Napier Port Holdings Ltd · NZX:NPH
Napier Port — H1 2022 Earnings Presentation
36 slides from Napier Port's earnings presentation, May 2022
Slide 1: Half Year Results Investor Presentation
HALF YEAR RESULTS INVESTOR PRESENTATION Six Months to 31 March 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 FY2022 HALF YEAR Challenging operating and shipping conditions for regional exporters and importers Trade volumes and results reduced on disruptions Trade environment for key cargoes remains positive Excellent progress on strategic initiatives including 6 Wharf, logistics serv
Slide 5: Highlights
HIGHLIGHTS
Slide 6: Challenges and Highlights
CHALLENGES AND HIGHLIGHTS FY2022 HALF YEAR Volumes impacted by ongoing supply chain disruption, labour shortages, Omicron and extreme seasonal weather conditions Operational resilience and service delivery sustained in the face of significant challenges Shipping disruption continues, however first h
Slide 7: Strategic Projects Update: 6 Wharf
STRATEGIC PROJECTS UPDATE DRIVING GROWTH AND RESILIENCE 350m 6 WHARF - A PLATFORM FOR GROWTH • Significant construction progress • Commissioning phase and operational integration • Official opening ceremony 22 July 2022 • Sustainability an overriding consideration PROJECT SPEND FORECAST • No change
Slide 8: Strategic Projects Update
STRATEGIC PROJECTS UPDATE DRIVING GROWTH AND RESILIENCE STRATEGIC PROJECTS • Health and Safety focusing on critical risk management • MoorMaster™ and ShoreTension® Dynamic Mooring • Focus on creating value for customers: increasing revenue & returns • Site-to-sea logistics capability central and low
Slide 9: Container Shipping Leads Trade Result Lower
CONTAINER SHIPPING LEADS TRADE RESULT LOWER TRADE OVERVIEW FY2022 HALF YEAR Variance Volume HY2022 HY2021 kT / TEU % Total cargo (kT) 2,513 2,786 -273 -9.8 Containerised cargo (TEU) 113,000 135,000 -22,000 -16.6 Bulk cargo (kT) 1,707 1,870 -163 -8.7 - Logs exports (kT) 1,316 1,428 -112 -7.9 9
Slide 10: Strong ARPU Growth Helps Mitigate Volume & Inflation Impacts
STRONG ARPU2 GROWTH HELPS MITIGATE VOLUME & INFLATION IMPACTS FINANCIAL RESULTS OVERVIEW FY2022 HALF YEAR HY2022 HY2021 Variance $M $M $M % Revenue 50.7 52.6 -1.9 -3.6 Result from operating activities 16.4 21.3 -4.9 -22.8 Net profit after tax - underlying¹ 7.2 10.6 -3.4 -32.1 Cash flow from operatio
Slide 11: Financial & Operating Performance
FINANCIAL & OPERATING PERFORMANCE
Slide 12: Revenue Lower on Trade Volume
REVENUE LOWER ON TRADE VOLUME • 3.6% decrease to $50.7m in total revenue half year-on-half year (HoH) • Trade volumes down 8.7% for bulk cargo and 16.6% for container services • Decrease in trade volumes largely mitigated by higher average revenue per unit 1 (ARPU) HY2022 REVENUE PROGRESSION HY2022
Slide 13: Bulk Cargo – Lower Volume with Underlying ARPU Growth
BULK CARGO – LOWER VOLUME WITH UNDERLYING ARPU GROWTH • Bulk revenue decreased $1m (5.1%) HoH to $19.2m • Volume decreased 0.16 million tonnes (-8.7%) to 1.71 million tonnes HoH • Bulk cargo average revenue per tonne increased 4.0% to $11.23/T from $10.80/T HoH • New infrastructure levy on bulk volu
Slide 14: Log Volume Resilient Given Industry Headwinds
LOG VOLUME RESILIENT GIVEN INDUSTRY HEADWINDS • Log export volume decreased 0.11 million tonnes (-7.9%) HoH • Softer macro conditions and ongoing supply chain disruptions in China • Prices remain relatively robust but offset by high shipping costs • New Zealand supply slow down over holiday period a
Slide 15: Container Services Revenue Supported by Increased ARPU
CONTAINER SERVICES REVENUE SUPPORTED BY INCREASED ARPU • Container Services revenue decreased 2.9% HoH • Total volume decreased 22,000 TEU (-16.6%) HoH • Full containers down 9,000 TEU, empties down 8,000 TEU, and tranships and DLRs down 5,000 TEU • Average revenue per TEU increased 16.4% to $268 pe
Slide 16: Increased Impact of Container Shipping Disruption
INCREASED IMPACT OF CONTAINER SHIPPING DISRUPTION • Container vessel calls reduced by 31 to 102 HoH • Continued omissions, blanked sailings, and off-schedule calls • Weather events in Q2 • Introduction of ZIM trans-Tasman and withdrawal of Maersk OC1 Trident service • Impact: • Increasing average co
Slide 17: Higher Opex Input Costs
HIGHER OPEX INPUT COSTS • Overall opex increased by $3m HoH • High inflationary environment • Ongoing focus on controllable spend, cost recovery and revenue growth from strategic projects • Employee benefit expenses increased $1.4m (8.1%) HoH • Additional personnel supporting strategic investments p
Slide 18: Lower Operating Result Driven by Lower Trade Volume
