SPN
30/10/2014 10:36
GENERAL
REL: 1036 HRS South Port New Zealand Limited (NS)
GENERAL: SPN: South Port Annual Meeting 2014
South Port New Zealand Annual Meeting
NZX AND MEDIA STATEMENT
30 OCTOBER 2014
South Port investing in container capacity
"South Port New Zealand is expanding its container handling capability to
provide a competitive ongoing shipping option for Southland based
containerised cargo", the Company's Chairman, Mr Rex Chapman told today's
annual meeting.
This is occurring against the background of potential consolidation in the
New Zealand ports sector.
"As the operator of the Port at Bluff, Southland, the Company is monitoring
these developments closely, while maintaining good relationships with those
other ports that are at the forefront of changes in the port sector", said Mr
Chapman.
"The consolidation of cargo at one or two New Zealand ports is an inevitable
precursor to the introduction of larger container vessels on sea-lanes to New
Zealand", he said.
"These larger vessels are more fuel efficient and are expected to provide a
lower cost service because of their scale. These cost benefits can only be
achieved if the vessels operate at or near maximum capacity.
"If these larger ships are confined to Auckland, Tauranga or Lyttelton, then
Bluff will more than likely be required to service coastal feeder vessels to
these major port hubs. This is an outcome that has formed part of our longer
term strategy".
"One of the consequences of the freight alliance between Kotahi, Port of
Tauranga and Maersk is that other shipping lines are jostling to secure the
remaining slice of the container pie", said Mr Chapman.
"This has the potential to result in changes to cargo movements out of
Southland. South Port has limited ability to influence some of these
logistics decisions and our best response is to ensure that we remain a
competitive option for the regions exporters and importers".
STRONG YEAR
After a slower start to 2014 South Port had achieved a new record cargo
volume of 2.72 million tonnes and a record net profit after tax of $6.68
million. This profit was a 2.8% increase on the previous year's result of
$6.5 million.
The dividend policy has resulted in a sustained and steady increase in
dividends over recent years. This year's dividend has been held at 22 cents
per share because of the need to fund future capital expenditure on a second
crane and proposed warehouse development.
The second Liebherr mobile harbour crane and an additional heavy-lift
container forklift will cost $6.3 million but will provide a two container
crane operating model for the MSC Capricorn Service, meeting the
"time-in-port" operating window with an increased volume of cargo exchanged.
The Company owns an industrial site in Mersey Street, Invercargill adjacent
to a Kiwi Rail area. Early planning is under way to establish a 4,000m2
warehouse and packing/unpacking operation at this site.
South Port Chief Executive Mark O'Connor said "several sectors had
contributed to 2014 being a successful year for the company, the growth of
forestry and dairy, strong levels of fertiliser and petroleum imports,
aluminum production at NZAS's Tiwai Point Smelter, and increased
containerised trade".
South Port cargo handling has increased 46% over a period of six years from
1,863 tonnes in 2009 to a record 2,719 tonnes in the 2014 year. Some 75% of
all cargo through the Port is bulk.
Commenting on the ongoing issue of NZAS's business viability, Mr O'Connor
noted improved trading conditions over the year. The revised energy supply
contract with Meridian Energy would require key decisions by this customer
over the next 18 months.
"Forestry now represents a quarter of South Port tonnage. Log volumes
during the previous year reflected an upward cycle in that trade; however,
Chinese buyers were out of the market for the time being", said Mr O'Connor.
The medium to longer term outlook for the southern region's forestry industry
is positive on the supply side with recoverable quantities of Radiata rising
over 2015-16 and projected at a sustainable 800,000m? from 2019 to around
2028. Douglas fir production would remain below 200,000m? until around 2028
when it would trend steadily higher and offset the long-term trend in
Radiata.
"Dairy inputs into the expanding agriculture sector are significant, notably
from stock food and bulk liquids, but fertiliser and fuel have continued to
be important", said Mr O'Connor.
To meet growing demand from customers for storage, South Port spent $4.8
million on a new 6,000m? dry warehouse primarily for fertiliser and stock
food, and this facility has completed a successful full year's operation.
South Port's growth targets include attracting 35-40% of the regional
container market as a feeder port. As the Company develops container
infrastructure it would encourage liner service commitment as a parallel
investment in the region.
In the energy sector, there is scope for further growth from additional
sources such as servicing potential future gas production in the Great South
Basin. The Shell Consortium is programmed to commence exploration from 2016.
An additional permit has been awarded to Woodside Petroleum, a major
Australian E&P group with deepwater experience, and New Zealand Oil & Gas.
Bluff is ~80 kms from the northern edge of this permit.
The reduced dairy pay out may result in a reduction in fertiliser and
supplementary stock feed imports. At this stage of the year there is no
discernible trend in respect to these cargos.
OUTLOOK
"During this last year log prices have fallen and it is expected that there
will be a consequent reduction in log volumes", said Mr Chapman. "There are
some signs of a recovery in the demand for New Zealand logs but it is
difficult to predict with any certainty how log volumes in the coming year
will compare to the previous year".
The Company's investment in increased warehousing, all of which is fully
tenanted, helps to balance some of more cyclical revenues.
"At this very early stage of our financial year we are forecasting a similar
overall cargo level but a slightly lower level of tax paid profit for 2015",
said Mr Chapman. An update of the earnings outlook will be provided at the
time of releasing the interim result in February 2015.
As part of its Annual Meeting process, South Port provided to shareholders a
viewing of the Bluff Port infrastructure including the newly acquired
Liebherr mobile harbour container crane. This crane received a formal
blessing from local Runaka representative, Dean Whaanga, plus was officially
commissioned during the Port tour by Environment Southland Chairman, Ali
Timms. Environment Southland is a 66.5% shareholder in South Port.
FOR FURTHER INFORMATION PLEASE CONTACT:
Mr Mark O'Connor
Chief Executive
South Port New Zealand Ltd
Tel (03) 212 8159
Mr Warren Head
Managing Director
Head Consultants Ltd
Tel (03) 3650 344
Mobile 021 340 650
End CA:00256996 For:SPN Type:GENERAL Time:2014-10-30 10:36:10
