Logs underpin port result

Mark Cairns says container shipping is a dynamic industry. Photo / APN

Underlying profit hits record level as timber exports help offset decline in containers.

A booming log export trade helped offset a 10 per cent decline in Port of Tauranga's container business, allowing the company to report a record underlying profit of $78.3 million for the June year, up 1.3 per cent, and an increased dividend.

The company's year was heavily influenced by shipping giant Maersk, which switched its Southern Star service to the main competitor, Ports of Auckland.

This month, the tides turned and Port of Tauranga, which in June signed a long-term agreement with Maersk and logistics company Kotahi, reclaimed the Southern Star.

Port of Tauranga chief executive Mark Cairns said the 10 per cent fall in container volume was almost entirely the result of the Southern Star calling at Auckland during the year.

"That's how significant the Southern Star call was to us leaving, and how significant it is to us now that it has returned again," Cairns said.

"That's the nature of container shipping," he said. "It is very dynamic."

On Wednesday Ports of Auckland reported net profit of $74 million for the year to June 30, up 90 per cent on the previous year, driven in part by a recovery in the container trade. Ports of Auckland said Port of Tauranga's Kotahi deal could cost the company up to 10 per cent of its container trade this year.

Cairns said log volumes were up 12 per cent over the year and that the port had not suffered a decline in volume as a result of recent price falls.

Port of Tauranga's bottom line profit fell by 30.2 per cent to $78.3 million from $112.1 million a year earlier, mostly reflecting a $34.9 million gain from the sale of an associate in the prior year.

Group earnings before interest, tax, depreciation and amortisation increased by 5.5 per cent to $142.5 million from $135 million.

The board declared a final dividend of 29c a share, lifting the full-year dividend to 50c a share, representing an 8.7 per cent increase over the prior year's dividend. Cairns said that net debt at $255 million and gearing at 29.7 per cent gave the company capacity to fund the $50 million expected to be required to dredge shipping channels.

Dredging was due to start next year, Cairns said.

Price pressure in the Chinese market was expected to impact on the volume of log exports in the short term, he said.

Shares in Port of Tauranga closed up 60c yesterday at $15.90.