Northland Port 'well rid' of engineering business

By Phil Boeyen, ShareChat Business News Editor

Monday 14th May 2001

Northland Port (NZSE: NTH) has recorded a larger than expected loss on the sale of its engineering subsidiary, which has cut markedly into the company's profit result.

For the year ended March the port posted a profit of $954,000, 80% down on the previous year.

Profit per share was 2.3 cents per share compared with 11.5 cents per share last year. Sales fell to $24.9 million from $56.2 million.

At the half-year the company included a loss of $5 million in its accounts on the sale of engineering subsidiary Northport, but in the full-year result the loss has risen to $8 million.

Chairman, Mike Daniel, says the loss resulted from redundancy payments and from one fixed price contract which had proved considerably more complex than originally anticipated.

"The contract in question is expected to be completed during the following few months, and provision has been made in the year's results for the cost of completion.

"The company has contracted out of the remaining contracts and resulting redundancies and warranty claims have either been met or provided for in this result.

"We are well rid of this subsidiary which while providing employment and a way of life for many Northlanders has cost shareholders many millions of dollars over the years."

The company is not paying a final dividend but Mr Daniel says the port's directors expect the current year's performance to result in tax paid earnings from operations of at least 10 cents per share and to resume dividend payments of a substantial proportion of these earnings.

At the end of the year the company had $23 million on bank deposit. Shareholders had already been paid a special dividend of 15 cents per share and the company says the balance of the cash, after the capital requirements of the new port, would be distributed to shareholders over the next few years.

Mr Daniel says existing and potential customers have shown considerable interest in the new port at Marsden Point, which augurs well for the company's 50% investment.

The first berth is due to be commissioned in April next year.

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