WASHINGTON: Records tumbled for listed South Port this week after it delivered a much stronger full-year result than expected, underpinned by higher bulk cargo tonnages. However, undermining future results are costly maintenance plans, which will have a negative impact on earnings soon.
South Port chairman Rex Chapman said the company had recorded its best financial performance, surpassing $8million in net earnings and also posting a higher dividend. “This past year has, for all its uncertainty, delivered a fourth consecutive improved result for South Port,” Mr Chapman said.
South Port declared a 18.5c final dividend, lifting the full year to 26c; or a total of $6.43million. “The company has benefited from a diversified exposure to the expanding southern regional economy and the pleasing result has been driven by higher bulk cargo tonnages,” Mr Chapman said. However, a review of South Port’s infrastructure asset maintenance plan for the year determined an increasing need for repairs and maintenance would have “a material impact on profitability” during the next five to seven years, Mr Chapman said. “South Port estimates that earnings in the next financial year are likely to reduce by approximately 15%,” he said. For its full year to June, total operating revenue was up 6.7%, from $34.5million a year ago to $36.9million.
Total group assets rose from $47.1million last year to $53million. “The directors regard this as a particularly strong result, considering that at the start of the year we had predicted a softening trend in cargo,” Mr Chapman said. Chief executive Mark O’Connor said the largest gains were made in logs, woodchips and dairy with most other cargoes showing good resilience to economic conditions.
“Bulk cargo activity was again a major influence on business, resulting in a 7% increase in cargo at 187,000 tonnes,” he said in a statement. “Breaking the three-million-tonne cargo threshold is a significant milestone for the business and reflects a consistent period of growth since the 2009 year, when cargo was 1.86 million tonnes.”
Open Country Dairy had increased warehouse activity and additional storage capacity was being provided to Open Country in the season ahead, he said. Another regional entity, Mataura Valley Milk, plans to build a $200million dairy processing plant in Eastern Southland to manufacture infant formula and UHT cream.
“The cargo volume lift was achieved against the backdrop of a dairy industry that is being severely tested and a subdued sheep and beef sector,” Mr O’Connor said. Construction of the $4.5million Intermodal Freight Centre in Invercargill, completed this year and opened in July as an import cargo facility, would see containerised cargo, sourced from various ports, relayed on rail for unpacking and uplifted by trucks much closer to end users, Mr O’Connor said.
