INDEPENDENT NEWS

POAL financial results show underlying strength

Published: Thu 25 Aug 2005 10:35 AM
Media Release
Thursday 25 August 2005
POAL financial results demonstrate underlying strength
Ports of Auckland’s financial performance for the year ended June 2005 demonstrated the underlying strength of the business, Chairman Neville Darrow said in announcing the result today.
“2004-05 was a challenging year as it incorporated the loss of a significant shipping-line service. But the Company has turned in a most creditable result, and with the winning of three new services in the final quarter the prospects for this coming year are much improved,” Mr Darrow said.
Total earnings before interest and taxation (EBIT), excluding unusuals, were $70.1 million against $71.0 million for 2004.
Port Operations EBIT, excluding unusuals, was $61.6 million against $64.2 million. Port Operations covers all cargo-handling activities and represents most of the Company’s business activities.
The after-tax profit, excluding unusuals, was $42.2 million compared with $44.3 million for 2004. The surplus after tax, including unusuals, was $38.6 million compared with $57.2 million. The 2004 result included a net gain of $12.0 million largely as a result of the sale of the Westhaven and Hobson West Marinas.
Shareholders’ funds increased by 65% to $651.7 million. The value of investment properties rose 80% on revaluation at 30 June 2005 to stand at $183.6 million. The value of operational properties increased 64% on the three-yearly revaluation at 30 June 2005 to stand at $582.6 million.
Superior shareholder returns
“Ports of Auckland has generated superior returns to its shareholders in the short, medium and longer term. Over the period since listing on the New Zealand Stock Exchange (12 years), the compound annual growth rate was 19.2%. Over the past year, it has been 25.2%; over the past three years 16.6%; and over the past 5 years 21.2%,” Mr Darrow said.
Continuing commercial focus
In regard to the acquisition by Auckland Regional Holdings (ARH) of the 20% of shares it did not already own, Mr Darrow said that it was very much business as usual for Ports of Auckland.
“First, because ARH remains a very supportive shareholder and there is every encouragement to operate the ports commercially and to grow in line with an agreed strategic direction. This, of course, to ensure an increasing dividend stream for the benefit of the Auckland region. Second, because the Port Companies Act requires us to run a commercially successful business.
“Ports are also a leading barometer of a nation’s economy and the Port of Auckland is New Zealand’s largest port. We recognise that our performance is an important indication of the health of both the Auckland and national economies.”
Mr Darrow confirmed that Ports of Auckland would continue to report publicly on an annual and half-year basis.
“We are also keen to report to our stakeholders on our stewardship of the Port and other waterfront assets; and to demonstrate that we are creating value for the Auckland region by continuing to achieve as a commercially successful business,” Mr Darrow said.
Ports of Auckland remains committed to:
- Growing the underlying container and general cargo business,
- Optimising the use of key assets, particularly the valuable container-handling space at the terminals, and
- Optimising the value of investment property assets.
Operational highlights
Ports of Auckland’s Chief Executive, Geoff Vazey, outlined key operational highlights.
“Excellent work by the team in Axis Intermodal, the Company’s container division, attracted three shipping services to Auckland in the latter part of the year. This new business has resulted in a shift of over 35,000 TEUs a year from Tauranga to Auckland on an annual basis,” Mr Vazey said.
Important productivity improvements had been achieved, including a 4% drop in the time containerships spent in port.
“Auckland now rates top in Australasia and second among all 16 ports on the eastabout round-the-world trade route, which is served by the largest containerships to call in New Zealand. Last year we were top in Australasia but fifth among all ports,” he said.
The Company was achieving fastest time to market for Auckland import containers. “No other port can achieve this for Auckland manufacturers, distributors or retailers, many of whom rely on our priority service to maintain their just-in-time inventory systems. If time to market is important to cargo owners, we can provide a real advantage for them,” Mr Vazey said.
“Our new inland port at Wiri is now operating and is providing a convenient drop-off and pick-up point for importers and exporters, saving them the trip to the seaport. As with our East Tamaki inland port, Wiri is facilitating after-hours trucking when the motorways are flowing freely.
