Napier Port Holdings Ltd · NZX:NPH
Napier Port — FY2022 Earnings Presentation
39 slides from Napier Port's earnings presentation, Nov 16, 2022
Slide 1: Annual Results FY2022
ANNUAL RESULTS FY2022 16 NOVEMBER 2022
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER This presentation has been prepared by Napier Port Holdings Limited (together with Port of Napier Limited, "Napier Port"). This presentation is being provided to you on the basis that you are, and you represent and warrant that you are, Past performance: Any past perf
Slide 3: Presenting Today
PRESENTING TODAY ALASDAIR MACLEOD TODD DAWSON KRISTEN LIE CHAIR CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER 3
Slide 4: Welcome & Introduction
WELCOME & INTRODUCTION 2022 FINANCIAL YEAR Successful year under challenging operating conditions Trade environment for key cargoes positive despite numerous challenges for regional exporters and importers Excellent progress on strategic initiatives – completion of Te Whiti (6 Wharf), development of
Slide 5: Highlights
HIGHLIGHTS
Slide 6: Highlights
HIGHLIGHTS 2022 FINANCIAL YEAR Satisfying financial results underpinned by operational resilience and service delivery in the face of significant challenges First half year trade volumes and results reduced on disruptions; second half year stabilised Progressed infrastructure and strategic projects
Slide 7: Strategic Projects – Te Whiti (6 Wharf)
STRATEGIC PROJECTS – TE WHITI (6 WHARF) DRIVING GROWTH AND RESILIENCE • Critical asset for region and NZ • Expands capability of North Island supply chain • Larger vessels and cargo exchanges • Strategic road and rail links • Investment model for port sector 22 July 22 Official Opening $171.1m 350m
Slide 8: Strategic Projects – Delivering Solutions for Customers
STRATEGIC PROJECTS – DELIVERING SOLUTIONS FOR CUSTOMERS CREATING VALUE AND GROWTH OPPORTUNITIES • New & diversified revenue & returns • Focus on creating value for customers: • Site-to-sea road and rail logistics capability to central and lower North Island - steadily growing 12 months after impleme
Slide 9: Container Shipping Leads Trade Volume Reduction
CONTAINER SHIPPING LEADS TRADE VOLUME REDUCTION TRADE OVERVIEW Variance Volume FY2022 FY2021 kT / TEU % Total cargo (kT) 5,392 5,869 -477 -8.1 Containerised cargo (TEU) 254,000 276,000 -22,000 -7.9 Bulk cargo (kT) 3,650 3,950 -300 -7.6 - Logs exports (kT) 2,844 3,019 -175 -5.8 • Challenging operatin
Slide 10: Strong ARPU Growth as Volume Declines and Inflation Bites
STRONG ARPU1 GROWTH AS VOLUME DECLINES AND INFLATION BITES FINANCIAL RESULTS OVERVIEW FY2022 FY2021 Variance $M $M $M % Revenue 114.5 109.5 +5.0 +4.6 Result from operating activities 40.1 43.8 -3.7 -8.4 Net profit after tax - underlying2 18.6 22.0 -3.4 -15.2 Cash flow from operations 33.0 34.8 -1.8
Slide 11: Sustainability Reporting
SUSTAINABILITY REPORTING ESG FRAMEWORK AND STRATEGY • Built on our Sustainability Strategy launched August 2021: • Busy programme of embedded social, economic and environmental initiatives, it's part of ‘what we do’ • 100 time-framed actions over a 10+ years horizon • 54 sustainability workstreams u
Slide 12: Emissions Reduction Strategy
EMISSIONS REDUCTION STRATEGY WORKING TOWARDS ZERO NET EMISSIONS BY 2050 2021 and earlier 2022 2023 onwards • Sustainability strategy launched including an action to • Verifying our emissions inventory baseline Emissions Reduction Strategy Framework: develop and adopt an emissions reduction strategy
Slide 13: Financial & Operating Performance
FINANCIAL & OPERATING PERFORMANCE
Slide 14: Higher Revenue on Lower Trade Volume
HIGHER REVENUE ON LOWER TRADE VOLUME • 4.6% year-on-year (YoY) increase in total revenue by $5.0m to a new high of $114.5m • Container services increased $5.1m • Bulk cargo revenue flat (-$0.1m) • Trade volumes down 7.9% for container services and 7.6% for bulk • Revenue growth largely results from
