NZ Port Consolidation: POA, Tauranga could reap savings from merger
October 22nd, 2009
Morningstar’s research unit, AspectHuntley says Port of Tauranga is better placed than its Auckland rival to scale up for bigger ships with lower capital investment. The Australian researcher estimates Ports of Auckland will need to spend $200m to catch up with Tauranga’s capabilities. A merged company could extract “significant” cost savings and prevent overinvestment in cranes and dredging. The firm concludes “on all metrics, whether it be profitability, balance sheet strength or return on capital, POT is far superior to POA.”
A mark of Tauranga’s incursions into Auckland’s territory is the growth in importance of its Metroport facility in South Auckland, which now accounts for 25% of all containers traded across Tauranga’s wharves. CEO Mark Cairns says he’s confident of winning more container trade off Auckland over time. Metroport is now NZ’s fourth-largest container terminal. Still, AspectHuntley says bulk cargo growth is likely to be in line with GDP. Port of Tauranga is one of the beneficiaries of Fonterra’s decision to trim the number of ports it uses. AspectHuntley says the switch from Taranaki may be worth $4m in additional annual revenue for Tauranga, assuming the dairy co-op uses Tauranga’s services.
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