Port of Tauranga full steam ahead but what's next for dividends?

All eyes next on Port of Tauranga capital management plans.

With the Port of Tauranga due to pay its last scheduled special dividend later this year and another capex growth wave on the horizon, investors are pondering about its next intentions for dividends.

The port, which this week reported a strong 10 per cent increase in net profit for the first half of the 2019 financial year (group net profit was 4 per cent up) will update the market on its capital management and expenditure plans on August 28, when it announces its full year result.

In September it is due to pay a special extra dividend of 5c per share, the last of four special annual dividends which has seen the company pay out 90 per cent of its retained earnings.

The company's current dividend policy is to pay out between 70 and 100 per cent of retained earnings.

Delivering its half year result on Monday, the company said it would reduce its capital spend this year from $60 million to $45m. It declared an interim dividend of 6c per share, up 5.3 per cent on the previous corresponding period.

Craigs Investment Partners senior research analyst Mohandeep Singh said the market would be keen to hear whether the company will continue to pay a special dividend or stop the practice given the capital expenditure ahead to meet cargo growth expectations.

In October the company outlined five projected stages of capex, totalling $310m.

The programme includes the purchase of multiple new gantry and rail-mounted cranes and extending the container terminal quay south by 285 metres.

Actioning of the staged programme is dependent on cargo volume growth.

The company this week said it expected full 2019 year earnings to be at the upper end of the previous guidance of $96m to $101m. It expects to handle about 1.3 million containers in the year.

The share price of New Zealand's biggest port rose to $5.45 immediately after the strong half year result, which recorded an 8.8 per cent rise in total trade to nearly 13.6 million tonnes, but has since trailed off to $5.20, which Craig's Singh attributed to light trading volumes and some profit taking by investors.

The half year group net profit rise of 4 per cent was on revenue of $153m, compared to $141.4 for the same 2018 period.

The earnings of fully-owned subsidiary Quality Marshalling increased 36.4 per cent on the previous period but associate companies' earnings declined, largely due to accounting position adjustments.