Financial results
Third quarter revenue rose 25.3% to $30.4 million from $24.3 million in the same period last year. Revenue for the nine months increased 8.4% to $83.0 million from $76.6 million last year.
Container services
Container services revenue for the quarter of $19.1 million rose 10.5% from $17.3 million in the same period last year. For the nine months, container services revenue increased by 4.1% to $50.2 million from $48.2 million due to improved average revenue per twenty-foot equivalent unit (TEU), and higher
container volumes.
Average revenue per TEU for the nine months increased 1.2% to $233 from $230 in the same period last year, as full and reefer containers dwelling on port for longer periods – due to shipping schedule disruptions – offset fewer container vessel calls.
Container volumes for the quarter increased 8.3% to 80K TEU due to increased volumes of wood pulp and timber exported and empty containers that were repositioned to Napier Port later than the prior year.
However, volumes continued to be disrupted by unreliable shipping schedules and shipping capacity constraints. Meanwhile, volumes in the prior comparative quarter were also depressed by the COVID-19 Alert Level 4 lockdown when non-essential cargo ceased to enter Napier Port.
For the nine months, container volumes increased 2.8% to 215K TEU from 210K TEU in the same period last year, primarily due to increased transhipment activity related to the supply chain disruptions. These volumes were underpinned by meat, fresh and other fresh and chilled produce trades offsetting slightly weaker exports of pip fruit.
Bulk cargo
Bulk cargo revenues for the quarter of $10.6 million increased 67.4% from $6.3 million in the same period last year. For the nine months, bulk cargo revenues rose 38.1% to $30.8 million from $22.3 million as volumes increased 29.7% to 2.9 million tonnes from 2.2 million tonnes in the same period a year ago.
Log export volume increased by 36.1% to 2.2 million tonnes from 1.6 million tonnes for the nine-month period due to sustained strong log export market conditions. In the prior year period, bulk cargo volumes were weakened by the cessation of forest harvesting during the COVID-19 Alert Level 4 lockdown
period.
Average revenue per tonne increased 6.5% to $10.67 from $10.02 in the same period last year. This includes one-off cost recovery revenue of $0.29 per tonne and the remainder is as a result of log exports.
Operating results
The result from operating activities for the third quarter rose 37.4% to $12.8 million from $9.3 million. For the nine months, the result from operating activities increased 9.8% to $34.1 million from $31.1 million due to 8.4% higher revenue, offset by a 7.5% increase in total operating expenses, the principal
components of which were increased insurance and employee benefit expenses.
Underlying net profit after tax for the third quarter, after adjusting for non-recurring reported net gains, increased by 55.5% to $6.7 million from $4.3 million in the same period last year. For the nine months this increased by 11.7% to $17.2 million from $15.4 million.
Reported net profit after tax for the nine months increased 0.7% from $18.3 million to $18.4 million. The current year result benefited from a $1.2 million revaluation of investment property. The prior year benefited from a one-off tax benefit of $1.5 million due to the reinstatement of tax depreciation on commercial buildings and the $2 million receipt of the government’s COVID-19 wage subsidy (which was subsequently repaid in the fourth quarter of the 2020 financial year).
Chair Alasdair MacLeod said: “Napier Port is benefiting from the strength of New Zealand’s primary sector economy. In particular, our region is proving resilient and we are proud to play our part in connecting our customers to the world.
“Our customers continue to face supply chain disruption in containerised trades due to changing shipping schedules, difficulties securing shipping capacity and empty container supply, with increased freight rates and shipping charges being widely felt.
“Our results in the third quarter and the nine-month period benefited from strong offshore demand for New Zealand forest products and a resilient performance of our region’s other main exports. This has offset supply chain pressures and the absence of cruise ship visits due to the pandemic.
“Our results also reflect the talent of our team and their commitment to our customers. Despite the considerable challenges to containerised trade and the constraints on operational space due to the construction of 6 Wharf, our people have kept cargo flowing across our wharves for the benefit of New
Zealand. We are grateful for their efforts.”
Chief Executive Todd Dawson said: “We are very pleased with the performance of Napier Port for the year to date in what has been very challenging conditions. Missing container ship calls – 15 in the last
three months – and a lack of schedule integrity resulting in the flow-on disruption to supply chains is now a feature of the New Zealand supply chain.
“We do not see signs of this supply chain disruption abating in the immediate future. The challenge before Napier Port is to work with our customers to minimise the impact on their businesses by leveraging the expertise of our team and strong relationships we have forged in recent years.
“I am very proud of the progress we have made on our strategic initiatives – particularly over the last quarter, which is our traditional peak export season. The commitment of our team to understanding our customers’ needs and their work to deliver high levels of service and solutions has been tremendous.
“The trade outlook for the remainder of this year is positive, with strong demand for our region’s forest products. Meanwhile, apple volumes have only slightly decreased which reflects the industry’s hard work in mitigating the effects of seasonal labour shortages and shipping challenges. We welcome the government’s recent decision to allow increased numbers of seasonal workers from some Pacific nations in time for next season’s harvest.
“We continue to invest in building our capability and capacity for the future, including the development of our long-term infrastructure investment, 6 Wharf. Construction of this multi-generational asset continues to be on time and on budget. We have recently celebrated the effective completion of the
piling part of the construction programme consisting of drilling and placing nearly 400 piles. We expect the new wharf to go live in late 2022, and detailed operational planning for its use is well under way.”
BALANCE SHEET AND CAPITAL EXPENDITURE
Over the nine-month period Napier Port has invested $76.3 million in capital assets, further progressing its strategic infrastructure development programme, led by the 6 Wharf development project.
Napier Port ended June 2021 with drawn bank debt of $60.0 million, having commenced drawing on our banking facilities earlier in the current financial year to fund the 6 Wharf development. In addition, we have undrawn bank facilities of $120 million.
EARNINGS GUIDANCE AND OUTLOOK
Mr Dawson said the challenges to container-based supply chains from regional and global shipping disruptions are continuing to overhang the free flow of cargo.
“The re-emergence of COVID-19 into New Zealand’s community is an unwelcome development and a situation that is evolving daily. The impact on Napier Port will depend on how this situation develops, the government’s response, and the effect these factors have on the businesses of our cargo customers. Napier Port’s focus will remain on keeping its people and community safe and maintaining our ability to operate to support our economy. As a result of the current lockdown, we expect to see some reduced
cargo volume due to non-essential businesses ceasing or limiting their operations, however at this time we are unable to estimate the impact of this.
“We continue to expect an underlying result from operating activities for the year to 30 September 2021 of between $39 million to $42 million.
“Looking forward, we have seen some early market signals suggesting Chinese log market prices may be moderating. In addition, log exporters continue to experience higher shipping costs which is negatively affecting the economics of this trade and which both have an influence on the volume of
exported logs from New Zealand,” Mr Dawson said.
“As expected, cruise ship visits are unlikely to resume for the coming cruise season, which traditionally commences in October and extends through the summer.
