Port withdraws guidance on lost log loadouts

Wednesday 1 Apr 2020

Port of Tauranga has withdrawn its full-year earnings guidance citing the government’s restriction on log harvesting and processing. The company, the country’s largest export port, had trimmed its guidance last month, citing the potential impact of the coronavirus on its log volumes. On Friday it scrapped the guidance altogether. While many of its cargoes, including exports of meat, dairy and kiwifruit are classed as essential goods by the government, forestry products are not.

“Log and other forestry product exports will be significantly impacted,” chief executive Mark Cairns said. “This is unfortunate as we were seeing positive signs emerging in China, our major log export market. Business there had been returning to normal with log consumption recovering towards pre-Chinese New Year levels.”

“Under the current circumstances the Port of Tauranga board considers it prudent to suspend profit guidance for the time being.”

The port is the country’s biggest handler of logs, shipping almost 3.4 million tonnes in the six months through December, 8.4 percent less than the same period a year earlier. Container volumes were 3.4 percent higher at more than 642,200 twenty-foot equivalent units.

The government has ordered the lockdown of the economy to contain the spread of covid-19 but is trying to keep essential services like food producers, energy suppliers and healthcare providers operating.

Food exporters have generally been allowed to continue operating, as has the Tiwai Point aluminium smelter, but others have not. Newsprint maker Norkse Skog was declared an essential service but expects to run out of pulp as wood processing will come to a halt unless the government grants wider exemptions. Cairns said that while some customers will stop shipping product during the lockdown, the firm is in a strong position to weather the impact of the pandemic.

It comfortably paid its $40.8 million interim dividend last week, has a strong balance sheet and strong operating cashflows from across a diversified business.

“Many of our major exports, including meat, dairy products and kiwifruit, are classified as essential cargoes. Imports of oil products, food and medical supplies are also essential cargoes.”

Port of Tauranga shares rose 3.9 percent to $6.13 in a generally stronger market.

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