Leaner South Port increases profit

Friday 31st August 2001

Bluff port company South Port (NZX: SPN ) is running a tighter ship after divesting its rural investments, turning in a better profit from a lower revenue base for the year ended June.

The company has recorded a surplus of $2.2 million for the period, up 12% on last year's result, lifting earnings per share to 8.4 cents per share from 7.5 cents last year. Revenue was $12.34 million compared with $18.276 million previously.

Last year's result included six months of $7.1 million from the port's discontinued ownership of Southland Motor Group.

Group surplus before interest and tax rose by 25% to $3.4 million from $2.7million in the prior year.

South Port has pointed to the processed forestry and fertiliser sectors as important generators of cargo volume increases, with fertiliser imports rising due to strong demand from sheep and beef farmers.

Chairman, John Harrington, says the gain in cargo volume, coupled with continuing containment of costs has generated a result higher than forecast at the time of the interim results.

"And when the servicing costs of bank debt used to finance the November 2000 share buy-back is taken into account, it is an extremely positive outcome.

"In addition, the company has been able to recover some of the higher operating and depreciation expenses associated with the tug replacement which took place in the previous year."

Mr Harrington says South Port has been prudent in balancing capital investment decisions required to meet the ongoing needs of customers with the objective of achieving sound economic returns.

Chief executive, Mark O'Connor says new shipping links have been consolidated during the year and the trans-Tasman market is showing signs of improved market demand for New Zealand product.

In June one service was increased from every 11 days to every 6 days, which will double the number of trans-Tasman vessels calling at the port.

Mr O'Connor says cold storage facilities have also turned in excellent performances flowing from the handling of frozen fish and chilled dairy products.

"South Port has achieved a lift in refrigerated dairy products moving through Bluff by working closely with NZ Milk Products at Edendale, Southland (part of Fonterra Co-operative Group) and the NZ Dairy Board to develop export options."

While South Port says the company is in a sound position it adds that continuing growth is largely dependent on the global economic conditions of the next 12 - 24 months.

A final dividend of 3.5 cents per share has been declared.

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