Bonus: Napier Port, driving profit and innovation

A quick catch-up with Napier Port’s CEO Todd Dawson reveals never a dull moment. Autonomous trucks and dredging to deepen shipping channels are just some of the things on the back of a strong half-year profit result.

Increased container volumes and an earlier pipfruit season has helped boost the numbers.

We hear how investors have been rewarded with a special dividend—on top of a higher interim dividend of 4c—and why cruise ships are less keen to come Down Under.

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Episode Transcript

Speaker 1 (00:02):
Cure and welcome to Shared Lunch. Today, we've got a
short bonus episode for you where we talked to Todd Dawson,
who's the CEO of Nappi Port, about the earnings results
out last week. Before we get started, there's some important information.

Speaker 2 (00:16):
Investing involves the risk you might lose the money you
start with. We recommend talking to a licensed financial advisor.
We also recommend reading product disclosure documents before deciding to invest.
Everything you're about to see and here is current at
the time of recording.

Speaker 1 (00:30):
Welcome Todd. Nice to have you back at Cheesy's HQ again.

Speaker 3 (00:34):
Thank you, nice to be here. I don't thank you
very much.

Speaker 1 (00:37):
Now, a few days ago you released your interim results
Napei Port, and it was a pretty strong result. All
in all, your revenue was up by ten point six
percent I think, to about seventy eight million, and your
net profit was up forty percent to just over twenty million,
although that was boosted by the Cyclone Gabriel insurance payout.

(01:00):
How would you describe the company's performance over that six
months to the sudieth of March.

Speaker 3 (01:05):
Yeah, that's a really pleasing result. I think it's sort
of underpinned by a strong recovery in the region, certainly
led by our container volumes which have come through really nicely.
A large part of that is really due to the
rebuild of pan Pack, you know, since the cyclone. They've
up to full production now so hit their straps around
the end of December early January. So pan Pack pan

(01:27):
Packs our pulp and timber customer just down the road
from the port, big volume customer as well. So yeah,
they've really underpinned a lot of that container recovery. We've
also had a really good season in terms of our
crews coming through. I think we finished the season with
seventy seven crews which runs across that period, and equally
some really good steady volumes for our bulk business as well.

(01:49):
So volume lead recovery coming through in those numbers. And
I think, you know, the other good thing from our
perspective is that the volume and revenue uplift is also
not just heed out the back door in terms of
costs as well, so we've minised the manager costs really
really well. A lot of the work that we put
in to correct flexibility in the port is coming through

(02:10):
in terms of the operating earnings. You know, we're getting
that operating lead what we talk about as operating leverage
coming through. As the volumes come through, the returns get better.
So good management of costs pricing is also played a
part over the years, but equally just really good management
of the business and responding to that recovery.

Speaker 1 (02:26):
So you would think that that economic cyde and we've
been in a bit of a downturn where we're going
up the other side.

Speaker 3 (02:31):
Now, would you say, look, I think you know New
Zealand seeing a really good, strong, I guess primary sector
lead recovery in our view, and that's what we in
our region are really all about. It's that regional primary sector,
you know, part of a country's that's that's flowing through
and that food and fiber demand globally, despite what's going on,

(02:53):
you know in macroeconomic markets, people still need the food,
they need the fiber, et cetera. And that's what that's
what we export. So it's lying through nicely and we've
had a fantastic growing season. You know, we're seeing some
effect of the season in terms of the apples and
squash and there's vegetables and things I let that go
out through NAPY port seeing a bit of that come
through in that first half. Result the second half of

(03:15):
the years we will see more of that polling come on.
And we've had a fantastic summer for growing produce and
that's flowing through as well.

Speaker 1 (03:23):
Is that a bit earlier for the pit fruit for example,
I mean there's climate change? Is that a slightly silver line? Now?

Speaker 3 (03:28):
I don't know if you put it down to climate
change or just just this year. We've certainly seen ideal
you know, all the stars, moons and planets are aligned,
and the growers that had outstanding growing conditions. The quality
of the fruit that's coming on is excellent. Where they'd
sort of typically see pack out rachech just how many
actual apples, say, out of ten that you get to

(03:50):
go and put in a box, it might be eight
or nine. It's definitely up in the nine out of ten.
So we're seeing material up with distance in terms of
the quality of the fruit that they can actually expelt
is really good this year. So yeah, it's been a
great season so far, and hopefully we see that continue
into the second half.

Speaker 1 (04:08):
New s tariffs and what's been happening there with all
those gyrations, does that affect you at all.

Speaker 3 (04:13):
Look, it affects US I think from confidence market sentiment
since Liberation Day and general Trump came out with what
he came out with. You know, our customers aren't seeing
any material impact from that right here and now. It's
not impacting our volumes going through the port and any
by any means, quite a small proportion of our cargo
actually ends up in the US. However, it's the I

(04:37):
guess the secondary effects that we're looking at more closely.
You know, where our export products go through to countries
like China, which you use, for example, our pulp and
our timber, which we export a lot of to make
other goods that then go on to the States. You know,
of consumer sentiment in China comes back a little bit,
that may impact those sales of our product that goes

(04:58):
up to China. So that's what we were a little
in the second half. But in saying that, you know,
who knows what Trump's going to come out with tomorrow.
So yeah, it changes day to day, and I think
things will settle down, And my feeling is that things
will settle down as everyone works out what the world
looks like post Trump's bargaining tactics.

Speaker 1 (05:18):
Yep, we'd all like to know that. Just thinking about
the cruise line, I see that slightly down at eight
percent down. I mean, how material is that? Do we
need those cruises coming in? I mean their environmental concerns
and the like. What snap re port's position on that.

