Port Taranaki. Photo: Supplied / Port Taranaki
Challenging economic conditions and production difficulties in the energy sector have impacted Port Taranaki's financial result for the 2023-24 year.
For the year ended 30 June, Port Taranaki recorded net profit after tax (NPAT) of $6.88 million, down from the previous year's all-time record of $13.87m.
Chief executive Simon Craddock said the result was lower than budgeted and a reflection of difficult times, particularly for the port's energy customers and rising costs.
"High interest rates and inflation, increased insurance costs, reduced gas production, lower log export volumes, and increased operational costs, have all combined to impact our result."
A tax law change, in which the government removed tax deductions of industrial and commercial buildings with original estimated lives of 50 years or more, also impacted Port Taranaki's full-year result.
"Without that change, NPAT would have been $8.59m, while it's also important to note that the 2022-23 full year result was boosted by some extraordinary non-trade revenue, including an insurance payout related to Cyclone Dovi," Craddock said.
Full-year revenue was $54.01m - $3.42m down on $57.43m in full-year 2022-23.
Operating expenses were up $2.44m to $32.41m, driven primarily by increased personnel costs and higher insurance costs. This was offset slightly by repairs and maintenance costs dropping from $4.21m to $4.13m.
Dividend payout
The Port Taranaki Board of Directors declared a final dividend for the year of $3m.
Dividends paid to the port's sole shareholder the Taranaki Regional Council (TRC) were $8m for the 2023-24 financial year.
Craddock said those dividends helped ease the rates burden on regional ratepayers.
"Port Taranaki is a key community and regional asset that's here in perpetuity.
"We're focused on ensuring the port is a multipurpose asset that is adaptable and resilient to present and future trading conditions, and continues to add value to the region - providing customers with the services and facilities they need, attracting new business and industry, and supporting the region via TRC dividends and community sponsorships."
Trade numbers
Total trade volume for the year was 3.91 million tonnes, which was 788,000 tonnes, or 16.6 percent, down on 4.69 million tonnes the previous year.
Bulk liquids trade was down 659,000 tonnes, or 23.4 percent, to 2.16 million tonnes, with methanol, the largest trade through Port Taranaki, dropping 429,000 tonnes (25.1 percent), from 1.71 million tonnes to 1.28 million tonnes.
It was the lowest volume of methanol through the port since 2012. Crude oils trade at 655,000 tonnes was 18 percent down on the previous year.
Craddock said the energy sector was traditionally the port's largest contributor to overall trade, but the decline in gas and condensate reserves and production had significantly impacted bulk liquids trade.
"Methanex NZ, our largest customer, reduced production earlier this year, and has now ceased methanol production for a period to provide gas to electricity generators.
"We recognise that this decision has been borne out of necessity, through a combination of a dry year for electricity generation and the decline in gas reserves, while significant development expenditure on existing oil and gas fields has not produced the expected results.
"However, New Zealand's international competitiveness is important, as is maintaining export earnings and favourable balance of payments. Therefore, we look forward to a solution being found and implemented that enables some of New Zealand's key export earners to return to previous higher levels of production."
Dry bulk trade for the 2023-24 year was up 43,000 tonnes (6 percent) to 754,000 tonnes, boosted by a 96,000-tonne increase in animal feed trade. However, fertiliser trade was down 45,000 tonnes to 95,000 tonnes.
At 945,000 Japanese Agricultural Standard (JAS) tonnes, export log trade dropped below 1m JAS for the first time in four years.
Craddock said slower economic growth in China weakened log prices and impacted trade resulting in a 140,000 JAS (12.9 percent) reduction in logs through the port.
The decline in total trade, in particular bulk liquids, had a subsequent flow-on effect on vessel visits, with 252 recorded for the 2023-24 year - 41 fewer than the previous year.
Outlook for 2024-25
Port Taranaki chairperson Jeff Kendrew said the outlook for the 2024-25 year was for more supply difficulties in the energy sector, resulting in lower bulk liquids and a fall in overall trade to approximately 3.2 million tonnes.
"This will, in the upcoming year, see an increased focus on delivering opportunities to diversify revenues, expanding the port's service offering, reducing costs, making the port's asset management plan more efficient, planning port infrastructure for multi-use needs and, therefore, positioning the company for the future," he said.
"While the near term is challenging, there is cause for optimism, with opportunities for new trade and support work in the future."