Lyttelton Port shares sink on shipping line loss worries

By NZPA

Monday 23rd September 2002

Shares in Lyttelton Port sank 5 percent today on a report it was fighting desperately to save a large part of its container shipping business.

The possible loss of P&O Nedlloyd to Dunedin's Port Chalmers results from the company's failure to get a union agreement to work ships 24 hours a day, seven days a week.

Lyttelton shares closed eight cents down at $1.60 on solid turnover worth $236,000. At one point, the stock traded down to $1.55, a 21-month low.

"The market is certainly taking it seriously. They have already lost one contract recently," Hamilton, Hindin, Greene broker Grant Williamson said.

Lyttelton Port managing director David Viles said on Friday the commercial risks of losing P&O Nedlloyd were real.

P&O Nedlloyd wants to start its new schedule with its bigger container ships in early December, and had indicated that either Lyttelton or Port Chalmers would be the South Island port.

Lyttelton would not be in the running if it could not offer 24/7 services which its competitors all provide.

Mr Viles noted Lyttelton had already recently lost 10 percent of its business when Maersk Sealand went to Timaru. P&O Nedlloyd's business makes up 20 percent of Lyttelton's turnover.

Mr Williamson said even if there was only a small risk of the company losing such a big proportion of its business, the market should be concerned.

In a last ditch effort to show the big shipping line it was serious to retain the business, Lyttelton has called in consultants to try and break the stalemate with unions over working round the clock.

Mr Viles said the port had been very successful in some parts of its business, notably the recent 15-year coal deal with Solid Energy and the loss of the Maersk Sealand had masked a recent pick-up in market share.

Analysts forecast the company 2002/03 net profit will fall to $13.5-14 million from the record $16.3 million profit for the latest June 30 year.

Peter Townsend, of the Canterbury Employers' Chamber of Commerce, said a further loss of shipping lines to the region raised doubts about the efficiency of the port.

"We have already lost Maersk, which is about 10 percent of our container terminal traffic. We run the risk of losing P&O, which is another 20 percent, that is 30 percent of the total container traffic through Lyttelton Port Company -- that's an untenable situation.

"If we can't, as the leading commercial centre of the South Island, have an internationally competitive port service, then we have to ask ourselves a very big question, why?"

P&O's move to bigger ships was forcing big changes on the ports that missed out on that container work, fund manager Nat Vallabh of AMP Henderson said. But he's not convinced that it will be enough to trigger ownership changes in the industry.

"That's still going to be very much a political decision," he said.

Lyttelton is the country's third-largest container port after Ports of Auckland and Port of Tauranga, which are competing for the P&O work at the top of the North Island. It was likely that Ports of Auckland will retain P&O business, Mr Vallabh said.

Port of Napier and CentrePort in Wellington at the bottom of the North Island were competing for P&O's second stop, servicing the center of the country.

Lyttelton's stock has fallen 13 percent since July when Maersk quit.

Comments from our readers

No comments yet