Release Date: May 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total cargo volumes increased by 10.7%, driven by a 35.7% increase in log exports.
- Revenue rose by 10.1% to $70.6 million, supported by strong log exports, cruise growth, and average revenue per unit growth.
- Operating leverage and effective cost control led to a 25.1% increase in the result from operating activities, reaching $27.4 million.
- Underlying net profit increased by 48.3% to $11.1 million, excluding unrealized revaluation gains, insurance income, and tax changes.
- The company has a diverse and resilient cargo base, with ongoing investments in infrastructure and customer services enhancing operational flexibility.
Negative Points
- Container volumes decreased by 17.3%, largely due to Cyclone Gabrielle's impact on production facilities and lower economic activity.
- Ongoing inflationary pressures and uncertain economic outlook pose challenges for cost management.
- Log volumes are expected to reduce in the second half of the year due to soft export market conditions and reduced raw log exports from Pan Pac.
- The upcoming cruise season is expected to see reduced passenger numbers and smaller vessels, likely leading to a reduction in overall cruise revenue for the 2025 financial year.
- Shipping schedule disruptions and local supply chain challenges continue to impact productivity and reliability for exporters and importers.
Q & A Highlights
Q: Can you provide an update on the guidance for FY25 and whether the 50% increase target is still achievable?
A: Yes, we believe the target is still very much achievable. We have a fair wind at our back, and these sorts of numbers are within reach. Our focus for next year remains on attaining that objective. (Todd Dawson, CEO)
Q: The FY24 guidance implies a sequential decline in profitability in the second half. Are there any additional factors we should consider?
A: The primary driver is volume, which is largely outside our control. We anticipate a softening in log volumes but expect container volumes to improve as the post-cyclone environment recovers. Our outlook is a reasonable estimate based on current conditions. (Todd Dawson, CEO)
Q: How much of the first-half log volumes were windthrown and unprocessed Pan Pac logs?
A: Approximately 8% to 10% of the first-half log volumes were attributable to windthrown and unprocessed Pan Pac logs. (Todd Dawson, CEO)
Q: What is the underlying unit pricing gain for container services, excluding mix influences?
A: The gains are driven by individual contract negotiations with shipping lines. While the environment has been conducive to achieving these lifts, it will be tighter going forward. We aim to continue achieving reasonable returns. (Todd Dawson, CEO)
Q: Are there any reasons to believe ARPU (Average Revenue Per Unit) wouldn't be better in the second half than the first half?
A: While we expect some positive effects from Pan Pac volumes coming back on stream, there are variables that could influence ARPU. We proceed with caution but aim to increase contract renewals. (Todd Dawson, CEO)
Q: What about ancillary revenues? Have you used them as a lever to increase revenue?
A: Yes, we have been a market leader in ancillary revenue streams. We continue to look at these fees annually and may introduce new fees in the future. (Kristen Lie, CFO)
Q: Can you provide an update on Pan Pac's ramp-up and when they will be back to full capacity?
A: The timber mill is largely back to pre-cyclone production capacity. The pulp mill is expected to be fully operational by November, with smoother volumes expected thereafter. (Kristen Lie, CFO)
Q: What is the expected impact on cruise revenue for next year?
A: We anticipate a reduction in overall cruise revenue due to smaller vessels and reduced passenger numbers. We haven't fully worked through the exact impact yet. (Kristen Lie, CFO)
Q: What is the status of the $20 million investment in cranes?
A: The $20 million is for two cranes, and we expect both productivity and sustainability improvements from this investment. We are considering electrification and hybrid options. (Todd Dawson, CEO)
Q: Can you provide more details on the risk reserve fund of $25 million?
A: The fund is expected to provide short-term liquidity in the event of a significant natural event and offer self-insurance options. We haven't finalized the specifics of the investment yet. (Todd Dawson, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
