Speaker 1: Cure and welcome to Shared Lunch. Today, we've got a
Speaker 1: short bonus episode for you where we talked to Todd Dawson,
Speaker 1: who's the CEO of Nappi Port, about the earnings results
Speaker 1: out last week. Before we get started, there's some important information.
Speaker 2: Investing involves the risk you might lose the money you
Speaker 2: start with. We recommend talking to a licensed financial advisor.
Speaker 2: We also recommend reading product disclosure documents before deciding to invest.
Speaker 2: Everything you're about to see and here is current at
Speaker 2: the time of recording.
Speaker 1: Welcome Todd. Nice to have you back at Cheesy's HQ again.
Speaker 3: Thank you, nice to be here. I don't thank you
Speaker 3: very much.
Speaker 1: Now, a few days ago you released your interim results
Speaker 1: Napei Port, and it was a pretty strong result. All
Speaker 1: in all, your revenue was up by ten point six
Speaker 1: percent I think, to about seventy eight million, and your
Speaker 1: net profit was up forty percent to just over twenty million,
Speaker 1: although that was boosted by the Cyclone Gabriel insurance payout.
Speaker 1: How would you describe the company's performance over that six
Speaker 1: months to the sudieth of March.
Speaker 3: Yeah, that's a really pleasing result. I think it's sort
Speaker 3: of underpinned by a strong recovery in the region, certainly
Speaker 3: led by our container volumes which have come through really nicely.
Speaker 3: A large part of that is really due to the
Speaker 3: rebuild of pan Pack, you know, since the cyclone. They've
Speaker 3: up to full production now so hit their straps around
Speaker 3: the end of December early January. So pan Pack pan
Speaker 3: Packs our pulp and timber customer just down the road
Speaker 3: from the port, big volume customer as well. So yeah,
Speaker 3: they've really underpinned a lot of that container recovery. We've
Speaker 3: also had a really good season in terms of our
Speaker 3: crews coming through. I think we finished the season with
Speaker 3: seventy seven crews which runs across that period, and equally
Speaker 3: some really good steady volumes for our bulk business as well.
Speaker 3: So volume lead recovery coming through in those numbers. And
Speaker 3: I think, you know, the other good thing from our
Speaker 3: perspective is that the volume and revenue uplift is also
Speaker 3: not just heed out the back door in terms of
Speaker 3: costs as well, so we've minised the manager costs really
Speaker 3: really well. A lot of the work that we put
Speaker 3: in to correct flexibility in the port is coming through
Speaker 3: in terms of the operating earnings. You know, we're getting
Speaker 3: that operating lead what we talk about as operating leverage
Speaker 3: coming through. As the volumes come through, the returns get better.
Speaker 3: So good management of costs pricing is also played a
Speaker 3: part over the years, but equally just really good management
Speaker 3: of the business and responding to that recovery.
Speaker 1: So you would think that that economic cyde and we've
Speaker 1: been in a bit of a downturn where we're going
Speaker 1: up the other side.
Speaker 3: Now, would you say, look, I think you know New
Speaker 3: Zealand seeing a really good, strong, I guess primary sector
Speaker 3: lead recovery in our view, and that's what we in
Speaker 3: our region are really all about. It's that regional primary sector,
Speaker 3: you know, part of a country's that's that's flowing through
Speaker 3: and that food and fiber demand globally, despite what's going on,
Speaker 3: you know in macroeconomic markets, people still need the food,
Speaker 3: they need the fiber, et cetera. And that's what that's
Speaker 3: what we export. So it's lying through nicely and we've
Speaker 3: had a fantastic growing season. You know, we're seeing some
Speaker 3: effect of the season in terms of the apples and
Speaker 3: squash and there's vegetables and things I let that go
Speaker 3: out through NAPY port seeing a bit of that come
Speaker 3: through in that first half. Result the second half of
Speaker 3: the years we will see more of that polling come on.
Speaker 3: And we've had a fantastic summer for growing produce and
Speaker 3: that's flowing through as well.
Speaker 1: Is that a bit earlier for the pit fruit for example,
Speaker 1: I mean there's climate change? Is that a slightly silver line? Now?
Speaker 3: I don't know if you put it down to climate
Speaker 3: change or just just this year. We've certainly seen ideal
Speaker 3: you know, all the stars, moons and planets are aligned,
Speaker 3: and the growers that had outstanding growing conditions. The quality
Speaker 3: of the fruit that's coming on is excellent. Where they'd
Speaker 3: sort of typically see pack out rachech just how many
Speaker 3: actual apples, say, out of ten that you get to
Speaker 3: go and put in a box, it might be eight
Speaker 3: or nine. It's definitely up in the nine out of ten.
