Strong gains in handling containers and record log numbers underpinned Port Otago delivering an increased $9 million dividend to owners the Otago Regional Council (ORC), for its full year trading to June.
Container numbers rose 10% to 205,000, a record 1.06 million tonnes of logs were moved across the wharves, fuel volumes rose 16% and ship calls rose 7% to 529 arrivals.
Port Otago chairman Dave Faulkner said the company's performance reflected the activity of exporters from across Otago and Southland.
“They're busy and product is moving, which is evident in the tonnages we're seeing across the port,'' Mr Faulkner told the ORC at a briefing this week.
Revenue for the year rose 22% to $109.4 M, earnings before interest and tax rose 2% to $12.7 M and after-tax profit rose $13% to $43.9 M. Debt rose from $68.4 M to $77.6 M, with about a further $20 M facility on which to draw.
Faulkner said after the meeting he was “comfortable” with the debt, given it was around 80% of the debt to equity ratio.
The $9 M dividend included a $1.5 M special dividend and takes the total of all dividends paid to the ORC since 1988 to just over $165 M.
During question time, councillor Michael Laws - a vocal critic of the size of dividend paid - asked Faulkner that given Port Otago was “cash heavy,” could it sustain that level of dividends. Faulkner said Port Otago's intent, subject to trading conditions, was to pay a $7.5 M dividend and $750,000 special dividend next year, and thereafter increase the $7.5 M by $250,000 each year, for the coming decade.
Laws pressed Faulkner in that property arm Chalmers Properties had $19 M of sales last year and expects $31 M in the coming financial years; as Hamilton property is further developed and sold.
“What will you do with that ($31 M),” Laws asked. Faulkner responded there was always infrastructure spending to consider and that Chalmers Properties was in talks at present about developing some bare-land it owns in Auckland.
Councillor Andrew Noone asked about the upgrade of straddle cranes in the future, and viability of going electric. Port Otago chief executive Kevin Winders said while looking at making all vehicles across its business electric, many of the hybrid versions were not yet powerful enough, or not yet even in commercial production.
“We have to wait for technology to catch up,” he said, but noted hybrid small diesel and electric were the focus.
Councillor Stephen Woodhead asked if the current overall growth in cargo handling was repeatable, in the next two years. Winders said that if rural Otago and Southland had good weather over the spring and summer growing seasons, that would translate into good exports.
Cruise ship numbers were 87 and expected to rise 117 this coming season, from which Winders expects the Otago economy would get a boost from last year's $56 M spent to $75 M this coming season.
He said the $35 M capital expenditure was coming to an end, including $22 M being spent on a Port Chalmers wharf extension and $8 M purchase of a second hand French back-hoe dredge; which was only 40% of its “new-build cost.”
While rival Lyttelton Port of Christchurch was dredging channels to 13 metres, Port Otago was already past that depth and the back-hoe dredge would be doing further channel dredging in the future.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.