Earnings call transcript: Napier Port Q3 2025 shows strong revenue growth

Napier Port Holdings Ltd reported robust financial performance for the third quarter of 2025, driven by significant growth in container service revenue and improved operating margins. The company highlighted strategic investments in infrastructure and cost management as key factors contributing to its success. Despite a challenging economic environment, Napier Port maintained its competitive edge, particularly in apple and log exports. According to InvestingPro data, the company maintains impressive gross profit margins of 51% and operates with moderate debt levels, supporting its strategic initiatives.

Key Takeaways

• Revenue for the first nine months increased by 12.6% year-over-year.
• Operating profit rose by 28.4%, with margins improving to 42.2%.
• Container service revenue surged by 24.6%.
• Napier Port is investing heavily in infrastructure, with a projected full-year capital spend of $30 million.

Company Performance

Napier Port Holdings demonstrated a strong performance in Q3 2025, with significant year-over-year growth across key financial metrics. The company’s strategic focus on infrastructure investments and effective cost management enabled it to capitalize on increased container volumes and favorable market conditions. Despite economic challenges, Napier Port maintained its competitive position, particularly in apple exports, benefiting from its strategic location.

Financial Highlights

• Nine months revenue: $120.6 million (up 12.6% YoY)
• Operating profit: $50.9 million (up 28.4% YoY)
• Container service revenue: $72.2 million (up 24.6%)
• Underlying net profit after tax: $23.2 million (up 46.1%)
• Operating margins improved to 42.2% from 37% in the previous year

Outlook & Guidance

Napier Port remains optimistic about its future prospects, expecting underlying operating activities to be at the top end of the $59-63 million range. This outlook is supported by InvestingPro’s comprehensive analysis, which shows the company trading at an attractive valuation relative to its near-term earnings growth potential. For detailed insights and Fair Value estimates, explore the full Pro Research Report, available to InvestingPro subscribers. The company anticipates continued growth in container volumes and revenue per TEU, despite a reduction in cruise bookings. Napier Port is confident in its ongoing investment programs and expects the cruise industry to recover within the next two to three years.

Executive Commentary

• Todd Dawson, CEO, remarked, "We continue to see supportive demand for the food and fibre trading through Napier Port."
• CFO Kristen Lee emphasized, "Our aspiration is to continue managing costs effectively."

Risks and Challenges

• Economic pressures on the primary sector could impact future performance.
• Cruise industry recovery is expected to take 2-3 years, affecting short-term revenue.
• Potential cost pressures as the company continues its capital investment program.

Napier Port Holdings Ltd’s strategic initiatives and strong financial performance in Q3 2025 position it well for future growth, despite ongoing economic challenges. The company’s focus on infrastructure development and cost management will be critical in navigating the evolving market landscape. With a beta of 0.72 indicating lower volatility than the market average and a strong current ratio of 3.87, the company demonstrates financial resilience. Access the complete financial health analysis and more exclusive insights through InvestingPro’s comprehensive research platform.

Full transcript - Napier Port Holdings Ltd (NPH) Q3 2025:

Kristen Lee, CFO, NetReport: Good morning, everybody, and thank you for all for for joining us this morning. As stated, my name is Kristen, Kristen Lee, CFO of NetReport. I’m joined on the call this morning by Todd Dawson, Chief Executive. Earlier this morning, we released our unaudited interim third quarter and nine months year to date results. In terms of the format for this call, we will provide a high level overview of the results, and then we will open up the line for any relevant questions.

Let’s get straight into it, and I’ll hand over to Todd to

Todd Dawson, Chief Executive, NetReport: get things underway. Yes. Thanks, Kristin. Good morning, everyone, and thank you for joining us today. I’m pleased to share that Napier Port has delivered a strong third quarter result, attributing to nine months revenue of $120,600,000 up 12.6% on the same period last year.

Our operating profit has reached $50,900,000 an increase of 28.4% year on year. This is a great result that we are pleased to be able to report having completed three quarters of our financial year. As we have highlighted previously, there are three key drivers behind our earnings growth, which are again reflected in today’s results. First, we’ve seen growth in cargo volumes. This has been driven by several factors: a strong and ongoing regional recovery in volumes two years on from Cyclone Gabriel, favorable seasonal growing conditions, which lead to an early apple harvest with higher fruit volumes sustained throughout the season, increased DLRs of discharge load and restow and transshipment to container activity as shipping line services adjusted as we grew our share of this trade increased empty containers arriving to support the export volume growth and, of course, the restoration of the panpacks pulp and timber operations.