Speaker 3: So we're seeing material up with distance in terms of
Speaker 3: the quality of the fruit that they can actually expelt
Speaker 3: is really good this year. So yeah, it's been a
Speaker 3: great season so far, and hopefully we see that continue
Speaker 3: into the second half.
Speaker 1: New s tariffs and what's been happening there with all
Speaker 1: those gyrations, does that affect you at all.
Speaker 3: Look, it affects US I think from confidence market sentiment
Speaker 3: since Liberation Day and general Trump came out with what
Speaker 3: he came out with. You know, our customers aren't seeing
Speaker 3: any material impact from that right here and now. It's
Speaker 3: not impacting our volumes going through the port and any
Speaker 3: by any means, quite a small proportion of our cargo
Speaker 3: actually ends up in the US. However, it's the I
Speaker 3: guess the secondary effects that we're looking at more closely.
Speaker 3: You know, where our export products go through to countries
Speaker 3: like China, which you use, for example, our pulp and
Speaker 3: our timber, which we export a lot of to make
Speaker 3: other goods that then go on to the States. You know,
Speaker 3: of consumer sentiment in China comes back a little bit,
Speaker 3: that may impact those sales of our product that goes
Speaker 3: up to China. So that's what we were a little
Speaker 3: in the second half. But in saying that, you know,
Speaker 3: who knows what Trump's going to come out with tomorrow.
Speaker 3: So yeah, it changes day to day, and I think
Speaker 3: things will settle down, And my feeling is that things
Speaker 3: will settle down as everyone works out what the world
Speaker 3: looks like post Trump's bargaining tactics.
Speaker 1: Yep, we'd all like to know that. Just thinking about
Speaker 1: the cruise line, I see that slightly down at eight
Speaker 1: percent down. I mean, how material is that? Do we
Speaker 1: need those cruises coming in? I mean their environmental concerns
Speaker 1: and the like. What snap re port's position on that.
Speaker 3: Yeah, Look, cruise is a really good industry for the port,
Speaker 3: and my view is it's really good for New Zealand.
Speaker 3: We have seen a drop off and cruise over the
Speaker 3: whole country this year. Our numbers went impacted quite as
Speaker 3: bad as some of the other ports around the countryside
Speaker 3: where they've been seeing from fifteen to thirty percent down.
Speaker 3: This year, we were slightly down and we ended up
Speaker 3: the year I think seventy seven I think was the
Speaker 3: total number. I think we've go our last cruise vessel
Speaker 3: through this week, and next year we're saying sixty six,
Speaker 3: so down again. Unfortunately, the cruise industry, their capacity is
Speaker 3: imminently movable, and so you know, you can put your
Speaker 3: vessels wherever you want in the world where you're going
Speaker 3: to make the best return, and currently they're not making
Speaker 3: the best returns in the southern hemisphere in New Zealand,
Speaker 3: so they're putting their vessels up in the Northern Hemisphere.
Speaker 3: There are a mixture of international things going on there
Speaker 3: as to what the cruise lines are doing in terms
Speaker 3: of decision making, as well as localized issues that they're
Speaker 3: looking at. And unfortunately New Zealand's getting a reputation with
Speaker 3: the cruise industry is being not very friendly or welcoming.
Speaker 3: We're known is no Zealand. So we've got to change that,
Speaker 3: really do, because it's actually cruise is actually a very
Speaker 3: strong and important contributor to New Zealand economy. It's fantastic
Speaker 3: for our business, it's higher margin work as well, and
Speaker 3: it's fantastic for the local region in terms of the
Speaker 3: number of people that come through. So it's a real
Speaker 3: shame to see that sception in the international cruise industry
Speaker 3: of New Zealand.
Speaker 1: Let's look at that insurance payout, the seven point five million,
Speaker 1: and that was due to business disruption during cyclone. Gabrielle,
Speaker 1: that's I think been quite nice for investors. You've actually
Speaker 1: helped share in those proceeds with them. Can you tell
Speaker 1: us about that.
Speaker 3: Yeah, Look, it's really nice to be able to issue
Speaker 3: a bit more of a special dividend this time around.
Speaker 3: And I guess as reflective of the fact that we've
Speaker 3: had those insurance proceeds come through that the balance sheet
Speaker 3: is in a really healthy position. But also to reward
Speaker 3: those shareholders that have been there stuck with us for
Speaker 3: a while, and we to when we can reward them
Speaker 3: with a bit more of a one off special dividends.
