- Napier Port reported an overall decrease in its container and bulk volumes today
- The decreased volumes are due to global supply chain woes and ongoing labour shortages.
- The company also downgraded earnings guidance for FY22.
Napier Port (NZX.NPH) on Monday announced an update on 1HFY22 trade volumes and earnings guidance.
For the six months till March 31, container volumes decreased by 16.6% and bulk cargo volumes were down by 8.7% over pcp.
The fall in cargo volumes was due to a number of factors like the increase in global supply chain woes, shipping disruptions and ongoing seasonal labour shortages. Besides this, adverse weather conditions in New Zealand also impacted primary sector production.
Napier Port expects cargo volumes for FY2022 to be lower as compared with the forecast, leading to a reduction in its financial outlook for FY22.
NPH downgrades forecast
The Company today said that assuming that current market conditions continued, it expects a drop of almost 10% as compared to what was previously forecasted. The range is now expected to be NZ$38 million and NZ$42 million, as compared to the previously forecasted NZ$43.8 million.
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Todd Dawson, chief executive of Napier Port, said that the Port had faced a challenging half period with an escalation in disruptions of regional and global shipping schedules. This has led to vessel omissions, delays and inconsistent vessel calls.
Further, Omicron outbreaks and pandemic-related port lockdowns in China have added pressure on the global supply chain. Extreme weather conditions in New Zealand have also contributed to delays in cargo arriving at port and have caused several port closures in the second quarter of the first half.
However, Mr Dawson said that the Company was optimistic that the environmental factors that delayed products from getting to ports were easing and cargoes were returning to normalcy in April.
Overall, the trade environment for key cargoes remains positive with primary sector commodity prices remaining high across New Zealand.
Expects a stronger 2HFY22
The Company is expecting a stronger 2H FY22 for meat, forestry and horticulture products assuming labour is not in short supply.
Positive factors, however, are offset by inflation and other mounting economic pressures.
Cruise services are also likely to be disrupted in FY22. Although one cruise vessel called during the first half, border restrictions are likely to prevent the resumption of international cruise vessel visits.
Bottom Line: NPH has undergone challenging times and is likely to feel the impact in its FY22 full-year results. Major challenges were posed by supply chain disruptions