Slide 15: Container Services Revenue Growth Despite Disruptions
CONTAINER SERVICES REVENUE GROWTH DESPITE DISRUPTIONS • Container services revenue up 7.8% YoY to $70.5m • Volume decreased 22,000 TEU (-7.9%) YoY • Full containers down 14,000 TEU. Lower export timber (-6,000 TEU), apples (-4,000 TEU) and meat (-3,000 TEU) • Empty volumes down 8,000 TEU due to fewe
Slide 16: Bulk Cargo – Revenue Stable on Lower Volume
BULK CARGO – REVENUE STABLE ON LOWER VOLUME • Bulk revenue decreased 0.3% YoY to $41.4m • Volume decreased -0.3 million tonnes (-7.6%) to 3.65 million tonnes • Bulk cargo average revenue per tonne increased 7.9% to $11.33/T from $10.50/T • New infrastructure levy on bulk volume of $0.40/T/JAS • Carg
Slide 17: Log Volumes Ease but Remain Resilient
LOG VOLUMES EASE BUT REMAIN RESILIENT • Log export volume decreased 175k tonnes (-5.8%) YoY • Soft Q2 due to holiday period slow down, covid labour impact and weather • Volume firm for remaining quarters despite softer macro conditions and ongoing supply chain disruptions in China and NZ labour shor
Slide 18: Challenging Higher Opex Input Costs
CHALLENGING HIGHER OPEX INPUT COSTS • Overall opex increased by $8.8m (13.3%) YoY • High inflationary environment • Ongoing focus on controllable spend, cost recovery and revenue growth from strategic projects • Employee benefit expenses increased $3.8m (10.5%) YoY • Additional personnel supporting
Slide 19: Challenging Higher Opex Input Costs
CHALLENGING HIGHER OPEX INPUT COSTS • Property and plant expenses up $3.9m (33.4%) YoY • Fuel & power increase $2.5m: • +$3.4m rate and -$0.9m volume • Fuel cost recovery (FAF) implemented from 1 May • Plant expenses up $1.0m • Additional mobile plant maintenance - including deferred maintenance OTH
Slide 20: Lower Operating Result Driven by Lower Trade Volume
LOWER OPERATING RESULT DRIVEN BY LOWER TRADE VOLUME • Result from operating activities down $3.7m (8.4%) • Net reduction of $7.1m attributed to lower trade volumes (revenue less pure variable expenses 1) • ARPU growth greater than operating expense growth • Abnormal first half year result stands out
Slide 21: Net Profit Lower with Operating Result
NET PROFIT LOWER WITH OPERATING RESULT • Underlying NPAT¹ decreased by $3.4m (-15.2%) • Increased depreciation and finance costs $1.3m • Post-Te Whiti Wharf completion: • Approx. $2.4m additional annual depreciation (revised estimate) • Majority of finance costs to income statement NET PROFIT AFTER
Slide 22: Capital Expenditure – Te Whiti Wharf Completed
CAPITAL EXPENDITURE – TE WHITI WHARF COMPLETED • Capital expenditure of $60.2m (cashflow spend $72.1m) • FY2022 Te Whiti construction $45.1m (cashflow spend $56.5m) • Other development in support of strategic initiatives and growing revenue • Further paving for log storage, log debarker, Shore Tensi
Slide 23: Capital Expenditure – Te Whiti Project Costs
CAPITAL EXPENDITURE – TE WHITI PROJECT COSTS • Te Whiti Wharf total project costs • Total construction project cost $171.1m, excluding capitalised overheads and finance costs • Budgeted cost range originally $173-190m • Total capitalised overheads and finance costs of $8.3m • Total consenting, plann
Slide 24: Cash Flow & Liquidity
CASH FLOW & LIQUIDITY FY2022 FY2021 Var $M $M $M Operating cash flows 33.0 34.8 -1.8 Investing cash flows (71.9) (103.6) +31.7 Dividends (15.0) (15.6) +0.6 Other financing cash flows (1.6) (0.1) -1.5 Increase / (reduction) in cash and cash equivalents 0.5 (6.5) Increase in total gross drawn loans an
Slide 25: Capital Management
CAPITAL MANAGEMENT • Inaugural bond issue on 23 September 2022: $100m, 5.5 year, 5.52% fixed rate, unsecured, unsubordinated • Matures March 2028 • Listed on NZX Debt Market (NPH010) • Used to repay bank debt and for general corporate purposes • Bank facilities of $80m total as at year end DEBT MATU
Slide 26: Capital Management
