Shipping disruption, labour shortages and high-cost inflation impacts Napier Port’s results.
Napier Port is expecting business to pick up towards the end of the financial year as isolated events result in higher volumes.
The company has reported a 15 per cent drop in profit to $9 million for the six months ending March 31, while underlying profit tumbled by 32.1 per cent to $7.2m.
Container volumes decreased by 16.6 per cent to 113,000 20-foot equivalent units – down from 135,000 in the same period of 2021 as container ship visits dropped to 102 from 133. Bulk-cargo volumes declined by 8.7 per cent to 1.7m tonnes.
Despite the weak half-year, chief executive Todd Dawson has reaffirmed full-year earnings guidance offered in April of underlying profit in the range of $38m-$42m. That said, headline profit is expected to be hit by finance costs and depreciation.
The board will pay an interim dividend of 2.8c a share, unchanged on the previous first half.
Dawson, pictured, says: “Successes have been overshadowed by ongoing seasonal labour shortages and an escalation in global-shipping disruptions that have created challenges for all parts of the supply chain – customers, ports, shippers, carriers and agents.
“Schedule reliability has continued to be unpredictable resulting in missed or delayed vessel arrivals at Napier as well as at other ports throughout New Zealand and internationally.
“Ships arriving have required larger container exchanges for us and cargo owners to manage. These factors have been compounded by pandemic-related absences across cargo owners’ workforces and adverse local seasonal weather. This created challenges for primary sector production and further disrupted the flow of cargo.
“While we do not expect any immediate easing in global supply-chain challenges, we are confident that – as Covid-19 becomes endemic and the shipping industry gradually adapts to the current trading environment – these pressures will lessen.
“Our focus is working to keep the supply chain open and cargo flowing to minimise these disruptions.
“In line with our strategic goals to maintain strong links with our customers and build partnerships, we have worked hard to communicate with all in the supply chain and make changes to accommodate their needs to ensure cargo and shipping services are delivered as seamlessly as possible.
“The challenging trading conditions have continued to place significant demands on our people. We are grateful and impressed by the way they have worked to maintain and enhance links Napier Port maintains between the wider regional economy and international markets.
“A key success has been the vigilance displayed with regards to Covid prevention and containment, slowing its spread across our workforce.
“Covid-related absence, at any one time, did not exceed 11 per cent between January and March, which meant no operations were stopped as a result of omicron.”
Looking to the future, Dawson says Napier Port has continued to focus on ensuring its region maintains direct, efficient and competitive links to world markets.
“The most notable achievement has been the significant progress we have made bringing investment in 6 Wharf to near completion. The project continues to deliver ahead of schedule and at a lower cost than initial estimates. It is set to officially open in July 2022.
“The new wharf opens growth opportunities and shipping options for cargo owners across the central and lower North Island.
“It will allow us to accommodate larger vessels arriving in New Zealand, and provide greater flexibility and availability across all our wharves. We believe this new capability will enhance the attractiveness of Napier to shipping lines.
“The trade outlook for our region remains positive with primary-sector commodity prices remaining high, and a stronger second half anticipated for meat, forestry and horticulture exports.
“Even though there are signs the pandemic is abating, the port still faces uncertainty in the supply chain including shipping disruption, labour shortages and high-cost inflation.”