America's Cup revenue hoists Ports of Auckland gain to $43m

By DANIEL RIORDAN

Ports of Auckland has boosted annual profit by 30 per cent, despite losing market share in its core business of container shipping.

The company, which says the outlook for the current year is positive despite facing its toughest competition in years, yesterday reported a net profit of $42.8 million for the year to June compared with the previous year's $32.8 million.

Chairman Sir Richard Carter, who announced he would retire following the October annual meeting after seven years at the helm, said the company had achieved an "excellent" result against aggressive competition in the container market, which had affected volumes and revenue. The company's shares fell 1c after the result to close at 410c.

The biggest improvement was in property and marina income, which rose from $11.3 million to $19.3 million, boosted in part by activity associated with the America's Cup.

Productivity increases and cost reductions were achieved across all operations.

Sales revenue was up just 1 per cent ($153.3 million compared with $151.9 million), but operating expenditure fell 6 per cent to $91.9 million. Unusual items were $3.5 million lower at $2.8 million.

The company reported its shipping volumes a month ago and the financial results were largely in line with analysts' expectations.

The company's share of the key container market has fallen. It now has 43 per cent of national trade, compared with 50 per cent last year, and 56 per cent of the North Island trade, down from 70 per cent.

Chief executive Geoff Vazey attributed this to regional ports enjoying strong growth in locally sourced exports while exports from the Auckland region remained relatively static. In a couple of key markets, meat exports through Auckland dropped 15 per cent while dairy was down 4 per cent.

The company also took a big hit from the decision last year by shipping line ANZDL to work through the Port of Tauranga, losing about 10 per cent of its container trade.

Its container volumes had held steady, and adjusted for the ANZDL loss were up 20 per cent, according to UBS Warburg analyst David Fraser.

Mr Vazey said the company was trying to win back container trade by offering lower prices to some customers. Container volumes nationwide rose about 16 per cent last year and the company was confident it could lift its market share by continuing the major operational improvements made in the year just finished.

Contributing to longer-term confidence was a worldwide shipping trend to larger vessels and mergers between shipping lines.

Bigger ships would spend less time in New Zealand and have greater requirements in berth depth, backup land and cranes.

That would make them less likely to call at regional ports and more likely to focus on Ports of Auckland.

The company declared a final dividend of 9c, lifting total dividends for the year to 33c, which included a special dividend of 15c declared in February. All dividends were fully imputed.