Fears of a flatline lag on port’s shares

SHARES in the country’s biggest export hub, Port of Tauranga, took a dive yesterday, as investors shrugged off a record annual profit.

The stock lost 31c to $14.39 in late afternoon trading, even though the company reported a 52 per cent rise in net profit to $112.1 million after tax.

However, the company noted its statutory profit was lifted by strong earnings from associate companies and a $38.2 million gain on the sale of its stake in freight company C3 Ltd.

Underlying profit was still up 5 per cent to $77.2m.

Analysts suggested investor expectations had been too high for the stock, which people had been buying up ahead of the result.

Grant Williamson of Hamilton Hindin Greene said Port of Tauranga ‘‘just seems to pour out record results, which given it’s a utility is a credit to the management’’.

However, Forsyth Barr analyst Andy Bowley said the share price was at risk of falling as investors questioned whether the company could keep up high growth.

Forsyth Barr said the management’s commentary seemed similar to last year and noted a softening in freight volumes during the second half.

‘‘We think growth is becoming increasingly more difficult to generate at POT given a more competitive Ports of Auckland and POT’s success in recent years.’’

While Tauranga had benefited from past industrial action at Auckland’s port, Port of Tauranga chief executive Mark Cairns denied freight volumes were starting to fall, although he did expect them to flatten.

During the year there had been a change in shipping services, with the return of Maersk’s Southern Star service to Ports of Auckland and the addition of four new services.

Container volumes had grown 7 per cent this year on the back of a 35 per cent rise last year. ‘‘That’s a pretty solid result.’’ The ‘‘acid test’’ would come when Ports of Auckland put out its results, Cairns said, but he believed Port of Tauranga had ‘‘hung on to more volume than we expected to’’.

Revenue at the port grew 7 per

‘The longer game is to actually trans-ship some of that South Island cargo over Port of Tauranga wharves on to the larger vessels.’ Mark Cairns Port Of Tauranga chief executive

cent to $244m during the period, boosted by container growth and a 3 per cent rise in trade volumes.

Trans-shipment volumes – containers transferred from one ship to another – rose 12 per cent but volumes at its South Auckland hub, MetroPort, were flat.

‘‘We’ll be working pretty hard to grow that again,’’ said Cairns, referring to the port’s recent purchase of 6 hectares adjacent to the inland port.

Looking south, Cairns was coy about the reason behind Port of Tauranga’s proposed $21.5m purchase of half of Timaru’s PrimePort.

PrimePort has suffered since Fonterra decided in 2009 to send most of its cargo through Lyttelton.

Whether Port of Tauranga was aiming to win that custom back, Cairns would not say, but he did say Tauranga’s ability to service bigger ships would tie in well.

‘‘The longer game is to actually trans-ship some of that South Island cargo over Port of Tauranga wharves on to the larger vessels.’’

Timaru was also an opportunity that was too good to pass up in other ways too. Seventy-five per cent of the South Island population lived within 200km of Timaru, and there were many irrigation projects underway there.

‘‘Given our RMA [Resource Management Act] legislation, I don’t think there will be too many new ports in New Zealand.’’