Short term pain for long term gain
- Unaudited group revenue of $123.6m, up 2.5% on the previous corresponding period (pcp).
- Unaudited net profit after tax of $24.4m, down 16.4% on the pcp.
- Interim declared dividend of $18.6m, compared to $23.8m for the pcp.
- Capital expenditure is up due to our investment in capacity growth. This is primarily automation and new cranes at our Waitematā sea port, plus a new road bridge and our first customer facility at our Waikato Freight Hub.
- Operating costs have increased due to lower volumes and productivity being impacted by work on the automation project.
|For the six months ended 31 December 2018 |
|||31 December||31 December|
|Profit before income tax||28,312||34,011|
|Net Profit after tax||24,401||29,204|
- Container volume (TEU) of 485,093 down 4.6% (508,262 pcp).
- Total general cargo volume of 3.253m tonnes, down 4.7% (3.412m tonnes pcp).
- Car volume of 124,190 units, down 16.6% from 148,879 units in the pcp.
Ports of Auckland Chief Executive, Tony Gibson has today announced the company's half-year results.
"Our company is in the middle of a major investment programme which will increase capacity, efficiency and returns. This work will give us a solid foundation for a sustainable future, but while construction is underway there is a tangible effect on our business. A number of these factors have combined to make the first half of this financial year difficult for Ports of Auckland", he said.
"The entire period has been clouded by the death of one of our colleagues in a straddle accident at the container terminal in August 2018. The accident was a terrible tragedy for a young man and his family, and has impacted on all of us here at the port.
"In combination with a number of other factors, the accident also had a significant impact on our operations. The terminal is currently operating with less capacity as a result of work to introduce automation, which has limited our ability to respond to unexpected increases in demand or the terminal closure following the accident. As a result, we experienced severe congestion in September and October, and had to divert a few services to other ports.
"While this congestion is now behind us, we will continue to operate with reduced terminal capacity until automation infrastructure works are completed later in 2019.
"The congestion also highlighted a vulnerability in the Auckland supply chain. It is working at capacity, and small problems can rapidly escalate.
"At its heart, Auckland's growth means the supply chain needs to evolve if it is to handle the increased volumes which are now a permanent part of the landscape. Factors behind the vulnerability include delays to shipping (over half of all container ships arrive late), labour shortages affecting the port and trucking industry, and a lack of capacity at nights and weekends in distribution centres, importers' warehouses and empty container depots.
"Our goal is to promote change that will more efficiently use existing supply chain capacity. This will require a combination of technology, greater co-ordination and better use of off-peak periods at night and during weekends. Ports of Auckland is working with the National Road Carriers Association to update its processes and to try to educate other players in the supply chain so that they understand the need for change.
"As a result of the problems above, plus service changes and consolidation in the market, container volumes are down significantly. Until we've completed automation and opened up more container terminal capacity it will continue to be a difficult time and that will be reflected in our results this year and the next.
On a positive note, I can report that the work to increase capacity is proceeding well. Automation infrastructure work is on track for completion later in 2019. To avoid the risk of any repeat of last year's congestion issues, a decision has been made to delay automation 'go-live' until early 2020, once the import peak and holiday seasons are over. We have also taken delivery of three new high productivity cranes, and work to commission them is well underway.
"Off-port, construction of the first customer facility at our Waikato Freight Hub has progressed well and is due to open in May. This is a key part of our strategy to increase export volumes and improve the efficiency of the supply chain by balancing imports and exports.
"Volumes fell in our Multi-Cargo operation. A decline in car sales plus the impact of measures to prevent the introduction of the Brown Marmorated Stink Bug into the country have caused a fall in car volumes. Car import volumes for the full year are expected to be lower than the previous financial year.
"In 2017 we developed a 30-year master plan which outlines how we can modify the current port to handle growth until such time as a new port is developed. The direction of the plan was supported by Auckland Council in May 2018, and we have proceeded to implement it.
"In the past six months we have demolished the old container cranes on Bledisloe Terminal to create more room for general cargo handling. We applied for and were granted consent for a car handling building at the south end of Bledisloe Terminal. By building up to create more room for handling cars and light commercial vehicles we will be using our land more intensively and eliminating the need for future reclamation. Longer term, it will enable the port to open up Captain Cook wharf – currently used for vehicle handling – for use by cruise ships.
"The building will be a striking addition to the waterfront, as the western façade will be covered with 3,000 LED lights which can be used to create stunning visual displays. The roof of the building will be specially strengthened to enable the future construction of a new downtown public park. Ports of Auckland is planning to begin consultation on the design of the park later in 2019. Site set up for construction of the car handling building has started and it is expected to be complete by late 2020.
"We have also applied to the Environmental Protection Agency for consent to dispose of dredged material at sea. Dredged material is currently used in our Fergusson Terminal reclamation project, but given our commitment to end reclamation once this project is finished, material will need to be disposed of elsewhere. Disposal at sea in a designated disposal site over 150 kms from Auckland is currently the best option. We are awaiting a decision on this application.
"Later this year, we will apply for consent to deepen the Waitematā Shipping Channel to accommodate larger container ships. We are beginning consultation on this project prior to submitting a consent application.
"Ports of Auckland has an ambitious goal to become a zero emissions port by 2040, and this year announced a significant milestone in that effort, the construction of Auckland's first hydrogen production and refuelling facility. The project is being undertaken in partnership with Auckland Transport, KiwiRail and Auckland Council. We intend to apply for consent for this project at the end of March 2019.
"We continue to make a significant economic and social contribution to Auckland and New Zealand. We have declared an interim dividend of $18.6 million to our owner, Auckland Council. Over the last five years Ports of Auckland has earned almost a quarter of a billion dollars for Auckland, money the city can use to help fund vital infrastructure projects and manage the cost of Auckland rates."
"The next 18 months are not going to be easy. The work we have underway is important for the sustainability of our operations and our ability to keep delivering to Aucklanders the freight they need. The long-term benefits are clear, but in the short term it will be challenging for us. I would like to thank all our staff for the work they are doing to prepare our port for a new era and to keep it operating at a high standard despite many difficulties."
The 2018 interim report is available at:
For further information contact:
Head of Communications
Ports of Auckland
M: +6421 495 645
E: [email protected]