Port of Tauranga, awaits Auckland offer, sees profit growth

Thursday 23rd October 2008

Port of Tauranga Ltd. expects to lift profit this year after increased volumes boosted earnings 20% in the first quarter.

"As we look ahead, we take note of the significant turmoil in the global economy and global financial markets," chief executive Mark Cairns told shareholders at their annual meeting. "Whilst we are yet to fully understand the extent of the effects on our business, at this stage we are comfortable that we will exceed last year's earnings."

Port of Tauranga lifted earnings 7% to NZ$42 million in the 12 months to June 30, on increased forest products across its wharves and 25% jump in volumes at its container business, which rival Ports of Auckland has expressed interest in buying.

No discussion has taken place with Ports of Auckland since its August 28 announcement "but we are advised that it is coming," Chairman John Parker told the meeting.

Shares of the company fell 0.8% to NZ$6.55 today, outperforming the benchmark NZX 50 Index, which dropped 2.9% amid a global stocks rout on concern economic growth will slump worldwide, reducing demand and curbing corporate profits.

Port of Tauranga is well placed to weather a global slowdown because its debt to debt plus equity ratio is 28.6% and the company has bank facilities at favorable rates through to 2010, Parker said.

The two port companies failed to negotiate a merger in 2007 after the proposal was rejected by Ports of Auckland's owner, Auckland Regional Holdings. In August, Port of Tauranga today said a full merger between the two companies still makes sense. Port companies are having to contend with shipping companies rationalising their routes and choosing so-called hub ports of call rather than visiting multiple facilities. Among changes, Maersk stopped visiting Tauranga and made Auckland its hub.

By Jonathan Underhill

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