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Forsyth Barr

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Port of Tauranga 1H22 Result Initial Thoughts</h2>
Port of Tauranga (POT) reported a strong 1H22 result with NPAT up +16% against the prior year. The strong result reflected a bumper first quarter, followed by a slowdown in 2Q22. Total trade volumes were flat, but mix favourable with overall container volumes up and lower margin transhipments down -21%. Associate income fell -6% on restated prior year figures. The company will pay an interim dividend of 6.5c, up from 6.0c last year.
Key points
<ul>
<li>Containers: Main port volumes increased +1.5% but slowed sequentially after an +8% lift in 1Q22. In contrast overall container revenue lifted +23% on higher storage charges, favourable mix &nbsp;and the full period consolidation of Timaru Container Terminal.</li>
<li>Bulk products: increased +1% despite a -6% decline in log exports. Growth was driven by kiwifruit exports, other wood products, grain and protein imports.</li>
<li>Marine revenue: increased +11% on a +3% lift in ship visits suggesting some pricing gains.&nbsp;</li>
<li>Associates and JVs: down on prior year due to softer contributions from Northport (-NZ$0.3m), PrimePort Timaru (-NZ$0.8m), partly offset by the steadily improving Coda (+NZ$0.5m).</li>
</ul>
Outlook
Management has stuck to its previous FY22 NPAT guidance range of NZ$103m-NZ$110m despite the strong first half, citing 2H22 uncertainty.
Result conference call
Management will host a result briefing for investors and analysts at 11am today.&nbsp;Those wishing to participate need to register&nbsp;by contacting&nbsp;<a href="mailto:cfo@port-tauranga.co.nz" target="_blank" rel="noopener">cfo@port-tauranga.co.nz</a>.
Result summary (NZ$m)
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 145.8pt; height: 12.75pt;"></td>
<td style="width: 52.8pt; height: 12.75pt;">
1H21
</td>
<td style="width: 52.8pt; height: 12.75pt;">
1H22
</td>
<td style="width: 52.8pt; height: 12.75pt;">
Chg
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Profit and loss account
</td>
<td style="width: 52.8pt; height: 12.75pt;"></td>
<td style="width: 52.8pt; height: 12.75pt;"></td>
<td style="width: 52.8pt; height: 12.75pt;"></td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Sales revenue
</td>
<td style="width: 52.8pt; height: 12.75pt;">
159.5
</td>
<td style="width: 52.8pt; height: 12.75pt;">
186.0
</td>
<td style="width: 52.8pt; height: 12.75pt;">
17%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Port operations
</td>
<td style="width: 52.8pt; height: 12.75pt;">
140.4
</td>
<td style="width: 52.8pt; height: 12.75pt;">
168.3
</td>
<td style="width: 52.8pt; height: 12.75pt;">
20%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Property services
</td>
<td style="width: 52.8pt; height: 12.75pt;">
15.5
</td>
<td style="width: 52.8pt; height: 12.75pt;">
16.2
</td>
<td style="width: 52.8pt; height: 12.75pt;">
5%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Marshalling services
</td>
<td style="width: 52.8pt; height: 12.75pt;">
2.8
</td>
<td style="width: 52.8pt; height: 12.75pt;">
1.3
</td>
<td style="width: 52.8pt; height: 12.75pt;">
-55%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Unallocated expenses and other
</td>
<td style="width: 52.8pt; height: 12.75pt;">
(74.7)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
(88.4)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
18%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
EBITDA
</td>
<td style="width: 52.8pt; height: 12.75pt;">
84.0
</td>
<td style="width: 52.8pt; height: 12.75pt;">
97.4
</td>
<td style="width: 52.8pt; height: 12.75pt;">
16%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Depreciation and amortisation
</td>
<td style="width: 52.8pt; height: 12.75pt;">
(16.5)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
(19.0)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
15%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
EBIT
</td>
<td style="width: 52.8pt; height: 12.75pt;">
67.5
</td>
<td style="width: 52.8pt; height: 12.75pt;">
78.4
</td>
<td style="width: 52.8pt; height: 12.75pt;">
16%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Associate income
</td>
<td style="width: 52.8pt; height: 12.75pt;">
6.3
</td>
<td style="width: 52.8pt; height: 12.75pt;">
6.0
</td>
<td style="width: 52.8pt; height: 12.75pt;">
-6%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
One-time items
</td>
<td style="width: 52.8pt; height: 12.75pt;">
0.0
</td>
<td style="width: 52.8pt; height: 12.75pt;">
0.0
</td>
<td style="width: 52.8pt; height: 12.75pt;">
n/a
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Interest expense
</td>
<td style="width: 52.8pt; height: 12.75pt;">
(8.5)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
(8.1)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
-4%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Profit before tax
</td>
<td style="width: 52.8pt; height: 12.75pt;">
65.4
</td>
<td style="width: 52.8pt; height: 12.75pt;">
76.2
</td>
<td style="width: 52.8pt; height: 12.75pt;">
17%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Taxation
</td>
<td style="width: 52.8pt; height: 12.75pt;">
(16.7)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
(19.9)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
19%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Reported NPAT
</td>
<td style="width: 52.8pt; height: 12.75pt;">
48.7
</td>
<td style="width: 52.8pt; height: 12.75pt;">
56.3
</td>
<td style="width: 52.8pt; height: 12.75pt;">
16%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Abnormals (post tax)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
0.0
</td>
<td style="width: 52.8pt; height: 12.75pt;">
0.0
</td>
<td style="width: 52.8pt; height: 12.75pt;">
n/a
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Underlying NPAT
</td>
<td style="width: 52.8pt; height: 12.75pt;">
49.4
</td>
<td style="width: 52.8pt; height: 12.75pt;">
56.3
</td>
<td style="width: 52.8pt; height: 12.75pt;">
14%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Underlying EPS (cents)
</td>
<td style="width: 52.8pt; height: 12.75pt;">
7.4
</td>
<td style="width: 52.8pt; height: 12.75pt;">
8.4
</td>
<td style="width: 52.8pt; height: 12.75pt;">
14%
</td>
</tr>
<tr>
<td style="width: 145.8pt; height: 12.75pt;">
Interim DPS
</td>
<td style="width: 52.8pt; height: 12.75pt;">
6.0
</td>
<td style="width: 52.8pt; height: 12.75pt;">
6.5
</td>
<td style="width: 52.8pt; height: 12.75pt;">
9%
</td>
</tr>
</tbody>
</table>
&nbsp;Source: POT, Forsyth Barr analysis

