately 33% of all cargo moving into and out of the port by rail. We continue to work closely with KiwiRail to further increase capacity and enhance service levels on the MetroPort Auckland rail operation. This slide was prepared by KiwiRail and illustrates plans to more than treble daily container capacity over today's volumes of around 500 TEUs per day to more than 1,800 TEUs per day, utilising new locomotives, longer trains, and additional passing loops. Productivity rates at the Tauranga Container Terminal remain at global best standards. Over the year, we maintained an average net crane rate of 37 moves per hour (Tauranga in blue on his chart), which compares favourably with the New Zealand average rate of 33 moves per hour over the same period (black on this chart - the Australian average is shown on the dotted red line on the chart) In January this year we averaged a net crane rate of 40 moves per hour over the month. In the event of vessels being off window, we now have a degree of capacity to increase vessel productivity, now that we have the third berth and seventh crane operational. Our financial and productivity achievements are hollow if we injure or maim our staff in the course of our operations. Our commitment to workplace safety is a daily practice at the Port and I am pleased to report a strong improvement in safety performance with the Company incurring only one Lost Time Injury for the year, reducing our Lost Time Injury Frequency Rate by 92% to 3.5 per million hours exposure. We still consider this one accident too many, but I am pleased to observe a much greater personal accountability for safety across the organisation and port community, as we progress towards achieving our collective goal of having an accident free workplace. Staff turnover remains very low at approximately 5%. Of the nine employees to leave during the year, four retired. One had worked with us for 43 years, while another had worked here for 34 years. I say it every year, but please be assured that my words are sincere - it is our Port People that give us our greatest source of competitive advantage and we couldn't achieve what we do without the "can do" attitude that pervades this place. I am privileged to work with this team and I thank them for their support and collective contribution to growing this $2.2 billion enterprise. To all of our customers - thank you for your support and custom, it has been a pleasure working with you over the year. In closing, I will now give you an indication of how things have been trending in the first quarter of the current financial year. We have trade up 3%, logs exports down 14%, dairy exports up 23%, and containers up 14%. Transhipped cargo is up 47%, graphically illustrating Port of Tauranga emergence as New Zealand's hub port. Parent EBITDa was up 3%, with the Group Net Profit After Tax down 3% on the prior corresponding period due to higher interest and depreciation expenses related to our significant capital expenditure programme. We will invest approximately $250 million over the period between 2012 to 2016 to enable Tauranga to be "big-ship" capable and we expect to increase container throughput from last year's 760,000 TEUs to over 1,000,000 TEUs by 2017 Provided there are no significant market changes, we expect full year after tax earnings in the region of $78 to $83 million. So to conclude, you would have probably worked out by now that we are fiercely proud of our Port. We consider that our relative competitive advantages are strengthening. We reckon we have a first class asset, unrivalled capacity for future growth with our strategic land holdings of 190 hectares and excellent road and rail connections. We have invested wisely to become New Zealand's Port for the Future. Thank you for your attention this afternoon, Ladies and Gentlemen. Mark Cairns CHIEF EXECUTIVE End CA:00256762 For:POT Type:ADDRESS Time:2014-10-23 15:28:25
- Forums
- NZX - By Stock
- POT
- Ann: ADDRESS: POT: Port of Tauranga Annual Meeting: Chair & CE's Address
Ann: ADDRESS: POT: Port of Tauranga Annual Meeting: Chair & CE's Address
Featured News
Add POT (NZSX) to my watchlist
The Watchlist
EQN
EQUINOX RESOURCES LIMITED.
Zac Komur, MD & CEO
Zac Komur
MD & CEO
SPONSORED BY The Market Online