Napier Port Holdings Ltd · NZX:NPH
Napier Port — H1 2021 Earnings Presentation
36 slides from Napier Port's earnings presentation, May 25, 2021
Slide 1: Half Year Results 2021
HALF YEAR RESULTS 2021 25th May 2021
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 CHAIRMAN CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER 3
Slide 4: Welcome & Introduction
WELCOME & INTRODUCTION COVID-19 remains a major factor in logistical supply chains Resilient half year trading and financial result for Napier Port Continued good progress on strategic initiatives, including 6 Wharf Board sustainability sub-committee established Share concerns with regional primary
Slide 5: Highlights
NAPIER® fj PORT Te Herenga Waka o Ahuriri HIGHLIGHTS
Slide 6: Half Year Highlights
HALF YEAR HIGHLIGHTS Resilient half year revenue and earnings, despite the absence of cruise vessels Sustained strong log export market conditions driving bulk cargo revenue growth Primary sector labour shortages and container supply chain challenges Renewed WPI partnership for at least a further 10
Slide 7: Strategic Projects Update
STRATEGIC PROJECTS UPDATE • 6 Wharf - on time and within budget • Whakatu inland port planning • Bulk cargo value-add projects approved - Mobile Harbour Crane log loading trial - Log debarking service • Launch of in-house logistics service - Initial cargo wins - Napier – Palmerston North - Longburn
Slide 8: 6 Wharf Construction Progress On-Plan
6 WHARF CONSTRUCTION PROGRESS ON-PLAN STATUS1: • 362 of 400 reinforced concrete piles completed • Deck construction commenced, 10 of 32 deck pours completed • Dredging – 621,000 cubic metres of around 1.3 million cubic metres has been completed • 2,720 of 4,500 revetment armour blocks cast, 1,757 ar
Slide 9: Positive Trade Result Driven by Log Exports
POSITIVE TRADE RESULT DRIVEN BY LOG EXPORTS TRADE VOLUME OVERVIEW Variance Volume HY2021 HY2020 kT / TEU % Total cargo (kT) 2,786 2,527 +259 +10.2 Containerised cargo (TEU) 135,000 135,000 - - Bulk cargo (kT) 1,870 1,597 +273 +17.1 - Logs exports (kT) 1,428 1,184 +244 +20.6 • Record log volumes in t
Slide 10: Resilient Financial Result Despite No Cruise Revenue
RESILIENT FINANCIAL RESULT DESPITE NO CRUISE REVENUE FINANCIAL RESULTS OVERVIEW HY2021 HY2020 Variance $M $M $M % Revenue 52.6 52.3 +0.3 +0.6 Result from operating activities 21.3 21.7 -0.4 -2.0 Net profit after tax - Reported 10.6 12.4 -1.8 -14.9 - Underlying¹ 10.6 11.1 -0.5 -5.2 Cash flow from ope
Slide 11: Financial & Operating Performance
FINANCIAL & OPERATING PERFORMANCE
Slide 12: Bulk Cargo Revenue Offsets No Cruise Revenue
BULK CARGO REVENUE OFFSETS NO CRUISE REVENUE • 0.6% revenue growth half year-on-half year (HoH) • Bulk cargo up 26.5%, container services up 0.5%, nil cruise revenue HY2021 REVENUE Other $1.3m Container services Bulk $31.1m cargo $20.2m Millions 12
Slide 13: Container Services Revenue Steady on Trade Mix Changes
CONTAINER SERVICES REVENUE STEADY ON TRADE MIX CHANGES • Container Services revenue up 0.5% HoH • Container volume in line with prior year: 135,000 TEU - Shipping schedule disruptions resulted in -5,000 TEU empty containers and +5,000 tranships and DLRs - Reefer volume growth +6.0% offsets drop in d
Slide 14: Higher Bulk Cargo Revenue Driven by Volume Increase
HIGHER BULK CARGO REVENUE DRIVEN BY VOLUME INCREASE • Revenue up 26.5% HoH to $20.2m • Driven by 17.1% volume increase • Average revenue per tonne increased 8.0% to $10.80/T from $9.99/T - Includes one-off cost recovery revenue of $0.45/T - Remainder driven by log exports HY2020 REVENUE HY2021 REVEN
Slide 15: Record HY Log Volumes
RECORD HY LOG VOLUMES • Log exports volumes up 20.6% HoH with sustained strong log export market conditions - Record half year log export volume of 1.43 million tonnes - Prior year log volumes were negatively impacted by Chinese market disruptions leading up to NZ’s COVID-19 Alert Level 4 lockdown •
Slide 16: Opex Increase: Led by Investment in People
OPEX INCREASE: LED BY INVESTMENT IN PEOPLE 2.4% INCREASE IN TOTAL OPERATING EXPENSES • FY2021: unwinding of COVID-19 response measures in FY2020 & strategic investment in people and capability • Employee benefit expenses up 5.4% HoH • Property and plant expenses down 6.7% due to timing of maintenanc
Slide 17: Operating Margin Maintained >40%
OPERATING MARGIN MAINTAINED >40% • Result from operating activities down $0.4m (2.0%) • Operating margin maintained at >40% in HY2021 RESULT FROM OPERATING ACTIVITES % Revenue $30 41.6% 40.5% $21.7 $21.3 $20 Millions $10 $- HY2020 HY2021 17
Slide 18: NPAT Down with Lower Operating Result
