Ports of Auckland Annual Result to June 30, 2018

Investing for a sustainable future

Highlights
1. Financials
• Reported net profit after tax was $76.8 million compared to $60.3m for the previous year. The result included $17.6m for items related to asset valuation changes and impairments compared to $5.3m last year. Underlying profit after tax was $59.2m compared to $55.0m last year.
• Group Revenue lifted from $222.4 million to $243.2 million, up $20.8 million, reflecting increases in volume and inclusion of Nexus Logistics and Conlinxx revenue for a full year.
• Declared dividend of $51.1 million, compared to $51.3 million for the previous year.

2. Volumes
• Container volumes were up 2.2% to 973,722 TEU (Twenty-foot Equivalent Units).
• Car and light commercial vehicle volumes were up 0.1% to 297,678 units.
• Breakbulk and bulk volumes (including cars & light commercial vehicles) were up 4.8% to 6.77 million tonnes.

3. Our people
• We continue to focus on safety and aspire to be a zero harm workplace. To June 30, 2018 Ports of Auckland had five lost time injuries, the same as the previous corresponding period. We are extremely sad to report that on 27 August 2018 one of our staff was involved in a straddle accident and subsequently passed away. The accident is currently being investigated internally as well as by WorkSafe New Zealand.
• In a New Zealand first, we are installing lash platforms onto our cranes so our stevedores will no longer have to work on the quay where heavy machinery operates.
• We are holding ‘Future of Work’ workshops to help our staff negotiate the changing work environment including our transition to automation.

4. Delighted customers
• We were voted Best Seaport in Oceania by our customers, for the third consecutive year.
• Container crane rates averaged 35.63 moves per hour, up from 34.67 the previous year.
• Car dwell time averaged 2.90 days, a slight fall on the previous year’s 2.93 days.

5. Investing for a sustainable future
• Significant progress has been made on the automation of our container terminal, which is due to go live in the second half of calendar year 2019.
• We completed construction of our new deep water container wharf and will soon take delivery of three new container cranes.
• We completed earth works at our Waikato Freight Hub and started construction of the first freight handling facility, for our first customer Open Country Dairy. Road and rail connections will be built during the next 12 months and the hub will open for business by mid-2019.
• As a result, capital expenditure was $130.5 million, compared to $88.2 million the previous year.
• As part of our goal to reduce our emissions to zero by 2040, we have committed to setting science based emissions reduction targets under the Science Based Targets initiative, the first port in the world to do so. We have also joined theClimate Leaders Coalition, a group of 60 leading New Zealand companies committed to reducing the country’s emissions.

6. Community
• Over 70,000 people attended SeePort 2018, our annual open port festival held each year on Auckland Anniversary Weekend
• The Ports of Auckland 30-year Master Plan was released for public comment and received a broadly favourable response. The plan has been endorsed by Auckland Council and the company is now starting work on several Master Plan projects.

Ports of Auckland today released its results for the 2017/18 financial year.

Chief Executive Tony Gibson said “We’ve had a busy year, some interesting challenges and a good deal of success. We’re making a significant investment in our people, technology and infrastructure to establish a platform for sustainable future returns, with multiple projects, including automation, underway this year. At the same time we delivered great service to our customers and a strong result for our owner.”

“Volumes, revenue and profit were all up, as was capital expenditure as our investment programme accelerated. We made significant progress with work to automate our container terminal, having taken delivery of 25 of our 27 new automated straddle carriers (container moving machines) and plan to go live with automation in the second half of 2019.”

“We continued to perform well operationally and make a significant economic and social contribution to Auckland and New Zealand. Despite the fact that we are automating a working container terminal, with all the disruption that implies, we improved the speed with which we load and unload ships. Our crane rate – measured by the number of containers moved on and off a ship in an hour – increased to 35.63 moves per hour, compared to 34.67 the previous year. The next 12 months will be more challenging in this regard, as the automation project picks up pace and volumes increase.”

“For the third year running, we were voted Best Seaport in Oceania by our customers and industry peers in the region, reflecting the commitment and skill of our staff.”

“The most unusual challenge this year was the arrival of the Brown Marmorated Stink Bug on vehicle ships from Japan. The bug is a major threat to our horticultural sector so had to be kept out of the country, but the measures taken to keep it out caused significant delay and disruption to the import of vehicles. It was a testing and costly time for the industry, and we can all be proud of the way everyone worked together to get through the problem.

“Automation brings significant productivity and sustainability benefits, but it also impacts some of the traditional roles in our industry. We believe that a business like ours which is adopting new technologies has a responsibility to help staff and their families adapt. We have initiated aFuture of Work programme where our staff can learn and manage these new opportunities.

“We continue to value and empower our people by focusing on maintaining a positive safety culture, embracing diversity, and investing in training and development. Our new lash platforms emphasise our commitment to safety, as they physically separate pedestrian stevedores from straddles thereby eliminating one of our ‘critical risks’. We are the first port in New Zealand to introduce this innovation, and one of only a few in the world.”

“We are making good progress on our rail-linked network of Inland Freight Hubs. We completed earth works at our new 33 hectare Waikato Hub and started construction of a facility for our first major tenant, Open Country Dairy. We are working on road and rail connections and the site will be operational by the middle of 2019.”

“One of the most significant events of the year was the development of our 30-year Master Plan, which we shared with Aucklanders in November 2017. The plan was widely publicised and we received largely positive feedback on it. I’d like to thank Aucklanders for taking the time to get involved and comment on our Master Plan. In May, Auckland Council endorsed the plan and we will seek consent for several new master plan projects over the next year. The importance of this can’t be understated. Since 2011, there has been significant uncertainty about the port’s place in Auckland which has undermined our ability to meet future freight demand. That uncertainty is now gone, and we have a mandate for the next 30 years

There has been further consolidation of container shipping lines from mergers and acquisitions. We now have eight container line customers compared to 14 in the 2015/16 year. Container lines are facing higher costs and a difficult market, so put us under pressure to reduce costs. We are focussing on delivering fast efficient service in order to retain value.”

“We are also very aware of the increasing uncertainty in the global economy and the potential for a downturn as a result of increasing protectionism. We are well positioned to weather a downturn should one arise and our investments in people, technology and capacity will leave us well positioned to take advantage of any upturn.”

“Overall, it was a great year at the port. It is an exciting time to work in this industry, and we look forward to the year ahead.”

For a full copy of Ports of Auckland’s annual report, click here.

ENDS

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