POT 0.34% $5.90 port of tauranga ltd ordinary shares

Ann: ADDRESS: POT: Port of Tauranga Annual Meeting: Chair & CE's Address

ANNOUNCEMENT SPONSORED BY PLUS500
ANNOUNCEMENT SPONSORED BY PLUS500
CFD TRADING PLATFORM
CFD Service. Your Capital is at risk
CFD TRADING PLATFORM CFD Service. Your Capital is at risk
ANNOUNCEMENT SPONSORED BY PLUS500
CFD TRADING PLATFORM CFD Service. Your Capital is at risk
  1. lightbulb Created with Sketch. 2
    • 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
    				
 
watchlist Created with Sketch. Add POT (NZSX) to my watchlist
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.