SPN
11/02/2016 16:15
HALFYR
PRICE SENSITIVE
REL: 1615 HRS South Port New Zealand Limited (NS)
HALFYR: SPN: South Port NZ Ltd Interim Result
NZX & Media Statement
SOUTH PORT INTERIM PROFIT ANNOUNCEMENT
11 February 2016
South Port off to a strong start
Another positive start to the trading year has been made by South Port New
Zealand, with interim net profit improved 53.8% to $5.06 million, in the six
months to 31 December 2015, compared with $3.29 million in the corresponding
period last year.
South Port Chairman, Mr Rex Chapman, cautioned however, that the interim
results are influenced by a much higher proportion of scheduled annual
maintenance falling in the second half of the current financial year. He
said there would be "sizeable second half maintenance expenditure which will
occur across several operating areas."
"That aside, the improvement is satisfying as it comes against a challenging
market backdrop for a range of cargo providers," said Mr Chapman.
The Company also experienced an unexpected lift in tonnage, compared with
budget indications sourced from customers in autumn 2015.
"These projections had suggested reduced volumes across the board were likely
given the slow-down in the Chinese economy and lower international
agriculture prices," said South Port Chief Executive, Mr Mark O'Connor.
"In actuality, total cargo volumes rose 33,000 tonnes or 2%, to 1,512,000
tonnes, compared with 1,479,000 tonnes in the prior corresponding period."
"This cargo lift was driven primarily by stronger exports of bulk forestry
products (logs and woodchip), and increased volumes of dairy products,
reflecting the second seasonal impact of the production expansion made by
Open Country Dairy at their Awarua manufacturing site."
"In addition, consistent import volumes of fertiliser and petroleum, plus
stable activity related to the NZAS Smelter activity, supported our overall
throughput."
Mr O'Connor said that based on the cargo pattern for FY16 to date "it would
appear that financiers are supporting dairy farmers and accommodating
continuing pasture maintenance and feed related expenditure."
The major operational event of the half-year was the delivery of the tug Te
Matua, a larger vessel sourced from the Port of Tauranga at a total cost of
$2.5 million. Commissioned pre-Christmas, the modern tug's 40 tonne towing
strength lifts South Port's combined two-tug towing capacity to 75 tonnes.
Commenting on the 'over-heated' container shipping market, Mr O'Connor says,
"there is a mis-match between ship-slot capacity and available cargo."
"From an importer and exporter perspective this may offer a short-term win
but in the medium to longer term, rate stability needs to be re-established
to ensue key market connections remain viable. All major international trade
lanes are facing a similar predicament."
"South Port continues to progress business development opportunities", said
Mr O'Connor. Construction of the Intermodal Freight Centre began in November
on a 0.8 ha container unpacking/packing site at Mersey Street, Invercargill.
The facility has a target opening date of 2H16. It will mostly support
import container cargo flows into the Southland region, and for this purpose
is located adjacent to the KiwiRail container transfer yard.
The economic viability of the proposed Kaiwera Downs Wind Farm is being
assessed by Trustpower. Resource consents have been granted by local
councils for up to 83 wind turbines on a site 15 kms south-east of Gore. The
potential size and timing of the first of various stages is dependent on
market conditions.
In respect to NZAS, Mr O'Connor said "an extremely challenging environment"
continues to be faced by the aluminium producer, with weak international
aluminium commodity prices persisting. A decision from the Electricity
Review Authority on transmission charging by Transpower is awaited and any
resulting realignment will have "a significant bearing on the long-term
viability of NZAS."
The Shell/OMV/Mitsui oil exploration consortium is seeking more time for sub
surface analysis prior to making a final decision on whether to drill an
exploration well within their Great South Basin licence. South Port and
regional stakeholders continue to interact with the exploration interests who
remain optimistic about the medium-long term energy potential in the Basin.
OUTLOOK
"Despite a subdued demand picture for a range of cargoes, there are recent
customer signals that stable second half operations are likely", said Mr
Chapman. "South Port's main cargo flows are expected to hold up well and to
track budget expectation in the six months to 30 June 2016."
Given the planned increased level of repairs and maintenance spending in the
second half, a smaller net profit contribution is expected in that period.
Based on all current known factors, South Port estimates full year earnings
will be in the range of $8.25 million to $8.75 million, compared with $7.74
million earned in FY15.
"After assessing an anticipated year end result in this range, the Directors
have declared an increased fully imputed interim dividend of 7.50 cents per
share, compared with 7 cents per share in 1H15. The dividend will be payable
on 8 March 2016."
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) 365 0344
Mobile 021 340 650
End CA:00277540 For:SPN Type:HALFYR Time:2016-02-11 16:15:59