“This is achieving supply chain efficiencies and helping to get port-related container trucks off the motorway during peak hours. Toll Rail will provide a shuttle to and from the seaport next year when volumes grow sufficiently to fill that service,” Mr Vazey said.
Western Reclamation
Mr Darrow said that one of the most rewarding projects over the past year had been the development of draft concepts for the 18 hectare holding in the Western Reclamation, known as the tank farm.
“The Company’s over-arching objective is to facilitate the development of what is a unique waterfront area which all Aucklanders – and New Zealanders – can be proud of. We plan to release the draft concepts for public comment in September and we are looking forward to receiving that input. The final concepts for the area will depend, of course, on the public feedback and on the dialogue with Auckland City and the Auckland Regional Council.”
Outlook
In regard to the outlook, Mr Vazey said: “A complex market and changes in global shipping continue to keep us on our toes. But we are well set up for the future with a world-class Port, the fastest possible time to market for Auckland cargoes, and the necessary capacity, equipment, technology, attitude and performance levels to fulfil customers’ expectations well into the future.
“Special thanks go to our highly skilled and motivated staff for their excellent achievements during the year,” Mr Vazey said.
ENDS
Ports of Auckland Limited
Annual Results Presentation
25 August 2005
Neville Darrow
Chairman
Welcome and thank you for coming down to the port for this annual results briefing.
As you know, Ports of Auckland is now wholly owned by Auckland Regional Holdings. Our shares were delisted from the New Zealand Stock Exchange last month.
However, for us it is very much business as usual.
First, because ARH remains a very supportive shareholder and there is every encouragement to operate the ports commercially and to grow in line with an agreed strategic direction. This, of course, is to ensure an increasing dividend stream for the benefit of the Auckland region.
Second, because the Port Companies Act requires us to run a commercially successful business.
In keeping with this approach, I am pleased to confirm that Ports of Auckland will continue to report publicly on an annual and half-year basis. Ports are a leading barometer of a nation’s economy and the Port of Auckland is New Zealand’s largest port. We recognise that our performance is an important indicator of the health of both the Auckland and national economies.
We are also keen to report to our stakeholders on our stewardship of the Company’s port and other waterfront assets; and to demonstrate that we are creating value for the Auckland region by continuing to achieve as a commercially successful business.
Please join us for morning tea afterwards. Some of our senior managers are here and you can talk with them at that time. We have also organised a half-hour tour for anyone interested to see the Port at work. Let us know at morning tea if you would like to go on the tour.
Financial result
2004-05 was a challenging year as it incorporated the loss of the NZAX service – representing some 50,000 TEUs and approximately 8% of our container volumes.
Notwithstanding this setback, the Company has turned in a most creditable result; and with the winning of three new services in the final quarter the prospects for this coming year are much improved. It also demonstrates the underlying strength of the business.
Now to the results, where you should note that the comparative figures for earnings before interest and tax (EBIT) exclude the marina business, which was sold towards the end of the 2004 financial year.
Slide: Group EBIT
Total EBIT, excluding unusuals, was $70.1 million against $71.0 million for 2004.
Slide: Port Operations EBIT
Port Operations EBIT, excluding unusuals, was $61.6 million against $64.2 million for the 2004 year. Port Operations covers all cargo-handling activities and represents most of the Company’s business activities.
An overall drop in container volumes of 2.7%, enhanced security requirements, fuel and electricity price increases, and new product development all contributed to the difference.
We continue to keep operating costs firmly under control and are constantly seeking and implementing operating and productivity improvements.
Slide: Investment Property EBIT
Investment Property EBIT was up 21% to $6.9 million when the marinas are excluded from 2004.
Slide: Surplus after taxation (excluding unusuals)
The after-tax profit, excluding unusuals, was $42.2 million compared with $44.3 million for the previous year.
Unusual items were a net cost of $5.1 million compared with last year’s net gain of $11.9 million. For 2004-05, unusual items relate to concept development work for the Western Reclamation and to the restructuring of our marine services activities. In 2004, unusuals included a surplus of $15.9 million from the sale of the Westhaven and Hobson West Marinas.
Slide: Surplus after tax (including unusuals)
The surplus after tax, including unusuals, was $38.6 million compared with $57.2 million in 2004.
