Port Otago delivers $30.4 million profit

Port Otago Limited today reported a Net Profit After Tax of $30.4 million, up 30% on last year’s $23.3 million result. 

Port Otago measures its business on an underlying profit^* basis and, for the 2023/24 year, the underlying result was $34.4 million – up 7% on last year’s $32.0 million. The company has paid an annual dividend of $16.0 million to its shareholder, the Otago Regional Council (ORC).

The equity ratio was 78% at 30 June 2024, comfortably within the Statement of Corporate Intent range of 70% to 85%.

Port Otago Chair Tim Gibson presented the financial results to the ORC this afternoon. He says the Board is delighted with the result, which includes record seasons for both the container and cruise businesses.

“It’s great our container business contributed to the bottom line this year. Our Port Chalmers terminal handled a record 269,000 TEU, which included 104,000 transships units. This total throughput was 44% higher than last season. In order to manage the additional volume, 16 new Cargo Handlers were recruited and joined our kaimahi in the second half of the season. A big thank you to our existing Operations team who stepped up to keep the wheels turning in the meantime.”

Mr Gibson says the other particularly noteworthy element of this year’s result is that it included a $47 million investment into developing port and property assets. “We did this without increasing our borrowing and while continuing to meet our dividend commitment to the ORC. In the future, we will continue investing to remain resilient and profitable.

“We know what’s coming and that is increasingly severe impacts of climate change on our coast and the need to reduce our carbon emissions. Proactively investing in mitigating these risks and accommodating future shipping demands is not a ‘nice to have’. It is essential.”

Group revenue was significantly up on last year – $133 million, compared to $111.3 million. Operating expenses were up 12%, largely due to increased wages associated with a new shift model introduced to handle the increased container throughput.

Cruise experienced a record year, with 118 vessels received, carrying 272,000 passengers and crew – an estimated $90 million boost to the region’s economy. Bulk cargo volumes were down marginally to 1.70 million tonnes, compared to 1.77 million tonnes last year. Log export volumes remained consistent at 1.0 million tonnes.

Rental income from the investment property portfolio increased 15% to $30.3 million. While challenging economic conditions and increasing costs of construction slowed demand for new warehouses, two new builds were completed in Te Rapa Gateway during the year and a further two are currently under construction.

Three significant projects were delivered during the year. The Port Chalmers 1890s’ wooden Cross Wharf was rebuilt at a cost of $8.3 million. It was the final element to complete the company’s fit-for-purpose wharf infrastructure. The Marine team welcomed the $3.4m Te Rauone pilot boat to the fleet. And our Operations team opened a new container depot at Ravensbourne to provide additional capacity for customers and shipping partners.

The Port Otago board and leadership have reviewed the company’s “Build a better business” strategy. Mr Gibson says the team drew heavily on stakeholder feedback. “With the support of our shareholder, we have developed our roadmap for the future – and that is to be New Zealand’s ‘always open’ port. Always open in terms of our infrastructure and capability, but also always open to growth opportunities and new technology. This ties back to the need for significant investment in coming years. We must, where practically possible, remove volatility and deliver reliable returns for the long-term health of our region.”

Mr Gibson says the business and leadership are in excellent shape to deliver this strategy.

Looking ahead, tougher economic conditions will continue to challenge the region’s economy. “We expect export volumes to reduce as some sectors struggle to pass on increased costs, and imports to stay at low levels. We do know that there will be 20% fewer cruise ships calling this season, as cruise lines reposition vessels to higher-yielding markets offshore. We are engaged with cruise lines, with the goal of winning back business in the medium term. 

“At an operational level, there is significant activity, including replacing ageing railway infrastructure and upgrading the cruise terminal at Port Chalmers. We are also investing in strengthening the Aramoana Mole. All of these activities are critical for the business to be always open.”

Mr Gibson thanked the company’s kaimahi for another solid year and stepping up when it was needed. “As reflected by our bottom line, it was a big year for the business.”

Contact: