Tauranga port comes up with ‘cracker result’

Winning business from strike-hit Port of Auckland was only a minor factor in Port of Tauranga’s record half-year profit of $34.6 million, up 22 per cent from the previous half year.

The company has experienced strong cargo and revenue growth, and has turned that into strong profit growth, analysts said.

‘‘We are very proud of that. It was a cracker result,’’ port chief executive Mark Cairns said.

Chairman John Parker said the port was well placed for the second half of the year, and expected to post a full year after-tax earnings result in the region of $69m to $72m, stronger than most analysts expected.

The port has secured six new shipping services recently which will underpin profits in the second half, although the company has typically been conservative in its forecasts.

It also hopes for consent this year to dredge the port to allow much bigger ships to berth, which would make it even more attractive for freight.

Forsyth Barr research director Jeremy Simpson said the Port of Tauranga result was stronger than expected in all areas.

‘‘Port of Tauranga has been one of the best performers – perhaps the best performer in the market through the economic slowdown,’’ he said.

The port was well-managed, well-positioned for greater hubbing and transshipments of cargo and was growing its market share.

Log volumes were still growing and that was a big part, and high profit margin part, of the business. ‘‘Logs have probably been the thing to get them through the global financial crisis,’’ Simpson said.

Port of Tauranga declared a 20 per cent increase in interim dividend to 12 cents a share, fully imputed, from last year’s 10c a share. The dividend will be paid on March 23.

Port of Tauranga shares initially rose 20c to $11 on the strong profit result, but eased back to $10.80 by early afternoon. The shares are up from $7.73 a year ago. Analysts now rate the stock as ‘‘neutral’’ and around present valuations, so it was not seen as a bargain.

Goldman Sachs JB Were analyst Marcus Curley said Tauranga had turned very strong volume growth into ‘‘very strong profit growth’’. Underlying earnings were up about 40 per cent in the past couple of years.

‘‘When you grow earnings at that pace, the share price is going to follow.’’

The share price was ‘‘up to speed’’ with the result, but the company still had good growth prospects, Curley said, so long-term investors would not see the stock as over-valued.

For the December half year, total cargo volumes were up almost 10 per cent and container volumes jumped more than 17 per cent.

Total revenues for the half year rose 14 per cent to $105.7m.

‘‘Forestry has been an important backbone to the port. That has been surprisingly resilient,’’ said Cairns.

Log exports had risen 7 per cent and that was a big chunk of total exports.

But the real standout was the growth in container traffic, especially for dairy products – mainly milk powder – and the port aimed to lift its market share in that sector.

In the half year, it secured six new shipping services. Of those six, three Maersk services moved from Auckland to Tauranga, but the rest were new services, and some of those were calling at Auckland too.

‘‘We have put the building blocks in place [on reliability, productivity and cost competitiveness] but the industrial action in Auckland has been the final straw for a number of customers,’’ Cairns said,

However, little of the extra cargo in the past six months was diverted from Auckland, he said.