Speaker 3 (05:36):
Yeah, Look, cruise is a really good industry for the port,
and my view is it's really good for New Zealand.
We have seen a drop off and cruise over the
whole country this year. Our numbers went impacted quite as
bad as some of the other ports around the countryside
where they've been seeing from fifteen to thirty percent down.
This year, we were slightly down and we ended up

(05:56):
the year I think seventy seven I think was the
total number. I think we've go our last cruise vessel
through this week, and next year we're saying sixty six,
so down again. Unfortunately, the cruise industry, their capacity is
imminently movable, and so you know, you can put your
vessels wherever you want in the world where you're going
to make the best return, and currently they're not making

(06:18):
the best returns in the southern hemisphere in New Zealand,
so they're putting their vessels up in the Northern Hemisphere.
There are a mixture of international things going on there
as to what the cruise lines are doing in terms
of decision making, as well as localized issues that they're
looking at. And unfortunately New Zealand's getting a reputation with
the cruise industry is being not very friendly or welcoming.

(06:39):
We're known is no Zealand. So we've got to change that,
really do, because it's actually cruise is actually a very
strong and important contributor to New Zealand economy. It's fantastic
for our business, it's higher margin work as well, and
it's fantastic for the local region in terms of the
number of people that come through. So it's a real
shame to see that sception in the international cruise industry

(07:02):
of New Zealand.

Speaker 1 (07:04):
Let's look at that insurance payout, the seven point five million,
and that was due to business disruption during cyclone. Gabrielle,
that's I think been quite nice for investors. You've actually
helped share in those proceeds with them. Can you tell
us about that.

Speaker 3 (07:22):
Yeah, Look, it's really nice to be able to issue
a bit more of a special dividend this time around.
And I guess as reflective of the fact that we've
had those insurance proceeds come through that the balance sheet
is in a really healthy position. But also to reward
those shareholders that have been there stuck with us for
a while, and we to when we can reward them
with a bit more of a one off special dividends.

(07:43):
So you know, we're looking always to be able to
see a steady and growing dividends sort of what we say,
and working with our dividend policy, and yeah, it's nice
to be able to give something back when we can.

Speaker 1 (07:56):
And also that's on top of the four cents for
the interim in which that's up from three cents.

Speaker 3 (08:02):
That's right, Yes, that's that steady and growing and then
a one off special as well, because we're in a
good position to be able to do that.

Speaker 1 (08:08):
Looking ahead, then Todd, I think you've increased your guidance
for the full year. I think it was around the
range was fifty five million two fifteen fifty nine. Yeah,
and this time we're at fifty nine to sixty three.
Is that right?

Speaker 3 (08:21):
Spot on? You've got a good memory, Yeah, that's right.
So we've increased that guidance range up and that's reflective
of the first half that we've had, and on I
guess our view that we expect things to stay steady
and we've obviously got our eye on the horizon as
to that those impacts in places like China, which is
why we've kept the range still quite wide at four

(08:41):
million dollar range there. So, but you know, all things
been equal, when the market conditions are remaining the same,
we'd be reasonably confident that we can we can certainly
meet that range.

Speaker 1 (08:51):
Any headwinds that you think might have other.

Speaker 3 (08:54):
Than the one I spoke about with the effects of
macroeconomic conditions, trade, things that are uncertain. You know, I
think we've got a we're setting up for a pretty
good strong second half as well.

Speaker 1 (09:06):
What excites you, then, Todd, this is our last question
for the next six months.

Speaker 3 (09:11):
Then, Look, I'm really excited about some of the projects
and things that we've got going on. We've got some
fantastic initiatives. We've got this partnership with Port Otago where
we're making it we're building a dredge that's going to
be a really strategic opportunity for the port to utilize
its full consent that we have. So we're already consented
to go deeper at napier ports. We don't have to
do any applications for resource consent and things like that,

(09:31):
so that'll enable us to do the maintenance stredging that
we do anyway, but equally, as we get as we
need to, we can chip away and just to make
the channels and birth bockets deeper as well. So strategically
long term that's fantastic. It protects the port from being
able to maintain its relevance as vessels get bigger, but
equally unlocks opportunities for us as well if we want
to do more things like transhipment and some of our

(09:51):
container volumes. First half, you've seen transhipment volumes coming through,
so we think that's an opportunity for us to be
able to do more of that type of work, which
comes down to have you got the capability, capacity, the depths, etc.
To be able to do that. The other one that's
really exciting is our we've got a new project that
we're getting the green light to which is around changing
the operating model in the port. We're going to do

(10:12):
far more. We're going to move our model from big
containers being taken to the crane with forklifts. We travel
around the port sideways to truck and trailers where the
crane will be fed by truck and trailers. But those
those truck and trailers will be fully autonomous, nobody driving them,
and equally electric as well. So fantastic new technology that's

(10:32):
coming on in the next eighteen months or so, great
for emissions and things like that as well. So really
exciting new technology that's coming into the port. And we're
seeing steady ongoing growth around our viewpoint supply chain service
as well, which is sort of the three major kind
of strategic initiative that we have underway, which I'm pretty
excited about seeing deliver.

Speaker 1 (10:52):
Yeah, lots of that's going on there. Yeah, yeah, hey,
we look Thanks so much for coming in and giving
us that short update. I'm sure investors will be really pleased,
especially with the divisions and the outlook and increased guidance.

Speaker 3 (11:08):
Thanks Helen, appreciate it.

Speaker 1 (11:09):
Thanks everyone for tuning in. You can watch Sheet Lunch
on YouTube or listen on your favorite podcast s app
We'll have our full version of Sheet Lunch on Wednesday
and Thursday. Martowa