Following up on comments regarding the rate of return on equity of ACIL owned Ports of Auckland, ACIL Chief Executive Gary Swift today said that the Council’s anticipated rate of return was realistic.
“ACIL has an obligation under the its establishing legislation to bring a strong commercial focus to the business, and the Port has an obligation under the Port Companies Act to be a successful business,” he said.
“That the shareholder and Council should accept a lower return on an asset as large as the port, is business nonsense. We need to provide a good return to the Council to help fund essential infrastructure in Auckland.”
Mr Swift confirmed that a confidential benchmarking report showing a comparitive analysis of returns by similar companies operating in different countires indicated that the current rate of return on equity by the Port was not satisfactory.
“Different companies and countries have different accounting policies, structures and operating models, which make benchmarking difficult,” Mr Swift cautioned.
While developing a strategy to achieve a satisfactory rate of return, the Ports of Auckland Board determined that a minimum return on equity of 12% was realistic.
To achieve this, the company undertook an indepth review of its structure and business – of which labour productivity is but one aspect. Changes are being made across the organisation to lift productivity and returns.
“ACIL is confident that when achieved, these strategies will allow the Company to achieve a more acceptable rate of return,” Mr Swift said.
Mr Swift said that comments made about these strategies being designed to privatise the port are incorrect.
“Increase in efficiency of labour productivty is equivalent to a 20% increase in the availbality of berth space and this in fact defers any future need for the port to expand,”
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