Wake-up call as port profit slips

By Dita De Boni

Tauranga's inland port is being blamed for a 23 per cent drop in second half profits by Ports of Auckland.

More than 70 redundancy payouts costing $6.3 million were spurred on by Auckland losing 10 per cent of container freight to the inland port established in South Auckland.

"There's nothing like desperation to focus the mind -- Tauranga was a major wake-up call to us," chief executive Geoff Vazey said at the company's results briefing yesterday.

Mr Vazey said he could "never say never" to more job losses but that the company was now in a position to claw back lost business as larger vessels rationalised their port calls and a move to container shipping favoured the "economies of scale" at the Auckland site.

Ports of Auckland declared full-year earnings of $32.8 million, down from $40.3 million in the 1997/98 year, with revenue slipping from $166.4 million to $151.9 million this year.

Earnings per share also fell from 30.4c a year ago to 24.8c this period, but the company managed to maintain its ordinary dividend of 18c (9c final) for a third consecutive year - though not last year's 38c special dividend.

Mr Vazey said the company was encouraged by the 5 per cent increase in total container volumes this year, and general freight throughput largely due to a 45,600 new and used car increase, and other signs, that it could "return to double-digit growth like before the Asian recession".

The company also pointed out that last year's results had been boosted by the sale of marina berth licences and other properties which were not repeated this year.

Mr Vazey said part of becoming more competitive meant Ports of Auckland would eventually pass cost savings made this year on to clients, but he would give no details about a timeframe for likely rate reductions.

Warburg Dillon Read analyst David Fraser said the Ports of Auckland would be soon considered an attractive investment.

"Operating efficiencies gained through restructuring will be very positive in the coming year for the company," he said.

The company also announced a reduction in directors, from eight to six, with the resignation of David Chetwin and John MacLennan this week.

Ports of Auckland shares ended the day up 6c at 496c.