Financial results
Revenue for the year to the end of September 2023 increased 3.4% to $118.4 million from $114.5 million in the previous year, despite a significant reduction in trade volumes.
Container volumes decreased by 12.7% to 222k TEUs* from 254k TEUs. The reduction followed the cyclone-enforced closure of Pan Pac’s wood pulp and timber mills and lower produce and other chilled exports due to crop losses.
Bulk cargo volume was down 12.8%, to 3.2 million tonnes from 3.65 million tonnes a year ago. The fall was largely due to an 11.3% reduction in log volumes, to 2.5 million tonnes compared to 2.8 million tonnes in the prior year as adverse weather and damaged roading infrastructure hampered harvesting. The log trade was also affected by subdued export market conditions for much of the year.
The impact of these lower volumes on revenue was offset by the return of cruise vessels and Napier Port’s tariff adjustments to address the impact of inflationary pressures and its significant infrastructure investment. A recovery in some trades in the fourth quarter of the financial year, including the export log trade, also assisted.
Container services’ average revenue per TEU increased by 10.2% compared to the prior year due to the tariff increases as well as shipping line and container mix changes, increased vessel calls and higher container depot revenues. Bulk cargo average revenue per tonne increased by 15.7% compared to the prior year, primarily as a result of the tariff increases and an increased contribution from the company’s log debarking operation.
The return of cruise vessels to Napier Port after a two-year pandemic induced hiatus also made a strong $5.3 million contribution to revenue. A total of 64 cruise ships visited Napier Port in the 2023 season compared to one visit in the prior year.
The result from operating activities was $37.2 million, a 7.1% decrease compared with $40.1 million in the previous year with revenue increases not fully offsetting inflationary cost pressures.
Reported net profit after tax was $16.6 million, a 18.8% decrease on the prior year’s $20.4 million. The result included higher financing and depreciation charges following the completion of Te Whiti (6 Wharf) and a $7.25 million contribution from a Cyclone Gabrielle business interruption insurance claim. Underlying net profit after tax, excluding net insurance proceeds and revaluation gains, decreased from $18.6 million to $10.7 million.
*Twenty-foot equivalent container unit
CAPITAL MANAGEMENT
Napier Port retains a strong balance sheet and continues to invest in its future. After investing $13.8 million in both landside operations and restorative channel dredging, it ended the financial year with $50 million in undrawn facilities and net interest-bearing debt of $130 million, down from $134 million at the same time a year ago
Napier Port’s Board of Directors has declared a fully imputed final dividend of 3.55 cents per share, bringing the total dividends for the 2023 year to 5.25 cents per share, down from the 7.5 cents per share of the prior year. The record date for dividend entitlements is 4 December 2023, with a payment date of 14 December 2023.
OUTLOOK
While persistent inflation pressures, tighter monetary conditions, and uncertainty in key international export markets continue to represent headwinds, Napier Port is optimistic for the new financial year.
“Just after the close of the fourth quarter Pan Pac re-opened its wood chip mill, the first part of its production facility to become operational again since the cyclone. It has advised Napier Port that timber mill operations are expected to restart in January, and the pulp mill in February, with the plant fully
operational by late calendar year 2024,” Mr Dawson said.
“Key regional infrastructure is back online, noting that work is ongoing across the wider region. The rail line through to Napier Port re-opened on 15 September 2023 and we expect that to have a positive effect on timber, pulp, meat, and log cargo volumes from the central North Island. It has also generated further interest in Napier Port’s North Island landside logistics and warehousing service, Viewpoint Supply Chain.
“Several major apple exporters suffered less permanent flood damage to their trees than initially thought and replanting of damaged areas is already underway or complete. Continued investment in the region’s apple industry underscores the value of the cargo and the positive long-term outlook for volume growth across Hawke’s Bay’s horticulture sector.
“The pick-up in the log trade seen in the fourth quarter has continued into October. With a new forestry export customer commencing at Napier Port and contribution from our log debarking operations, where customer demand is already high, we are well positioned to benefit from these in the future.
“Finally, the 2024 cruise season could be our busiest yet with 92 current bookings, more double and triple ship stays than ever before, and new cruise lines calling,” Mr Dawson said.
“These trends coupled with the infrastructure and capability we have put in place and progress that we have made on yields, provide significant leverage opportunities for momentum in earnings as trade volumes recover. We have made a good start to the new financial year and look forward to providing a
further update at our annual meeting in December.”
Further detail on Napier Port’s financial performance for the year ended 30 September 2023 is included in the Annual Report and investor presentation released to the NZX today and available on the company’s investor website at: https://www.napierport.co.nz/investor-centre/