Slide: Shareholders’ funds
Shareholders’ funds increased by 65% to $651.7 million.
The value of the Company’s investment properties increased 80% on revaluation at 30 June 2005 to stand at $183.6 million. The Company’s operational properties increased 64% on the three-yearly revaluation carried out on 30 June 2005 to stand at $582.6 million.
Slide: Earnings per share
Excluding unusual items, earnings per share fell marginally from 40.9 cents to 39.8 cents.
Slide: Shareholder returns
Ports of Auckland has generated superior returns to its shareholders in the short, medium and longer term.
Over the period since listing (12 years), the compound annual growth rate was 19.2%. Over the past year, it has been 25.2%; over the past three years 16.6%; and over the past 5 years 21.2%.
In his presentation Geoff will talk to you about the operating business and I will cover the matter of our investment property and one or two other issues.
Western Reclamation
One of the most rewarding projects over this past year has been the development of draft concepts for our 18 hectare holding in the Western Reclamation, known as the tank farm.
An extraordinary amount of work has gone into these draft concepts and they are based on prior community input and on extensive site, traffic and environmental studies. The Western Reclamation is a very complex site and our team has come up with some great ideas.
The Company’s over-arching objective is to facilitate the development of what is a unique waterfront area which all Aucklanders – and New Zealanders – can be proud of.
We plan to release the draft concepts for public comment in September and we are looking forward to receiving that input.
Meanwhile, we are continuing to work with Auckland City with the objective of having a proposed change of zoning publicly notified next year. The final concepts for the area will depend, of course, on the public feedback and on the dialogue with Auckland City and the Auckland Regional Council.
Sustainable development highlights
Ports of Auckland is committed to creating economic value for Auckland while being a good corporate citizen and a responsible steward of its waterfront land assets. Stewardship and the creation of economic value must go hand in hand, and here they do.
Reducing glare and power use
We have achieved a significant reduction in the glare from our port floodlights during the year by replacing 1,300 conventional lights with 650 more efficient ones. The project cost $900,000 but it should cut our electricity use by 15% a year – or enough to power 400 average households. We were pleased to see that the floodlight project was a finalist in the Auckland Regional Council’s 2005 Environmental Awards.
Power use has been further cut with the installation of power factor correction units at the Port’s two main power substations. We expect an additional saving of 5%.
Recycling dredgings
Over 200,000 cubic metres of dredgings have been recycled as environmentally friendly fill for the Axis Fergusson extension by mixing the material with cement to form mudcrete.
Contaminated dredgings from the city’s stormwater outfalls have also been contained by mudcreting and used as fill.
The channel dredging project and the extension to the Axis Fergusson container terminal are now in full swing and progressing satisfactorily.
The future
There has been no significant change to our approach to value creation. Ports of Auckland remains committed to:
- Growing the underlying container and general cargo business,
- Optimising the use of key assets, particularly the valuable container-handling space at the terminals, and
- Optimising the value of our investment property assets.
The strategies of the Company are firmly focused on these key elements of value creation.
Ports of Auckland is underpinned by sound fundamentals. We have a world-class Port and that is recognised as such by major shipping lines and cargo owners alike.
And there is the very real and exciting prospect of facilitating the development of the Western Reclamation into an outstanding waterfront precinct. We are committed to doing this to the very highest standards.
Now Geoff will cover the operational highlights for the year.
Thank you.
Ports of Auckland Limited
Annual Results Presentation
25 August 2005
Geoff Vazey
Chief Executive
Welcome everyone.
The progress we have made during the year is very pleasing. We have achieved significant efficiencies in our supply chain, we rate even higher now with our shipping line customers and we won three new shipping services which are now boosting our container volumes.
As the Chairman noted, container volumes for the year were down 2.7% with the loss in February 2004 of a shipping service that had represented 8% of our volumes. But growth of other shipping services and volumes from three new services have compensated for that earlier loss and we are well set up for the year ahead.
Breakbulk, or non-containerised cargoes, rose 7% to 5.0 million tonnes, thanks to growth in steel and the continued appetite in New Zealand for imported vehicles.
Port Operations highlights
Now I will move on to the year’s highlights for our port operations.
