The council-owned port is aggressively changing its financial forecasts and transitioning to vertical growth
Ports of Auckland is looking to fast-track its financial performance and massively increase its container capabilities as it works to secure its future in Auckland’s downtown.
Yesterday the Auckland Council-owned port reported a first-half profit of $20.8 million, up 40 percent on last year’s first half.
It also paid the council, which has been breathing down its neck over underperformance for years, a first-half dividend of $15m, up from $2.1m previously.
Auckland Mayor Wayne Brown, who campaigned on moving the port (or at least elements of it) to Northland said the result was “getting closer to being okay, but well short of what we are expecting”.
“I acknowledge the current team’s commitment to turning things around as well as their acceptance of the need to quickly do better,” Brown said.
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Ports of Auckland chief executive Roger Gray will deliver his revised financial goals to councillors at its formal half-year CCO briefing at the end of March but told Newsroom he was confident it could beat performance milestones given in its 2022-2025 statement of corporate intent.
It is already on track to beat its 2023 profit goal of $35m, anticipating a full-year profit of between $42m and $45m.
That takes it to (or slightly above) its 2024 goal of $42m. It then expects to meet or exceed its 2025 goal of $50m in 2024, at which point Gray believes the port will be well on the way to providing a decent return for the prime waterfront land it occupies.
“I do think this starts that journey of showing them that we're committed to having a fair return to the community.
“I think the people of Auckland, as they start to see the dividends improve over the next two or three years, will start to really appreciate the value the port brings not just for the economy but also as a business contributing to balancing out rates.”
Gray said Auckland Council’s chief executive and chief financial officer were aware of these new goals already.
Alongside having to focus on delivering more profit in the short term, Ports of Auckland also has longer-term issues in its size constraints.
The port has limited ability to expand (it would love another berth along the front of its Bledisloe Wharf) and will have to service the increasingly larger container vessels coming online in the not-so-distant future.
Currently, the port can accept vessels carrying around 5000 containers but has consent to dredge the Rangitoto Channel to eventually enable 'Panamax'-sized 12,000 container vessels to visit.
To meet the increase demand of handling and throughputs, the port is transitioning to stacking containers four-high, rather than the three-high system it had done in the past.
It doesn’t sound major, but Gray said an extra container on each stack is the equivalent of the container yard expanding 30 percent, or increasing annual capacity from around 850,000 containers to 1.2 million.
The port plans on launching the transition to four-high within the next month with the commissioning of five new straddles.
Taking the container terminal to four-high was a major part of the previous management’s now-ditched automation project, and the straddles purchased for the system will eventually be converted to manual use.
Gray said negotiations with supplier Kone to get them converted were in the “final throes” but no cost could be rolled out at this stage.
“The transition will give us the capacity to take us well out into the 2030s and beyond, so there's quite a significant phase for us over the next two years.”
Gray doesn’t expect the change to four-high to impact on its anticipated performance to 2025, though its draft statement given to council in late March will factor in associated operating costs.
“We will be able to deliver the upgrade of straddles, whatever the price is, within our forecast capex budget because we are pulling back initiatives that we now don't see as being important and we're able therefore to maintain our debt and our dividend policy going forward.”