LOWER OPERATING RESULT DRIVEN BY LOWER TRADE VOLUME • Result from operating activities down $4.9m (22.8%) • Net reduction of $6.4m attributed to lower trade volumes (revenue less pure variable expenses 1) • ARPU growth matching operating expense growth RESULT FROM OPERATING ACTIVITES Millions 1- Fue
Slide 19: Net Profit Lower with Operating Result
NET PROFIT LOWER WITH OPERATING RESULT • Underlying NPAT¹ decreased by $3.4m (32.1%) • Post 6 Wharf completion – approx. $3m additional annual depreciation2 NET PROFIT AFTER TAX $15.0 12.4 11.1 10.6 10.6 $10.0 9.0 Millions 7.2 $5.0 $- HY2020 HY2021 HY2022 Reported NPAT Underlying NPAT 1- Refer to ap
Slide 20: Capital Expenditure – Completing Wharf
CAPITAL EXPENDITURE – COMPLETING 6 WHARF • Capital expenditure of $34.6m1 • 6 Wharf construction $27.7m2, cumulative total $161.9m • $2.9m spend on other development capex in support of strategic initiatives and revenue growth • Further paving for log storage, log debarker, deposits for ShoreTension
Slide 21: Cash Flow & Liquidity
CASH FLOW & LIQUIDITY HY2022 HY2021 Var $M $M $M Operating cash flows 13.0 14.6 -1.6 Investing cash flows (43.7) (45.7) +2.0 Dividends (9.4) (10.0) +0.6 Other financing cash flows (0.1) (0.1) - Increase / (reduction) in cash and cash equivalents 1.8 (5.2) Increase in bank debt (42.0) (36.0) • Robust
Slide 22: Capital Management
CAPITAL MANAGEMENT • Target ratio of Net Debt to EBITDA ceiling of 3.5x through the 6 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, following completion of 6 Wharf Interest Rate Hedging Profile 120,000 5.
Slide 23: Conclusion & Outlook
CONCLUSION & OUTLOOK
Slide 24: Conclusion
CONCLUSION KEEPING OUR REGION CONNECTED Results reflect the challenges during the period Immediate challenges managed while remaining future focused Strategic initiatives driving growth and resilience Alignment with freight and supply chain strategy review 6 Wharf case study for port infrastructure
Slide 25: Current Outlook
CURRENT OUTLOOK LOOKING FORWARD TO FY2022 SECOND HALF Positive trade outlook for key cargoes and easing of first half challenges that delayed product getting to port Continuation of container-based supply chain and shipping disruptions expected Delivering strategic capital projects including the off
Slide 26: HY2022 Interim Dividend
HY2022 INTERIM DIVIDEND Interim dividend of 2.8 cps declared Fully imputed Record date: 10 June 2022 Payment date: 23 June 2022 Unchanged from June 2021 interim dividend 26
Slide 27: Questions
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Slide 28: Appendices
APPENDICES The following appended financial information provides a summary of financial information for the half year period ended 31 March 2022 (HY2022) compared to the corresponding half year period in 2021 (HY2021). Reconciliations provided are extracted from and should be read in conjunction wit
Slide 29: Revenue
REVENUE NZ$000 HY2022 HY2021 Container services 30,157 31,065 Bulk cargo 19,169 20,192 Cruise 12 - Sundry revenue 149 148 Revenue from port operations 49,487 51,405 Revenue from property operations 1,225 1,180 Total operating income 50,712 52,585 29
Slide 30: Operating Expenses
OPERATING EXPENSES Employee benefit expenses NZ$000 HY2022 HY2021 Wages & salaries 17,481 16,093 Other employee benefit expenses 1,387 1,362 Total employee benefit expenses 18,868 17,455 Property and plant expenses NZ$000 HY2022 HY2021 Plant expenses 3,100 2,510 Site expenses 814 664 Fuel & power 2,
Slide 31: Operating Expenses
OPERATING EXPENSES Other operating expenses NZ$000 HY2022 HY2021 Administration expenses 2,680 2,824 Occupancy expenses 3,262 3,016 Contract labour 2,012 2,301 Other staff expenses 949 605 Total other operating expenses 8,903 8,746 31
Slide 32: Capital Expenditure
CAPITAL EXPENDITURE NZ$000 HY2022 HY2021 Development capex 6 Wharf construction 27,728 45,129 Refrigerated container capacity - 1,075 Other development capex 2,868 346 Total development capex 30,596 46,549 Replacement capex 3,774 2,807 Compliance and other capex 271 - Total capex including capitalis
Slide 33: Reconciliation of Underlying Net Profit After Tax
RECONCILIATION OF UNDERLYING NET PROFIT AFTER TAX¹ NZ$000 HY2022 HY2021 Reported net profit after tax 8,984 10,574 Adjustments: Fair value movements on investment properties (1,800) - Underlying net profit after tax 7,184 10,574 1- Underlying net profit after tax is a non-NZ GAAP measure – refer to
Slide 34: 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 (including 6 Wharf) and the interest costs which will be capitali
Slide 35: 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 RELEVANCE DURING COVID-19 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
Slide 36: 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