NPAT DOWN WITH LOWER OPERATING RESULT • Underlying NPAT1 decreased by 5.2% to $10.6m - Lower operating result (-$0.4m pre-tax) - Increased depreciation and amortisation (-$0.3m pre-tax) $15.0 $12.4 $11.1 $10.6 $10.6 $10.0 Millions $5.0 $- HY2020 HY2021 Reported NPAT Underlying NPAT 1 - Refer to appe
Slide 19: Capital Expenditure Focus on Delivering Wharf
CAPITAL EXPENDITURE FOCUS ON DELIVERING 6 WHARF • Capital expenditure of $49.4m1 • 6 Wharf: • $45.1m2 in HY2021 • Cumulative construction spend of $78m to March 2021 • $90m - $110m spend expected for FY2021 – increased from $70m - $90m HY2021 CAPITAL EXPENDITURE $60 Replacement $ 53.1 $ 49.4 $2.3m $
Slide 20: Cash Flow & Liquidity
CASH FLOW & LIQUIDITY HY2021 HY2020 Var $M $M $M Operating cash flows 14.6 13.4 +1.2 Investing cash flows (45.7) (23.2) -22.5 Proceeds from bank debt 36.0 - +36.0 Dividends (10.0) (5.0) -5.0 Other financing cash flows (0.1) (0.3) +0.2 Net (decrease) in cash & cash equivalents (5.2) (15.1) +9.9 • FY2
Slide 21: Capital Management
CAPITAL MANAGEMENT • Increase in Net Debt to EBITDA ratio above 3.5x likely based on current environment (including cruise disruption) but remains a point of focus to mitigate this increase over time • Expectation that the ratio will be managed to within its long- term target range of 2.0x – 3.0x ov
Slide 22: Conclusion & Outlook
“NAPIER” fj PORT Te Herenga Waka o Ahuriri CONCLUSION & OUTLOOK
Slide 23: Conclusion
CONCLUSION Resilient half year revenue and earnings given ongoing effects of COVID-19 Benefits of diversity of the trade portfolio shown in first half Shipping and supply chain challenges & risks continuing Good progress with strategic development initiatives 23
Slide 24: Current Outlook
CURRENT OUTLOOK COVID-19 EFFECTS CONTINUE TO CLOUD OUTLOOK • Demand for the region’s food and fibre exports remains robust • Continued friction in getting products to markets via regional and global supply chains – continuing supply chain stress and capacity shortages likely for at least remainder o
Slide 25: HY2021 Interim Dividend
HY2021 INTERIM DIVIDEND • Interim dividend of 2.8 cps declared • Fully imputed • Record date: 11 June 2021 • Payment date: 25 June 2021 • Compared to nil in prior year See Appendix for dividend policy summary 25
Slide 26: Questions
NAPIER® fj PORT Te Herenga Waka o Ahuriri QUESTIONS
Slide 27: Appendices
APPENDICES The following appended financial information provides a summary of financial information for the half year period ended 31 March 2021 (HY2021) compared to the corresponding half year period in 2020 (HY2020). Reconciliations provided are extracted from and should be read in conjunction wit
Slide 28: Revenue
REVENUE NZ$000 HY2021 HY2020 Revenue from Port Operations 51,405 51,240 Revenue Other 1,180 1,044 Total operating income 52,585 52,284 NZ$000 HY2021 HY2020 Container Services 31,065 30,921 Bulk Cargo 20,192 15,966 Cruise - 4,177 Sundry revenue 148 175 Revenue from port operations 51,405 51,240 Prope
Slide 29: Operating Expenses
OPERATING EXPENSES Employee benefit expenses NZ$000 HY2021 HY2020 Wages & salaries 16,093 15,402 Other employee benefit expenses 1,362 1,166 Total employee benefit expenses 17,455 16,569 Property and plant expenses NZ$000 HY2021 HY2020 Plant expenses 2,510 2,715 Site expenses 664 732 Fuel & Power 1,
Slide 30: Operating Expenses
OPERATING EXPENSES Other operating expenses NZ$000 HY2021 HY2020 Administration expenses 2,824 2,796 Occupancy expenses 3,016 2,483 Contract labour 2,301 2,268 Other staff expenses 605 975 Total other operating expenses 8,746 8,522 30
Slide 31: Capital Expenditure
CAPITAL EXPENDITURE NZ$000 HY2021 HY2020 Development capex 6 Wharf pre-construction - 970 6 Wharf construction 45,129 11,197 Additional tug - 4,681 Acquisition and development of off-port depot services land - 2,565 Refrigerated container capacity 1,075 - Other development capex 846 623 Total develo
Slide 32: Reconciliation of Underlying Net Profit After Tax
RECONCILIATION OF UNDERLYING NET PROFIT AFTER TAX1 NZ$000 HY2021 HY2020 Reported net profit after tax 10,574 12,430 Adjustments: IPO transaction and related costs/ (reversals) - (201) Impairment of infrastructure assets for 6 Wharf development - 551 Tax impact of adjustments - (123) Tax benefit of r
Slide 33: Reconciliation of Underlying Net Cash Flows from Operating Activities
RECONCILIATION OF UNDERLYING NET CASH FLOWS FROM OPERATING ACTIVITIES1 NZ$000 HY2021 HY2020 Reported net cash flows from operating activities 14,563 13,426 Adjustments IPO transaction and related costs - 478 Tax impact of adjustments - 31 Underlying net cash flows from operating activities 14,563 13
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