Positive half-year result for Port Otago

Media Release – 23 February 2023

The Port Otago Group today announced a half-year profit of $9.2 million for the six months ended 31 December 2022, up 42% on the comparable 2021/22 result of $6.5 million.

Port Otago Chair Tim Gibson says the result is positive, given the challenges of recent years, and reflects the company's strong underlying financial base and its focus on ensuring that stability for the long term. "Decisions at Port Otago are made with decades ahead in mind. At an operational level, we are committed to investing in timely maintenance and capital infrastructure, alongside constantly questioning and improving our business operations.

"At a strategic level, our four business components – container, bulk, cruise and property – provide a balanced portfolio that minimises the impact of a poor financial performance within any single business unit. The value of this approach has been well illustrated by the complete disappearance of cruise for two-and-a-half years. The other three business units carried us through until October, when we welcomed the smooth return of cruise."

Revenue from marine and cargo services was up 29% on the comparable period last year, due to the return of cruise, alongside increased bulk and container volumes. While container trade continues to be disrupted by constraints elsewhere in the network, vessel reliability is improving and a more normal pattern is emerging.

Container TEU throughput increased by 5% over the period, with lower import volumes offset by higher transship volumes through Port Chalmers. Log export volumes of 543,000 tonnes for the six months were up 23% on last year's comparative period volume of 441,000 tonnes.

Mr Gibson says the long-term strategy of investing in the Auckland and Hamilton property markets is delivering, with income from property rentals increasing 10% to $16.7 million. "We have four design/build/lease projects underway and three will be completed by 30 June 2023, with the subsequent rent falling into the 2023/24 financial year."

In Dunedin, the Otago Regional Council's new headquarters, Whare Runaka, has moved from planning and design, to the construction phase. "Over the next 18 months, we will be focused on delivering a quality outcome for our shareholder," Mr Gibson says. "Closer to home still, construction of a new office for our team and the associated museum extension are on track for a mid year completion."

Two significant people-related projects are having an impact on the company's safety culture. The Safety Leadership Programme was rolled out during last year, giving our safety leaders the confidence and skills to be more effective and forthright in the business. In December, Port Otago Learning went live. This learning management system provides clarity in relation to roles, safe working procedures and training pathways.

Infrastructure projects continue in earnest, with the Ravensbourne Wharf upgrade nearing completion and work on a new Cross Wharf in the Port Chalmers basin due to start. The new wharf will replace a 100-year-old timber structure and is the last phase in modernising our Port Chalmers wharf infrastructure.

Within our community, the new amenity beach at Te Rauone was the highlight of the six-month period. The long-running project reached a milestone at Christmas, when work to pump 28,000m3 of recycled sand from our dredging operation up onto the beach was completed. "Much credit must go to the Te Rauone Beach Coast Care Committee members, who worked tirelessly to see the beach become a reality."

Looking ahead at the six months to 30 June 2023, Mr Gibson anticipates a 2022/23 full-year result ahead of last year's. "Alongside the return of cruise and increasing property rentals, we expect container and bulk volumes to be similar or slightly better than last year."

Directors declared an interim dividend of $6.5 million – up from 6.0 million last year – which will be paid this month.

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Interim Report to 31st December 2022