Speaker 3: So you know, we're looking always to be able to
Speaker 3: see a steady and growing dividends sort of what we say,
Speaker 3: and working with our dividend policy, and yeah, it's nice
Speaker 3: to be able to give something back when we can.
Speaker 1: And also that's on top of the four cents for
Speaker 1: the interim in which that's up from three cents.
Speaker 3: That's right, Yes, that's that steady and growing and then
Speaker 3: a one off special as well, because we're in a
Speaker 3: good position to be able to do that.
Speaker 1: Looking ahead, then Todd, I think you've increased your guidance
Speaker 1: for the full year. I think it was around the
Speaker 1: range was fifty five million two fifteen fifty nine. Yeah,
Speaker 1: and this time we're at fifty nine to sixty three.
Speaker 1: Is that right?
Speaker 3: Spot on? You've got a good memory, Yeah, that's right.
Speaker 3: So we've increased that guidance range up and that's reflective
Speaker 3: of the first half that we've had, and on I
Speaker 3: guess our view that we expect things to stay steady
Speaker 3: and we've obviously got our eye on the horizon as
Speaker 3: to that those impacts in places like China, which is
Speaker 3: why we've kept the range still quite wide at four
Speaker 3: million dollar range there. So, but you know, all things
Speaker 3: been equal, when the market conditions are remaining the same,
Speaker 3: we'd be reasonably confident that we can we can certainly
Speaker 3: meet that range.
Speaker 1: Any headwinds that you think might have other.
Speaker 3: Than the one I spoke about with the effects of
Speaker 3: macroeconomic conditions, trade, things that are uncertain. You know, I
Speaker 3: think we've got a we're setting up for a pretty
Speaker 3: good strong second half as well.
Speaker 1: What excites you, then, Todd, this is our last question
Speaker 1: for the next six months.
Speaker 3: Then, Look, I'm really excited about some of the projects
Speaker 3: and things that we've got going on. We've got some
Speaker 3: fantastic initiatives. We've got this partnership with Port Otago where
Speaker 3: we're making it we're building a dredge that's going to
Speaker 3: be a really strategic opportunity for the port to utilize
Speaker 3: its full consent that we have. So we're already consented
Speaker 3: to go deeper at napier ports. We don't have to
Speaker 3: do any applications for resource consent and things like that,
Speaker 3: so that'll enable us to do the maintenance stredging that
Speaker 3: we do anyway, but equally, as we get as we
Speaker 3: need to, we can chip away and just to make
Speaker 3: the channels and birth bockets deeper as well. So strategically
Speaker 3: long term that's fantastic. It protects the port from being
Speaker 3: able to maintain its relevance as vessels get bigger, but
Speaker 3: equally unlocks opportunities for us as well if we want
Speaker 3: to do more things like transhipment and some of our
Speaker 3: container volumes. First half, you've seen transhipment volumes coming through,
Speaker 3: so we think that's an opportunity for us to be
Speaker 3: able to do more of that type of work, which
Speaker 3: comes down to have you got the capability, capacity, the depths, etc.
Speaker 3: To be able to do that. The other one that's
Speaker 3: really exciting is our we've got a new project that
Speaker 3: we're getting the green light to which is around changing
Speaker 3: the operating model in the port. We're going to do
Speaker 3: far more. We're going to move our model from big
Speaker 3: containers being taken to the crane with forklifts. We travel
Speaker 3: around the port sideways to truck and trailers where the
Speaker 3: crane will be fed by truck and trailers. But those
Speaker 3: those truck and trailers will be fully autonomous, nobody driving them,
Speaker 3: and equally electric as well. So fantastic new technology that's
Speaker 3: coming on in the next eighteen months or so, great
Speaker 3: for emissions and things like that as well. So really
Speaker 3: exciting new technology that's coming into the port. And we're
Speaker 3: seeing steady ongoing growth around our viewpoint supply chain service
Speaker 3: as well, which is sort of the three major kind
Speaker 3: of strategic initiative that we have underway, which I'm pretty
Speaker 3: excited about seeing deliver.
Speaker 1: Yeah, lots of that's going on there. Yeah, yeah, hey,
Speaker 1: we look Thanks so much for coming in and giving
Speaker 1: us that short update. I'm sure investors will be really pleased,
Speaker 1: especially with the divisions and the outlook and increased guidance.
Speaker 3: Thanks Helen, appreciate it.
Speaker 1: Thanks everyone for tuning in. You can watch Sheet Lunch
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Speaker 1: We'll have our full version of Sheet Lunch on Wednesday
Speaker 1: and Thursday. Martowa