South Port posts record profit even as smelter cuts production

Monday, Aug 26, 2013

Record imports of fertiliser and a resurgence of log exports were not enough to make up for the business lost to South Port when New Zealand Aluminium Smelters (NZAS) cut production at its Tiwai aluminium smelter.

The operator of Bluff's port reported cargo volume declined by 7 percent to 2.51 million tonnes in the year ended June 30 from a record in the previous year.

Approximately 100,000 tonnes, or about 56 percent, of the reduction in volume related to NZAS, which continues to operate the smelter 15 percent below its normal capacity.

Still, South Port reported a record after-tax profit of $6.5 million, up 8.5 percent on the previous year, and beating the previous peak of $6.26 million set in 2011.

Operating profit before financing costs and tax increased by 8 percent to $9 million.

The port is paying a final dividend of 15.5 cents a share, taking the full-year dividend to 22 cents, up from 20 cents the previous year.

"The improved profit level was largely driven by stronger levels of other bulk cargoes and better cold storage utilisation at both of the South Port physical storage sites," Chairman Rex Chapman said.

Chief Executive Mark O'Connor said a record level of fertiliser product was imported through South Port during the past season and log exports staged a welcome resurgence, particularly in the second half of the financial year.

The port handled 246,000 tonnes of logs, up from 198,000 tonnes in 2012. Two new log exporters, Highlander Forests and Forest Management, moved logs through the port to Asian markets.

O'Connor said more rapid movement of dairy exports reduced use of the port's dry warehouses but a new dry warehouse at the west end of the Bluff Island Harbour completed in June 2013 is fully tenanted.

The port is hopeful a new electricity supply contract between NZAS and Meridian Energy will enable NZAS to achieve a competitive cost position for its operations in the longer term.

Environment Southland owns 66 percent of the company.

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