Tough year tests PrimePort Timaru’s resilience

A tough financial year has tested the tenacity of Timaru’s port operator with profit dropping more than 30% on the previous year.

PrimePort’s 2022-2023 after tax profit was $5.05m, down 31.3% on 2021-2022, while the operating profit, before tax, was down $2.3m, or 24.5%, “as market demand slowed in some trade areas and the ongoing effects of an inflationary environment were felt by the business” the company revealed on Friday.

Chief executive Phil Melhopt says the period has been a test of the company’s resilience, but adds it solidifies PrimePort’s commitment to investing in its infrastructure to help it retain its position as a critical logistics and freight partner for the central South Island.

Significant cost pressures for the business – jointly 50% owned by Timaru District Holdings Ltd and the Port of Tauranga – included staff pay increases, finance costs and insurance premium rises.

“Overall, operational costs were up 15.1% while reductions in bulk dry, logs and cement lowered trade volumes by 14.5%,” the company said.

PrimePort’s total revenue rose 2.2% or $627,000 on the back of increased rental revenue, cruise ships and tug charter revenue.

However, a rise in port operational costs of 15.1% ($2.9m) resulted in the $2.3m fall in operating profit before tax.

“Trade volume was down 14.5% on last year due to downward pressure on bulk dry, logs, and cement.

“Bulk trade volumes came back off last year’s record, although ship numbers were steady year-on-year at 433 compared to 432 in 2022.”

The company said bulk trades were 1.77m tonnes for the year, down 300,000 tonnes (14.5%).

“The China log export market remained subdued and the low ‘at wharf gate’ rates on offer to forest owners, meant many decided to leave them on the stump.

“Logs were down 31% (149,000 tonnes) on last year.

“Fertiliser, stock feeds and cement were down 26%, 15% and 6% respectively on last year.

“Fuel was 6% ahead, the only major bulk trade that performed ahead of the previous year.”

On the upside, 14 cruise ships visited, a 250% increase, with the pre-Covid peak being four cruise visits in one season.

Timaru Container Terminal Ltd (TCT) moved 78,650 TEUs (20-foot equivalent container units) through the terminal, which was up 2% on the previous year’s volume.

Melhopt said the company feels positive about the future “knowing we are upgrading our capacity and capability, investing in wharf upgrades and identifying ways to reduce our carbon footprint as a business”.

“It was pleasing to see our asset development programme make so much progress during the year and container ship operations are now using the rebuilt North Mole inner berth again.”

The company says the North Mole wharf upgrade project is 24 months in and contractors have completed 230 linear metres of a new 300mm thick concrete deck while North Mole hardstand improvements have continued which aim to boost the serviceability of the container terminal from both a safety and an operational perspective.

“Further reclamation works and hardstand upgrades have been completed at Evans Bay, with two hectares of the hardstand development now leased to Antarctica New Zealand for the construction of the new Scott Base.

“Work continues on number three wharf northern berth and number one extension wharf pile replacements, with number one extension scheduled for significant pile replacements and deck upgrades, starting later this year.

“The next stage of the port’s asset improvement programme will see an upgrade to number one extension wharf and significant planning work on this project has already been carried out.”