New container-line services
Excellent work by the team in Axis Intermodal, the Company’s container division, attracted three shipping services to Auckland in the latter part of the year. This new business has resulted in a shift of over 35,000 TEUs a year from Tauranga to Auckland on an annual basis.
Productivity up again
Staff at the Axis terminals also achieved important productivity improvements, with a 2% increase in crane productivity at Axis Fergusson, New Zealand’s largest container terminal, and a 4% drop in the time containerships now spend in port.
We were already held in high regard by our customers through their measures and we have got even better.
Global shipping-line customers continue to praise the efficiency of our terminals. Customer rankings are the ultimate proof of performance.
Auckland now rates top in Australasia and second among all 16 ports on the eastabout round-the-world trade route, which is served by the largest containerships to call in New Zealand. Last year we were top in Australasia but fifth among all ports.
Even faster time to market
Last year, we told you about our same-day priority service for Auckland import containers. Now on request we are facilitating delivery to local businesses within two hours of the ship berthing.
Television sets, for example, have been unloaded from a ship at 4am, delivered to the importer and unpacked by 6am, delivered to the department store at 8am, and in the home of a shopper the same day.
No other port can achieve this for Auckland manufacturers, distributors or retailers, many of whom rely on our priority service to maintain their just-in-time inventory systems. If time to market is important to cargo owners, we can provide a real advantage for them.
Bringing the Port inland
The year ended with our new inland port at Wiri sealed and ready to go. It is now operating, and is providing a convenient drop-off and pick-up point for importers and exporters, saving them the trip to the seaport.
As with our East Tamaki inland port, Wiri is facilitating after-hours trucking when the motorways are flowing freely. This is achieving supply chain efficiencies and also helping to get port-related container trucks off the motorway during peak hours. Toll Rail will provide a shuttle to and from the seaport next year when volumes grow sufficiently to fill that service.
Work continued during the year on plans for a customs-bonded processing facility for imported vehicles on our Pikes Point site at Onehunga. This facility can also be served by rail once economically feasible and we have been working with Toll Rail on the development of a prototype wagon for transporting cars.
Innovative new electronic products
Auckland is right up there with the smart ports of the world, with innovative high-tech systems and processes extending through the entire Axis container logistics chain, and with the focus on inventing more.
Another excellent online customer product was launched during the year to enhance road transporters’ ability to pick up import containers around the clock. The Axis Express service confirms driver ID, validates pre-processed information and generates a gate pass and card number. Turnaround is quick and paperless.
Ship access at all tides
Good progress was made on dredging the shipping lane in the Rangitoto Channel and this project is on track to be completed next year. When complete, large vessels will be able to enter the Port fully laden at virtually all states of the tide.
Plenty of room
Part of the Axis Fergusson container terminal extension has been completed and is now in service. Next year this project will have advanced to the extent that the container terminal will have capacity for an extra 100,000 plus containers a year. The extension is an important part of our plans to cater for future volume growth within the Port’s east-west boundaries.
Ready supply of empties
During the year, the Company took a 27.5% stake in United Containers Limited, one of New Zealand’s largest container-depot businesses.
80% of New Zealand’s import containers come into Auckland and when unpacked they provide a large pool of empties for exporters to fill, or for shipping lines to reposition to other ports. Complementing our on-wharf empty facilities with depots in South Auckland and elsewhere will achieve further efficiencies in the supply chain. A ready supply of empties is a key to supply chain efficiency.
Thinking ahead, looking north
As time passes, the urban areas of Auckland and Northland will inevitably grow towards each other. The Company took a 19.9% stake in Northland Port Corporation during the year. This will permit planned development of infrastructural links between the two ports and the two cities. Combined, they serve regions that are home to more than 40% of New Zealand’s population and the nation’s largest concentration of manufacturing businesses.
Outlook
A complex market where significant changes in global shipping continue to keep us on our toes.
But we are well set up for the future with a world-class Port, the fastest possible time to market for Auckland cargoes, and the necessary capacity, equipment, technology, attitude and performance levels to fulfil customers’ expectations well into the future.
Special thanks go to our highly skilled and motivated staff for their excellent achievements during the year.
Thank you.

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