Port Nelson’s 2021 financial year results reflect the impacts of global shipping challenges
Port Nelson Limited has released its financial results for the year ended June 2021. The 2021 financial year saw Port Nelson’s performance impacted by the global supply chain and shipping challenges. The Port had previously set its lowest profit budget in five years for 2021, due to concerns over how trade would respond in a COVID environment. This budget was exceeded despite lower cargo volumes due to strong cost control and increases in property valuations.
Port Nelson reported a Net Profit After Tax (NPAT), excluding one-off property revaluations, of $9.1m, up $1.7m (23%) on budget, and up 12% on the previous year. Strong commercial property revaluations contributed to an equity increase of $3.9m, impacting positively on the year’s profitability. The final NPAT was $13.0m. The Port was pleased to declare a fully imputed, full year, dividend of $4.0 million.
The Port’s cargo volumes for 2020/21 were 3.25 million tonnes, down 3% on budget, and 1% on the previous year. This result masks some key variances in our major cargo groups. Log exports were up 8% on budget, reflecting strong demand and prices in China. Container throughput was 102,995 Twenty-Foot Equivalent Units (TEU), down 13% on budget and 11% on last year.
As a consequence of lower cargo and container volumes, non-property-related revenue was well down on budget.
Hugh Morrison, Port Nelson’s Chief Executive, comments on how the Port focused on several cost-saving and cost deferment initiatives to mitigate the lower revenue, “the most significant was a deferral in wharf maintenance costs and a slowdown in capital investments. These costs will now be spread over future years. Savings were also made through a review of administration costs. A number of one-off savings also worked in our favour, in particular foreign exchange transactions.”
Port Nelson acknowledges the challenges that the region’s exporters and importers have had over the year, and the difficulties shipping companies have had in these volatile times. These impacts have particularly impacted those reliant on containerised cargo. The lack of containers, difficulty in finding and retaining vessel booking slots, omitted or delayed vessel calls, and significant cost increases have been ongoing obstacles for all parties to overcome. These challenges come on top of the impact of the Boxing Day hailstorm and other climatic events. Despite these challenges, the Port’s exporters and importers have shown strong resilience and innovation to keep the region’s quality products flowing.
During the year, the Port finalised its greenhouse gas emissions reduction targets. These targets have been set at levels that allow the Port to play its part to meet New Zealand’s Paris Agreement obligations.
The Port’s emissions reduction plan identifies several key areas that will be critical to achieving the targets, these include decreased reliance on fossil fuels through driver behaviour, plant replacement, biofuel integration, and alternative fuel sources for plant and equipment, as the technology becomes available. The Port has also committed to sourcing electricity from renewable sources.
The Port’s gross emissions for the year (Scope 1, 2, and 3) were 2,914 T (C02e). This is an 11% decrease on the 2020 emissions total and a 20% decrease on the 2019 baseline year total. For the first time in 9 years, Port Nelson reported no significant noise events.
For Port Nelson, as an international maritime border, protecting the Port team and the community from COVID-19 continues to be an essential part of our operation. Hugh comments on the commitment the Port people have shown to ensure the region has a safe maritime border for our community, “the 2021 financial year commenced with COVID-19 work practices well established at the Port. The Port’s front-line team has shown outstanding resilience complying with the weekly and fortnightly COVID-19 testing regime and with the mandatory vaccination order from the government. The volatile workload and COVID environment have taken its toll on our people and I thank the whole Port team for their commitment and the professional way they have overcome the many challenges of the year.”
Funding has been approved for the development of a modernised marine maintenance facility for vessels up to 400 tonnes. Many parties have been involved in making this happen including: central government (Kānoa - Regional Economic Development & Investment Unit), Nelson City Council, the marine engineering industry, and Port Nelson. The development will take place over the next 18 months and will bring more vessels to the region that require engineering, painting, and other marine services.
The Port continued its support of the Te Tauihu region by contributing $109,000 to various community organisations and initiatives in the 2021 financial year. Supporting the community through sponsorship is an important focus for the Port. In 2021 the Port sponsored initiatives including; Nelson Hearing, Nelson Tasman Chamber of Commerce’s Export Hub, Tasman Mako, Sealord Marine Rescue Centre, LifeLinc, and the Haulashore Island Trapping Programme.
Investment in infrastructure and property remain key focuses for Port Nelson. The Main Wharf North upgrade celebrated its completion in July 2021. The Port also purchased a new Liebherr Crane, an investment of nearly $9 million, and the Port’s first Reach Stacker. The new equipment provides safer and more efficient and environmentally friendly container operations.
Commercial property forms an important diversification of income for the Port. An exciting development opportunity being scoped is the development of a Science & Technology Precinct at the corner of Vickerman Street and Wildman Avenue. This facility, promoted with the support of the Cawthron Institute and Nelson City Council, will assist in attracting new knowledge-based companies to the region as well as supporting some of our growing technology and research businesses.
In keeping with its focus on cost management and reduction, the Port explored options to obtain efficiencies from combining governance and administration functions with Nelson Airport Limited (NAL). A decision has been made by shareholders to progress a holding company that would own the assets of both PNL and NAL. The new structure would continue to allow each company to operate separately but provide access to more cost-effective funding lines.
Looking forward, the 2022 financial year will see the Port continue its focus on key commercial projects including the slipway redevelopment and the Science and Technology Precinct. The Port looks to continue to develop its 5 year environmental strategy to reduce its carbon footprint and continue to support the community through sponsorship and a Port Nelson Open Day. Supporting our people at the Port and finding solutions for our customers will continue to be a high priority as the Port navigates the disruptions from the spread of COVID-19.
Hugh thanks the people of the Port and customers for their resilience and patience in these difficult times, “what was evident in 2021 was the ability of the region, the Port, and its customers to adapt to challenges, find ways to make things work, and identify new opportunities.”
- Revenue of $73.5
- Net profit after taxation of $13 million
- Total cargo volumes of 3.3 million tonnes
- Container volumes of 102,995 TEU
- Fully imputed interim dividend of $4 million
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