Napier Port expects to report a sharp drop in its first half profit. Photo / File
Napier Port expects to report a sharp drop in its first half profit. Photo / File
Napier Port says supply chain disruption and labour shortages will drag its operating profit down by about 23 per cent to $16.4 million in the first half year to March.
NZX-listed Napier Port - New Zealand's fourth biggest port by container volume - also lowered its full year earnings forecast.
Container volumes fell by 16.6 per cent in the half year and bulk cargo volumes dropped by 8.7 per cent.
"The fall in cargo volumes over the period follows an escalation in global container-based supply chain and shipping disruptions, ongoing seasonal labour shortages compounded by pandemic-related absences across cargo-owners' workforces, and adverse local seasonal weather conditions that have impacted primary sector production," it said.
Cargo volumes for the year to September would be lower than previously forecast, with a corresponding reduction in the port's outlook for the 2022 financial year.
Napier Port now expects an underlying result from operating activities for the year to be in a range between $38m and $42m - less than the previously forecast increase of about 10 per cent on the result for 2021 of $43.8m.
Napier Port chief executive Todd Dawson. Photo / Supplied
Chief executive Todd Dawson said the port, along with the Hawke's Bay region, had faced a challenging half year.
"There has been an escalation in regional and global container shipping schedule disruption and we continue to work with vessel omissions, delays, and inconsistent schedules across fewer vessel calls," he said.
"This has been accompanied by larger container exchanges for both the port and cargo-owners to manage."
Omicron outbreaks and pandemic-related port lockdowns in China have put additional pressure on global supply chains and flow-on effects on shipping reliability into New Zealand, Dawson said.
"The continuation of seasonal labour shortages in New Zealand's primary sector has compounded the impact of Omicron across Napier Port's second quarter, with labour shortages creating delays to production within customer operations and reduced overall production, contributing to the delay in processing of seasonal harvests and lower volumes of meat into the port."
Extreme weather contributed to delays in cargo arriving on port and caused several port shipping closures in the second quarter.
"Swell has been significant, and February and March were two of the heaviest rainfall periods on record for Hawke's Bay, with the quarter ending with the East Coast storm over the last week in March."
Dawson said Napier Port is optimistic the environmental factors that delayed product getting to port in February and March were easing, with cargoes moving more normally in the month to date.
The trade environment for key cargoes remained positive with primary sector commodity prices remaining high across New Zealand.
"We are expecting a stronger second half for meat, forestry and horticulture exports, assuming industry labour is available."
These positive factors were tempered by inflationary and other economic pressures we have highlighted previously.
"Cargo customers are concerned by ongoing shipping disruption, increasing supply chain costs, and ongoing labour shortages," he said.
Container vessel calls for the half year were 102, down from 133 calls in the prior year.
Log export volumes fell by 20.5 per cent for the second quarter and 7.9 per cent for the half year due to weaker export market conditions, higher shipping costs, an expected slowdown during Chinese New Year celebrations, as well as Covid-related disruptions at major Chinese ports and within the log export supply chain, the company said.
