Insurance costs hit CentrePort profit

02:28, Feb 20 2013

Soaring insurance and seismic strengthening costs have pushed Wellington-based CentrePort's interim net profit down 6 per cent.

The country's third-largest port booked a 3 per cent fall in revenue in the six months to the end of December, cutting its half-year, after-tax net profit to $5.1m.

Despite this, CentrePort chairman Warren Larsen said the company's core activities showed ongoing growth and the second half would be boosted by a seasonal increase in cruise ship visits.

Insurance costs at the port have risen more than 200 per cent over the last three years and now account for up to 20 per cent of its net profits.

Chief executive Blair O'Keeffe said the port had aggressively gone through its books and even considered self-insurance in some areas to reduce the cost.

"We've had to look at a whole variety of things relative to what we value assets at and what we replace and don't replace," he said.


"There's not a lot more we can do other than wait for the markets to settle down."

Earthquake strengthening had also taken a toll on the results.

CentrePort had developed a thriving commercial property portfolio on its Harbour Quays site and its three new office blocks were up to code, O'Keeffe said.

However, the company had been hit by the temporary loss of income and strengthening of one of its older buildings, and the permanent loss of income and possible demolition of its NZRFU building.

All up, CentrePort saw a slight fall in half-year revenue to $27.9m, down 3 per cent, and its earnings before interest and tax (ebit) slid 15 per cent to $6.4m.

Container volumes at the port were stable, down 2 per cent over the period, but business was booming for break-bulk cargo such as logs and scrap metal, up 20 per cent to more than 528,000 tonnnes.

Car imports were down by 11 per cent, and bulk fuel imports were stable.

However, the port did receive a boost from equity earnings in its joint venture companies, which rose 10 per cent to $4.5m.

That included growth in its coldstore business and profits from its joint ownership of the three Harbour Quays office blocks with ACC.

International ship calls at the port fell 13 per cent during the period, due to the loss of an MSC ship visit, and the port's burgeoning cruise ship visits were down 19 per cent.

But by the end of the year, cruise ship calls were expected to hit a record of 91.

Despite a tough first half, O'Keeffe said he was positive about the port's growth plans and its booming log trade, which was up 25 per cent year on year.