Port of Tauranga 1H22 Result Initial Thoughts
Port of Tauranga (POT) reported a strong 1H22 result with NPAT up +16% against the prior year. The strong result reflected a bumper first quarter, followed by a slowdown in 2Q22. Total trade volumes were flat, but mix favourable with overall container volumes up and lower margin transhipments down -21%. Associate income fell -6% on restated prior year figures. The company will pay an interim dividend of 6.5c, up from 6.0c last year.
Key points

Containers: Main port volumes increased +1.5% but slowed sequentially after an +8% lift in 1Q22. In contrast overall container revenue lifted +23% on higher storage charges, favourable mix &nbsp;and the full period consolidation of Timaru Container Terminal.
Bulk products: increased +1% despite a -6% decline in log exports. Growth was driven by kiwifruit exports, other wood products, grain and protein imports.
Marine revenue: increased +11% on a +3% lift in ship visits suggesting some pricing gains.&nbsp;
Associates and JVs: down on prior year due to softer contributions from Northport (-NZ$0.3m), PrimePort Timaru (-NZ$0.8m), partly offset by the steadily improving Coda (+NZ$0.5m).

Outlook
Management has stuck to its previous FY22 NPAT guidance range of NZ$103m-NZ$110m despite the strong first half, citing 2H22 uncertainty.
Result conference call
Management will host a result briefing for investors and analysts at 11am today.&nbsp;Those wishing to participate need to register&nbsp;by contacting&nbsp;cfo@port-tauranga.co.nz.
Result summary (NZ$m)





1H21


1H22


Chg




Profit and loss account







Sales revenue


159.5


186.0


17%




Port operations


140.4


168.3


20%




Property services


15.5


16.2


5%




Marshalling services


2.8


1.3


-55%




Unallocated expenses and other


(74.7)


(88.4)


18%




EBITDA


84.0


97.4


16%




Depreciation and amortisation


(16.5)


(19.0)


15%




EBIT


67.5


78.4


16%




Associate income


6.3


6.0


-6%




One-time items


0.0


0.0


n/a




Interest expense


(8.5)


(8.1)


-4%




Profit before tax


65.4


76.2


17%




Taxation


(16.7)


(19.9)


19%




Reported NPAT


48.7


56.3


16%




Abnormals (post tax)


0.0


0.0


n/a




Underlying NPAT


49.4


56.3


14%




Underlying EPS (cents)


7.4


8.4


14%




Interim DPS


6.0


6.5


9%




&nbsp;Source: POT, Forsyth Barr analysis

Port of Tauranga: 1H22 Result Initial Thoughts