Lyttelton faces challenges

By Phil Boeyen, ShareChat Business News Editor

Monday 18th February 2002

Lyttelton Port Company (NZSE: LPC) has improved its interim profit but is warning that it faces challenges to grow its business.

For the six months ended December the company's net profit was $7.83 million, up nearly 20% on the previous year's $6.56 million.

Sales revenue rose to $30.65 million from $29.07 million previously. Container traffic increased 5.5% but the company says container revenue was flat because prices per unit decreased as a result of continual pricing pressure from customers.

Chairman, Dr Brent Layton, says while the last six months have produced good results, the company is facing significant challenges to retain and grow business.

"Our customers are demanding reliable and efficient service at competitive rates and we must meet that demand or face the consequences of further deterioration of market share in the container trade."

MD David Viles says the company has been negotiating with unions to increase efficiency and flexibility at the port particularly in the container terminal.

"We have been canvassing a number of options with them. We hope to solve the issues together to ensure the port becomes competitive.

"There could be a short-term effect on profit, but ultimately any changes will benefit the Canterbury region, its businesses and in the long-run our employees' security."

Coal tonnage fell 3% with 844,300 tonnes exported through Lyttelton in the half year under review and Mr Viles says the company is working with Solid Energy to conclude negotiations for a long-term contract.

"Projections for the balance of the current financial year are very strong," says Mr Viles.

The port has declared an interim dividend of 3.75 cents per share, fully imputed.

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