Strikes and costs erode Lyttelton Port profits, dividend delayed

Thursday, 23 August 2018

The acrimonious industrial unrest at Lyttelton Port Company over several weeks earlier this year has reduced the annual profit. 

Chief executive Peter Davie said other details would be revealed in the annual report including return on equity, and the dividend to post-earthquake cash-strapped owner, Christchurch City Council.

After extracting the cost of the strikes, expenses and tax, the final profit for 2018 was $12m, down on last year's $14.4m last year, even though more trade gave higher revenue at $122 million compared with last year's $114m. 

Davie focused on positive milestones, including deeper dredging by one of the world's biggest dredges, the Fairway, due in port in a few days. 

**READ MORE:

* Quakes help surprise turnaround at Lyttlelton Port 

* Lyttelton Port to lose more from shut down than paying docked wages 

* World's biggest dredge on its way to Lyttelton after Singapore flush out**  

There is one Kiwi on board Fairway, a Ngai Tahu a seaman from Rapaki in Lyttelton Harbour. At the request of the captain he was teaching the crew a haka to be performed when the ship arrives in a few days. 

A recent settlement with Ngai Tahu over environmental monitoring allowed sign off for the dredging resource consent, one of several initiatives that Davie said would set up the port for freight demands for 30 years.

For the year ending June 2018 the port had a 5.7 per cent increase in containers, with 424,560 twenty foot equivalent units (TEUs) processed through the port compared with 410,711 in the previous year. 

'Container volumes would have been even higher but industrial action in March and April reduced the number of units by about 10,000,' Davie said.

'A number of decisions were taken in the year which impacted year on year profitability but set us up well for the future.

'These include hiring additional staff in the container terminal to meet customer demand which, due to their nature, are a step change in cost. We also invested more in our health and safety.

'We experienced an increase in rail costs due to the success of MidlandPort, and the rises in fuel prices were much more significant than anticipated.'

The growth in turnover was mainly driven by the container terminal and MidlandPort inland at Rolleston.

Imports rose from $4.1 billion to $4.67b for the year ending, while exports were $4.84b compared with $4.7b the previous year.

There was also an increase in motor vehicles with 60,789 arriving, compared with 55,488 the previous year. Bulk fuel imports remained steady at 1.13 million tonnes, while log exports were 431,291 tonnes compared with 490,000 the previous 12 months.

The port company completed a 170-berth walk-on floating marina, Te Ana Marina. Boat owners occupied 84 per cent of the berths and the port company was seeking hospitality and commercial tenants for a refurbished warehouse onshore.

In July construction started on the port's new $56m cruise berth for completion at the end of 2020.  

The cruise ship wharf was redesigned to reduce underwater noise during piling, and a management plan was in place to manage risks to Hector's dolphins. 

The port also bought a new $12.5m Liebherr crane.

Staff moved into new headquarters, Waterfront House, which brought teams together for the first time under one roof. 

'The building's environment encourages closer working relationships, enhancing morale.'

Other initiatives will enable doubling of Canterbury freight volumes over the next 15 years including the dredging, expansion of the container terminal land area at Te Awaparahi Bay, and expansion of the existing reclamation area by 24 hectares, plus a new 700 metre container wharf.