Financial results
Revenue for the half year rose 22.8% to $62.3 million from $50.7 million in the same period last year. Container services revenue for the half year increased 14.5% to $34.5 million from $30.2 million with a 5.7% increase in container volumes to 119,000 TEU (twenty-foot equivalent container unit).
Bulk cargo revenue for the half year increased 7.5% to $20.6 million from $19.2 million despite a 9.3% decrease in bulk cargo total volume. This followed changes in cargo mix and increased yields and log debarking operations revenue.
Cruise revenue for the first half was $5.1 million. The reintroduction of cruise following the reopening of the international marine border saw 62 cruise vessel calls in the half year, compared to a single call in the prior year.
As a result of intense cost pressures in recent periods operating expenses increased 17.8% on the same period last year, however, these costs were comparable to the second half of the 2022 financial year.
The result from operating activities for the half year increased 33% to $21.9 million from the $16.4 million reported for the first half of the last financial year.
Underlying net profit, which excludes unrealised property revaluation gains, was $7.5 million and increased from $7.2 million in the same period last year. Following the completion of Te Whiti wharf last financial year, depreciation costs have increased, and the majority of finance costs are now reported in the income statement, rather than capitalised as an asset. Reported net profit after tax was down 3.3% to $8.7 million from $9.0 million in the same period a year ago.
Cyclone Gabrielle Impacts
The landing of Cyclone Gabrielle resulted in damage and disruption to the Hawke’s Bay region and its infrastructure. Many parts of the community and cargo customers have experienced damage and reduced output, which will impact cargo volumes for the remainder of the financial year.
Napier Port suffered minimal property damage. Following the cyclone restorative dredging was undertaken to reinstate the shipping channel and berth depths, both of which had experienced some infill from the storm and swell.
Key road access to Napier Port has been restored, with ongoing repair and replacement of regional and minor roads and bridges underway. A new coastal shipping service between Gisborne and Napier provides an additional access route for exporters in areas where road or rail is only partially restored.
The main rail line to the south and central North Island has been restored as far as Hastings, but the link between Hastings and Napier requires reinstatement. This work is expected to continue through to the first quarter of the next financial year. The lack of direct to port rail access provides challenges for inbound pulp cargoes and our growing supply chain services operation; however, our team continues to support cargo flows to and from Napier Port and the central North Island hinterland via road and rail.
The forestry industry has re-established forest-based production, although it has seen some reduction in capacity due to short-term redeployments and some loss of industry transport capacity. Export market conditions for logs remains subdued.
Pan Pac operations are expected to be restarted around the end of this financial year in September, with a ramp up towards normal production levels during the next financial year.
The seasonal produce losses (pip fruit and other fresh produce) will result in a reduction of container traffic in the second half of our financial year. The extent of the potential future reduced output of planted areas, that will require remediation and replanting to restore production, remains uncertain.
Napier Port has business interruption insurance that is expected to provide a level of mitigation against the adverse trade effects following the cyclone. However, at this stage there is no certainty regarding the financial outcome of any claim. No insurance claim recoveries have been accounted for in the half year result.
Balance Sheet and Dividend
Napier Port remains well funded with $180 million of long-term funding facilities in place, of which $46 million was available and undrawn at the end of the half year period. With the completion of Te Whiti wharf Napier Port does not have any material capital commitments.
Despite the strong first half result and in recognition of the uncertainty regarding near term trading and an expectation of reduced full year earnings, the Board has resolved to pay a fully imputed interim dividend of 1.7 cents per share, which is reduced from the 2.8 cents per share paid at the same time last year.
The Board will review the full financial year performance and outlook when considering any final dividend following the end of the financial year. The record date for the interim dividend entitlement is 9 June and the payment date will be 22 June.
Outlook
Mr Dawson said: “Cyclone Gabrielle has delivered a challenge to the region and to Napier Port, however the strong performance we saw in the first half demonstrated our capability and the growth potential of the region and our port.
“Given the crop losses and damage to primary processing, trading in the second half will be subdued, and we expect a return to traditional export flows next year recognising some trade impairments will create drag into the new financial year.
“This outlook is underpinned by strong forward bookings for the summer cruise season in the new financial year.
“Napier Port will continue to support customers and the community and manage its outgoings and commitments whilst the recovery takes place.
“We also note the government’s financial commitment to Cyclone Gabrielle recovery including clean-up, the repair of road and rail networks, flood protection infrastructure and community wellbeing initiatives, of which Hawke’s Bay will receive an allocation.
We expect to provide a further update to the market regarding our June quarter trading results during August.”