CAPITAL MANAGEMENT • Target ratio of Debt to EBITDA ceiling of 3.5x (related to the Te Whiti Wharf construction period), with the expectation that the ratio will be managed to within its long-term target range of 2.0x - 3.0x over time • Debt to EBITDA of 3.36x at 30 September 2022 • Low exposure to
Slide 27: Conclusion & Outlook
NAPIER® PORT Te Herenga Waka o Ahuriri “CONCLUSION & OUTLOOK = =
Slide 28: Conclusion and Current Outlook
CONCLUSION AND CURRENT OUTLOOK LOOKING FORWARD TO FY2023 Solid result in the face of operational challenges; strategic projects driving growth and resilience continued at pace Shipping disruption continues; however supply chain constraints easing, global shipping capacity shortages and rates moderat
Slide 29: FY2022 Dividend
FY2022 DIVIDEND Final dividend of 4.7 cps declared Fully imputed Record date: 5 December 2022 Payment date: 15 December 2022 Total dividends, in respect of FY2022, of 7.5 cps, fully imputed (FY2021: 7.5 cps) 29
Slide 30: Questions
QUESTIONS
Slide 31: Appendices
APPENDICES The following appended financial information provides a summary of financial information for the year ended 30 September 2022 (FY2022) compared to the corresponding period in 2021 (FY2021). Reconciliations provided are extracted from and should be read in conjunction with the Supplemental
Slide 32: Revenue
REVENUE NZ$000 FY2022 FY2021 Container services 70,457 65,331 Bulk cargo 41,370 41,488 Cruise 12 - Sundry revenue 277 282 Revenue from port operations 112,116 107,101 Revenue from property operations 2,407 2,359 Total operating income 114,523 109,460 32
Slide 33: Operating Expenses
OPERATING EXPENSES Employee benefit expenses NZ$000 FY2022 FY2021 Wages & salaries 37,110 33,478 Other employee benefit expenses 2,858 2,698 Total employee benefit expenses 39,968 36,176 Property and plant expenses NZ$000 FY2022 FY2021 Plant expenses 6,777 5,793 Site expenses 1,653 1,287 Fuel & powe
Slide 34: Operating Expenses
OPERATING EXPENSES Other operating expenses NZ$000 FY2022 FY2021 Administration expenses 5,950 5,677 Occupancy expenses 6,816 6,263 Contract labour 4,319 4,526 Other staff expenses 1,999 1,506 Total other operating expenses 19,084 17,973 34
Slide 35: Capital Expenditure
CAPITAL EXPENDITURE NZ$000 FY2022 FY2021 Development capex 6 Wharf construction 45,096 100,916 Refrigerated container capacity - 1,201 Mooring plant and equipment 3,497 - Other development capex 3,325 3,140 Total development capex 51,918 105,257 Replacement capex 7,829 5,173 Compliance and other cap
Slide 36: Reconciliation of Underlying Net Profit After Tax
RECONCILIATION OF UNDERLYING NET PROFIT AFTER TAX¹ NZ$000 FY2022 FY2021 Reported net profit after tax 20,421 23,164 Adjustments: Fair value movements on investment properties (1,800) (1,200) Underlying net profit after tax 18,621 21,964 1- Underlying net profit after tax is a non-NZ GAAP measure – r
Slide 37: Dividend Policy
DIVIDEND POLICY • The Board is targeting paying total dividends within a range of 70% to 90% of Free Cash Flow1 • Free Cash Flow1 is a non-NZ GAAP measure adopted by Napier Port. It excludes capital expenditure on development projects and interest costs capitalised during construction • The payment
Slide 38: Our Strategy Builds on a Strong Business
OUR STRATEGY BUILDS ON A STRONG BUSINESS A LONG-TERM ASSET ESSENTIAL TO THE HEALTH OF THE HAWKE’S BAY ECONOMY AN INFRASTRUCTURE ASSET ESSENTIAL TO THE HEALTH OF THE HAWKE’S BAY ECONOMY Napier Port is an essential regional infrastructure asset and, by connecting Hawke’s Bay and central New Zealand to
Slide 39: Further Information on Napier Port
FURTHER INFORMATION ON NAPIER PORT To learn more about Napier Port and what it does please refer to our website at www.napierport.co.nz See our website Investor Centre for: • Share price information • Links to NZX results and market announcements • Key calendar dates • Publications, including: - Ann