Stormy weather for port
PrimePort Timaru has recorded a net loss of $7.4 million for 2012, it announced yesterday, on the back of losing all of its container trade and nearly half its staff this year.
The port company has had to write down the value of the container asset by $10.1m, which led to the after-tax paper loss. However, in stormy seas it still managed an operating profit of $277,000, shareholders were told at the AGM.
PrimePort has already said that it will shed 29 of its 55 staff at the end of this month, after announcing in June the loss of its container trade with Maersk and Hamburg Sud.
PrimePort chairman Roger Gower said the reduced container volumes from 49,000 in 2011 to 33,000 and the increase in dredging costs to $2m, up from $1.3m in 2011, had made it a tough year. The majority shareholder, the council parent company Timaru District Holdings Ltd, would not be getting a dividend this year.
"The advice by Maersk and Hamburg Sud in early July that they would withdraw the container service from September capped off this challenging year and has necessitated a restructure of the business to focus principally on breakbulk.
"It is hard to make a buck in the container trade. A lot of ports are caught up in the container trade [and so] this blow could have been a good thing in the long run. The underlying business is still a good cash business."
The loss of containers followed Fonterra's announcing three years ago that Lyttelton would be its preferred port over Timaru; and the Government subsidising rail through KiwiRail. The latest restructure will be the third in the past three years, PrimePort chief executive Jeremy Boys said.
"We have been blind-sided and hit by a fairly blunt instrument."
He predicted it could take over a year to return to profitability as the company absorbed redundancy costs and also the loss of $7m in revenue the container trade had provided.
Borrowing had been reduced from $2.5m to $1m, which placed the port in a position to invest in infrastructure for any new opportunities, Boys said, such as the proposed Holcim concrete plant in Weston signalling it would use the port. However, this project was on hold.
A member of the public at the meeting, Les Rawlings, asked when the company would return to profit. "I have already been to one funeral today. I feel like I am at another. When will there be a resurrection?"
In reply, Gower said losing container trade could help a move into more profitable operations.
- © Fairfax NZ News