Port Otago delivers another solid dividend

Media Release – 20 September 2023

Port Otago Limited today announced an underlying profit for 2022/23 of $32.0 million, compared to $17.6 million last year, and an annual dividend of $14.0 million to its shareholder, the Otago Regional Council (ORC).

While the Net Profit After Tax of $23.3 million was down on last year’s profit of $70.5 million, that was largely due to a near-zero unrealised property revaluation this financial year, compared to an uplift of $60 million unrealised property revaluation last year. Port Otago uses underlying profit to measure and compare between years. It is profit from the four core business units – container, bulk, cruise and property – and excludes property revaluations, adjusted only for the margin on current property development projects.

Shareholder equity increased slightly, to $704 million. The equity ratio was strong at 79% at 30 June 2023, and 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 pleased with the underlying profit figure, which positively reflected the day-to-day business of the port. “The return of cruise, along with increased container transships, boosted our bottom line. We also saw the positive impact of completing three Te Rapa Gateway design/build/lease warehouses during the year.”

Mr Gibson says Group revenue was significantly up on last year - $111.3 million, compared to $88.0 million. “Key was the return of cruise and its associated income. After two years of effectively zero income from this pillar of our business, we welcomed the season’s 101 vessels.”

Container throughput was up 12% on last year. “It’s great to see the container business grow market share, with transship volumes double that of last year and with 152 container vessels – well up on last year’s 108 total.”

Bulk business volume was 1.8 million tonnes – up 6% on last year. “This was due to increasing fuel and fertiliser volumes, and log exports were also up on last year.”

Mr Gibson says rentals from port property and investment properties increased 8%, to $33.9 million. More warehouse tenants were secured at the Te Rapa Gateway development, alongside lease renewals across the property portfolio.

Port Otago also released its fourth Integrated Report, today. Mr Gibson says the Integrated Reporting approach is keeping the business focused on the long term, in a balanced, healthy and transparent way. “When it comes to making decisions, being aware of all six capitals – our kaimahi, wider team, harbour and taoka, know-how and skills, assets and financial performance – steers us towards better decisions for our business and for others.”

Mr Gibson says several significant projects were delivered during the year. “Te Rauone Beach was opened in time for summer 2022/23 and we’re very proud of our involvement with the Te Rauone Coast Care Committee, whose members were at the forefront of this project.”

Another major achievement was the upgraded Ravensdown Wharf. “This outcome was years in the making. Together with Ravensdown, we worked through the challenge of balancing economic returns with the benefit of continued operation of the plant and reached an excellent solution. The upgraded wharf enables bulk carriers to berth directly outside the plant and removes the need for trucks to carry product by road.”

Mr Gibson says that, looking ahead, improving business as usual is a priority. “This year will be challenging, as New Zealand’s deteriorating economic conditions lower returns to our region’s farmers and reduce spending in our economy. We anticipate container volumes will be similar to the past year and turn our attention to the supply chain – specifically, how we can help our customers find efficiencies that will buffer them from variable export revenues. The upcoming cruise season is likely to be a record for Port Otago. Overall, we are well positioned and will continue investing in our business and taking advantage of opportunities that align with our strategic goals.”

Mr Gibson thanked the company’s 310 kaimahi for maintaining the quality of outputs during the 2022/23 year. “Particular thanks to our Operational teams who got in behind a four-month period of working a different shift pattern to accommodate increased volumes associated with the weekly Polaris service. This sent a strong and positive message to our stakeholders.”

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Integrated Report 2023