Newly-Listed Port Of Napier Wins Praise From Analysts

Forestry export port, the Port of Napier NPH on the east coast of New Zealand, has disclosed revenues of 99.6 million New Zealand dollars ($62.4 million) and total comprehensive income of NZ$15.2 million ($9.5 million).

Analysts at Forsyth Barr, a NZ based investment services company, said they were impressed. The company, which publishes its insight on the Smartkarma platform, wrote: "Napier Port (NPH) reported a solid first result as a listed company with no surprises and has kept to its IPO script for the FY20 outlook… NPH reported FY19 underlying NPAT +3% ahead of PFI (prospective financial information issued ahead of the IPO). While the margin for error was limited given the late stage nature of PFI forecast issuance through FY19 and the stable nature of port cargo flows, it was still important for the company to meet/exceed its first PFI hurdle."

In a separate research note, Forsyth Barr added, "NPH has led a textbook start as a listed company".

Port of Napier's financial year runs from Oct. 1 to Sept. 30. It floated on the New Zealand Exchange in August this year.

Revenues And Volumes

Port of Napier's final year revenues of NZ$99.6 million ($62.4 million) were an 8.6% increase over the previous financial year, and also beat analyst's forecasts by 2.3%. Port operations accounted for 98% of earnings and was an 8% increase over the previous financial year. The NZ$2.1 million ($1.3 million) balance of operational revenues was generated by property operations.

Total bulk cargo volumes handled at the port amounted to 3.4 million metric tonnes (3.7 million).

Port of Napier's primary throughput is exported forestry products, specifically, logs. In the 2019 financial year, the port handled just under 2.6 million metric tonnes (2.8 million U.S. tons) of log exports. The port also handled 656,000 tonnes (723,000 U.S. tons) of bulk imports and 167,000 tonnes (184,000 U.S. tons) of other bulk exports.

In the 2019 financial year, the Port of Napier handled total containerized exports of 134,000 twenty foot equivalent units (TEUs) shipping containers. The majority, 76,000 TEUs, were dry boxes filled with wood pulp and timber, canned food and "other."

The balance was comprised of refrigerated containers (54,000 TEUs) filled with apples, pears, meat and "other fresh produce." About 4,000 TEUs were empty.

On the import side, the Port of Napier handled 133,000 TEUs, of which 30,000 were dry, 4,000 were reefer and the other 99,000 TEUs were empty.

Commenting on revenues, the company attributed the increase in results to higher than forecast box and bulk cargo volumes.

Expenses And Profits

Operational expenses were up in the 2019 financial year by about 9.1%, mostly owing to increases in employee benefits and "other operating" expenses. These "other" expenses mostly related to professional services fees (auditing) related to the company's initial public offering. Employee expenses rose because of higher holiday pay accruals and a reclassification of employee-related listing costs.

Results from operations i.e. gross profit, stood at just under NZ$42 million ($26.3 million) for the financial year, a 7.9% increase on the previous financial year ending September 2018.

Profits before finance and taxes stood at NZ$22.5 million ($14.1 million), a decrease of 21.3%. The decrease was primarily because of a NZ$7.1 million one-off payment related to terminating interest rate swaps that were connected with borrowings. Interest expenses on borrowings declined from NZ$4.4 million ($2.9 million) to NZ$3.6 million ($2.3 million).

Owing to the large one-off fees associated with the IPO, paying down debt and terminating interest rate swaps, the Port of Napier's profit for the period fell by about 61% to NZ$6.9 million ($4.3 million) in the financial year ending September 2019.

However, the port's total comprehensive income for the period was boosted by a large sum, "cash flow hedges," that was transferred to the income statement to boost the bottom line to NZ$15.2 million ($9.5 million), down 12.2% from the $17.3 million ($11.5 million) recorded in the 2018 financial year.

Image by Jason Goh from Pixabay