Port Of Christchurch Experiences Stronger Growth

Lyttelton Port Of Christchurch Experiences Stronger Second Half Growth

Lyttelton Port of Christchurch (LPC) in announcing its annual result today advises that it has achieved record container volumes through the port for the year ending 30 June 2010, with a 5.3% increase on last year’s volume to 273,789 TEUs (2009, 259,933 TEUs).

Although the first half of the year was a challenging period for the company, the last six months of the financial year have shown strong growth, with increases in both export and import container volumes. In total, LPC moved 9.8 million tonnes of cargo through the port this year, an increase of 3.9% on 2009, driven by export container, log and vehicle volumes.

The second six months of the year were significantly stronger with almost 60% of NPAT achieved in that period, an increase of 21% over the same period in 2009.

This has translated into a normalised profit of $9.8 million. Costs incurred in the year relating to the ongoing merger discussions with Port Otago are included in the reported result, along with the impact of deferred tax relating to the removal of depreciation on buildings and the reduction in the corporate tax rate. Costs associated with acquiring 7.3 hectares of land adjacent to CityDepot acquired in July 2010 have also been expensed in the year under review. In total these reduce the reported NPAT for the year to 30 June 2010 to $9.008 million.

Financial Results

“LPC’s Net Profit after Tax for the year of $9.008 million is a significant achievement given the global market conditions” stated LPC Chairman Rodger Fisher. “It has resulted from a strong performance

across a number of our trades, particularly in the last six months, with revenue for the year ended 30 June 2010 increasing by 3.4% to $87.3 million.

“Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) were $29.2 million for the year ended June 30 2010, which represents a decrease of 1.1% on last year’s EBITDA of $29.5 million. Two items worthy of note when comparing the year on year results are increased costs of $600,000 in securing term finance and an additional $500,000 spent on our dredging campaign due to infill caused by unusually large and long easterly swells.“

“In light of these results I am very pleased to declare on behalf of the Board of Directors a dividend of 2.9 cents (fully imputed for tax) for the second half of this financial year” said Mr Fisher. “This brings the total dividend paid out of operating profits this financial year to 4.4 cents per share compared to last year’s total dividend of 4.9 cents per share.”

The dividend for the second half of the financial year (2.9 cents per share) will be paid out on 28 October 2010, coinciding with the LPC Annual Meeting.

We have been very pleased with overall trade results this year” noted LPC Chief Executive Peter Davie. “Total tonnage increased 3.9% to 9.839 million tonnes, and total container volumes increased by 5.3% to 273,789 TEUs for the year. Containers moved through the Lyttelton Container Terminal have risen by a pleasing 5.8%. In terms of total tonnage Lyttelton Port of Christchurch remains the largest port in the South Island by a substantial margin and the third largest port in New Zealand.”

In the container export sector there has been an impressive 97% increase in dairy products, resulting from our commercial contract with Fonterra, along with our continued strong support from Westland Milk and Synlait. Further growth is forecast for this sector.

LPC did witness notable changes in its container cargo mix in the 2010 financial year. Full export container volumes grew 15.7% in the period and reefer export volumes increased by 6.6%. Moderate growth also occurred in the full import container trade, with the trend toward 40’ container imports continuing. The empty export container volumes declined 15.7% in the period, a trend born out of service changes and tighter market conditions.

A record year was experienced in log exports, with a 58.7% increase on last year’s volumes. New Zealand’s export log boom is forecast to continue into the 2011 year. It was also pleasing to see the vehicle trade begin to recover in the year, and our import volumes rise by 21.1%. Fertiliser imports were also a highlight in the dry bulk trades through the port, with a 21.7% increase in volumes in the year. This increase was offset by reduced cement and grain volumes.

Coal exports were down 2.7% to just over 2 million tonnes, but volumes are projected to improve in the 2011 year as mining production increases. The coal team was delighted with achieving, for the first time, average annual coal loading volumes exceeding 25,000 Tonnes per day.

Port Amalgamation

LPC continues to work through the feasibility of a merger with Port Otago. The Board and Management of LPC are fully committed to the negotiations as it remains our belief that amalgamation is crucial for the long-term viability of New Zealand ports.

Highlights
Highlights for LPC for the year are outlined below:
An increase of 5.8% in berth productivity this year, contributing to positive gains in excess of 70% over the past six years.
Our inland port, CityDepot, had no lost-time injuries throughout the year.
The smooth implementation in conjunction with KiwiRail of the rail shuttle service from CityDepot to the wharfside.
The purchase on 1 July 2010 of 7.3 hectares of industrial land adjacent to the CityDepot site recognising the need for more land strategically located for the long-term, which will enhance the logistics options for LPC’s customers.
We welcomed the 4,500 TEU capacity OOCL New Zealand on its maiden voyage to New Zealand in April 2010 – this was the largest container vessel to ever call at Lyttelton.
A resource consent was lodged with ECan on 22 December 2009 for the deepening and extension of LPC’s navigation channel. The resource consent would allow LPC to create a 14.5 metre draught capability at all tides, and would involve both the deepening and extension of the channel to approximately four kilometres beyond the harbour heads.
The resource consent for the coal stockyard expansion was lodged on 3 August 2009 and publicly notified on 2 December 2009. After submissions closed on 12 February 2010 requests for further information were received from both Canterbury Regional Council (ECan) and Christchurch City Council (CCC) and processing of the responses to these requests was ongoing at 30 June 2010.

In October 2004 Lyttelton Port of Christchurch outlined plans to spend approximately $90 million over the next five years on new equipment, rebuilding plant and infrastructure development. There were three key stages outlined for the Port’s development – restoration, growth and creating long-term value. The investment was necessary to cater for projected growth, to remain competitive and deliver customers fast, efficient and safe turnaround.

Mr Davie stated “The developments outlined in the restoration and growth phases of that programme are now complete, at a cost of approximately $70 million and we commenced our long-term value phase of the Port’s development this year with two key projects. Firstly, we increased container capacity by extending the container yard through the removal of a shed on Cashin Quay 1. Secondly, we undertook a rail expansion in the Container Terminal, significantly increasing rail receival capacity and TEU throughput. The rail siding is now complete and a Rubber Tyred Gantry will be commissioned in December 2010.”

Outlook

Mr Fisher concluded “The financial year ahead is showing promising signs of producing volume growth across containers, coal and LPC’s general cargo trades. Our recent infrastructure projects support our strategy of adding long-term value through growth and innovation, placing LPC in a strong position to handle the growth we are confident we will occur as the economy comes out of recession, and ensuring the company remains the South Island Port of choice for our customers.”

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