Ports weather sharp wind shifts

By Peter V O'Brien

Friday 25th June 2004

Port company shareholders could validly adapt the title of a well-known song to "what a difference six months make."

Percentage movements in share prices from a survey last June were: Lyttelton Port -5.8%; Northland Port Corporation -6.3%; Ports of Auckland -9.9%; Port of Tauranga, +20.9% and South Port -11.2%.

Northland's 17.8% decline since January reversed a 14% gain in the preceding six months, while port Tauranga's 14.8% lift was a solid improvement on the 5.3% increase between June 2003 and January.

The companies' fortunes have depended on the health of their regional economies and the condition of the industries whose products crossed their wharves, whether as exports or imports.

Much was made in recent interim reports about a high New Zealand dollar affecting exporters but little was said about the maintenance of export volumes for primary produce, despite the currency's rise. Overseas price gains, particularly for primary commodities traded in US dollars, heavily outweighed the kiwi's upward surge over the past year. That point was noted in NBR's consideration of commodity markets on June 11 and 18.

A rising currency led to an increase in import volumes, although that had its main impact on Ports of Auckland, which handles most of the country's trade. Chief executive Geoff Vazey said in the interim report for the six months ended December that Auckland was New Zealand's most balanced port "with a 60:40 ratio of full import to full export containers."

He said that made Auckland's metropolitan port an attractive choice for container shipping to balance cargo flows. He said imports kept on at a high level in January, which was unusual because import cargoes traditionally eased in the month.

It might have been unusual but was understandable, given the New Zealand dollar's performance in the last quarter of 2003.

Ports of Auckland's share price decline and those of other port companies were also understandable, given investors' usual movement from defensive utility stocks to the goers when the sharemarket entered a growth phase.

Other factors were implicated, including changed shipping patterns.

South Port seemed the worst affected, going by chairman John Harrington's comments in the report for the half-year ended December.

He said, "it may unfortunately be a year of two quite different halves." The strong first-half result (profit down 5%) would partly cushion the expected financial fallout from the recent dropping of shipping links to Bluff by the transtasman "Butterfly" service.

Tasman Orient line's addition of another monthly call to Bluff would link the region directly to North Asia, a "service enhancement" to three calls monthly, which meant container and breakbulk shipping solutions were available to all major Asian destinations.

The companies' reports had a recurring theme of increased costs. Some were the usual movement in expenses but others were decidedly unusual.

Lyttelton Port, for example, said full-year earnings before interest, tax, depreciation and amortisation would be 8% down on the previous year, due to a reduction in revenue and increased operating costs. The latter comprised higher charges for insurance, electricity and maintenance projects, of which $500,000 related to the "painting of a container crane" (actually two, according to a company elucidation to NBR).

OK, a container crane stands 10-12 storeys high, to make it higher than the top-loaded level of a container vessel.

It is a long, creeping beast with a mass of metal (says he, looking down at the cranes on Wellington's container wharf).

Cost of materials would be high, because anti-corrosive, quick-drying sealants and overcoats cost plenty.

The paints must be quick-drying to ensure a crane is available within a few hours to service ships on tight schedules.

But at $250,000 a shot, there must be an opportunity for semi-professional entrepreneurial painters with no fear of heights, and/or abseiler skills.

Lyttelton's coal shipments were apparently doing well.

Comments from our readers

No comments yet