supply?! When will they ever begin to speak the truth about the true
nature of the deflationary depression that is affecting the whole
world, including John Key’s “rockstar economy”
clouds loom for Ports of Auckland
supply in industry augurs tough six months.
of Auckland declared a dividend of $25.9 million for the half year,
up from $25.5 million for the same period last year and representing
81.9%. Photo / Brett Phibbs
Ports of Auckland
enjoyed strong earnings over the first half but the company faces
challenges in the second half as the global shipping industry
suffers multi-billion dollar losses thanks to a surplus of supply
Council-owned company, which operates New Zealand's biggest import
port, said its net profit came to $31.6 million - up 9.5 per cent on
the same period a year earlier - despite revenue falling by 2.2 per
cent to $106.1 million.
Ports of Auckland
declared a dividend of $25.9 million for the half year, up from
$25.5 million for the same period last year and representing 81.9
per cent of the after-tax profit for the period. The profit
represents a return on equity of 10 per cent, just short of the
council's goal of a 12 per cent return on its investment.
Downward pressure on
earnings is expected in the second half - traditionally the less
profitable of the halves - as the world shipping industry goes
through a severe downturn and faces the prospect of US$5 billion
($7.5 billion) in losses.
The big container
shipping lines have been building larger ships in an effort to
reduce unit costs, while trade growth has been low.
"We are delighted
with the result, but it's been anything but plain sailing,"
chief executive Tony Gibson said. "It's tough out there for our
customers," he said. "There is too much supply and not
The world's biggest
shipping company, Maersk, this month reported a US$2.5 billion loss
in its fourth quarter from a profit of US$189 million in the same
Late last year, CMA CGM
spent US$2.4 billion on a controlling stake in Singaporean container
line APL and two big Chinese shipping giants, COSCO and China
Shipping, have joined forces. The Baltic Dry Index, a shipping
benchmark, this month hit its lowest point since the index started
In its result, Ports of
Auckland said container volume was down 3.3 per cent on last year to
474,613 TEU (20-foot equivalent units) and breakbulk volume -
including vehicles - was down 2.8 per cent on last year's at 2.995
In notes to the
accounts, Ports of Auckland said it had agreed to pay $23 million
for land North of Hamilton to develop a freight hub, which it says
will complete its network across the North Island in a deal
announced in January.
Ports of Auckland said
lines are looking to cut costs and are shedding staff, rationalising
routes and undertaking mergers and take-overs. They are also looking
to ports to reduce costs.
With Maersk having tied
up a large share of export volumes as a result of their arrangement
with Port of Tauranga and the Fonterra-Silver Fern Farms joint
venture Kotahi - there was fierce competition for inbound cargos,
the company said.
"This has resulted
in route rationalisation with some lines allocating vessel space to
import cargoes for Australia rather than competing for New Zealand
imports, and some lines leaving the New Zealand trade altogether,"
Ports of Auckland said.
This has contributed to
a 3 per cent decline in the port's volumes in the year to date.
"This struggle by lines to secure market share will continue
into the second half and beyond," the port said.
Revenue was down 2.2 per
cent to $106.1 million, compared to $108.5 million in the same
period last year. Despite the revenue decline, profit was up due to
lower costs, primarily as a result of the timing of spending on
repairs and maintenance.
Over the six months,
Ports of Auckland announced that it was establishing a Bay of Plenty
freight hub in Mount Maunganui, opened a new cold store for
Polarcold in Wiri and started on construction of a cross-dock at
for six months to December 31.
• $31.6m profit,
up 9.5% on previous year • 785 total
ship calls, up 6.2% • 31 cruise
ship calls, up 4 • 124,000 car
volume, up 4.4%