Second, our long term strategy of investing in infrastructure and additional services for our customers is delivering. These investments are enhancing the value we provide to customers, improving our revenue yields and enabling positive operating leverage as our volumes grow. And third, we’ve maintained a focus on cost management. Despite continuing cost pressure points, we are effectively containing operating expenses while container volumes are increasing, supporting our earnings growth. We anticipated the softening in export logs given the nine months last year benefited from additional wind throw volume, so it was pleasing to see an uptick in the third quarter, bringing the June year to date total to 2,030,000 tonnes versus last year’s 2,190,000 tonnes.

We’re making good progress on our capital investment program to deliver our transformation projects, asset management plan and in plant renewals. The dredge vessel construction is progressing well, and we’re on track to enter into our principal commercial contracts to commence preliminary works for our container terminal transformation in the fourth quarter. Kristin will now provide more details on the numbers for you.

Kristen Lee, CFO, NetReport: Thanks, Todd. With our third quarter twenty twenty five trade volume released in July, we reported third quarter year on year volume increases of 12.7% for containerized cargo and 2% for bulk cargo. The uplift in container volumes has been led by higher apple exports, up twenty seven point six percent third quarter on third quarter and supported by higher containerized general cargo imports and empty containers to support that export cargo growth. For the nine months to June, compared to the same period the year before, total container volumes of 194,000 TEU increased 13.4% from 171,000 TEU. In this period, pulp and timber exports have increased 22.4% on pan packs full return and other container movements increased 61.5%, mainly due to increased restow activity and transshipments following service changes among container shipping lines.

Container services revenue for the quarter of twenty nine point four million dollars increased 21% from $24,300,000 in the same period last year. For the nine months, container service revenue increased by 24.6% to $72,200,000 as higher container volumes were amplified by higher revenue per TEU. Average revenue per TEU for the nine months increased 9.9% to $373 from $339 in the same period last year. This is driven by higher port pack and depot contributions, container mix and tariff increases. Bulk cargo revenue for the quarter increased 10% to $12,300,000 from $11,100,000 in the same period last year as bulk volumes increased 2% to 780,000 tonnes.

For the nine months, bulk cargo revenue increased by just over 11.1% to $37,700,000 from $37,300,000 while volumes decreased 6% to 2,490,000 tonnes. Log export volume for the quarter increased by 6.1% to 680,000 tonnes and for the nine month period decreased by 7.3% to 2,030,000 tonnes. Prior year volumes included logs sourced from Central North Island windthrown forests and additional panpack log exports, albeit this was tapering off in the third quarter of last year. Average revenue per tonne for the nine months increased 7.5% to $15.16 from $14.1 in the same period last year, driven by changes to cargo mix and vessels together with tariff and levy increases. At 2025 crew season completed with 78 vessel calls with nearly 110,000 passengers, contributing $8,300,000 to group revenue, down from $9,100,000 for the prior year.

In terms of core operating results, we are demonstrating very strong operating leverage again this year as revenue growth is translating strongly into operating profits. The result from operating activities for the third quarter increased 44.6% to £17,700,000 from £12,300,000 in the prior comparative period. For the nine months, result from operating activities increased 28.4 to £50,900,000 from 39,600,000.0 We’re seeing some ongoing cost pressures related to labor, including our contracted stevedoring costs, some modest increases in our administrative costs from technology and project related work, and we’re benefiting from flattish property and plant expenses and stabilized insurance costs. However, overall operating margins are significantly improved at 42.2% for the nine months, up from 37% in the prior year comparative period. Underlying net profit after tax for the third quarter after adjusting for Cyclone and Gabriel related net insurance income and income tax changes in the prior year increased by 75.6% to £8,400,000 from £4,800,000 in the same period last year.

For the nine months, this increased by 46.1% to 23,200,000 from £15,900,000 Reported net profit after tax for nine months increased 49.9% from £19,100,000 to £28,600,000 In terms of capital management, over the nine month period, NetSupport has invested £19,100,000 in capital assets across growth and replacement categories. We’re tracking towards approximately $30,000,000 of spend for the full financial year with a relatively wide range around that dependent upon approvals and timing of contractual matters. Despite a $9,100,000 increase in cash tax payments between the comparative periods, operating cash flow increased by $1,600,000 or 3% to $53,900,000 from $52,300,000 in the same period last year. Underlying operating cash flow, excluding insurance receipts and negative related taxes, held steady at $45,000,000 up from 44,800,000.0 We’ve made $25,000,000 in dividend payments within the current financial year, including the $5,000,000 or $0.25 per share special interim dividend paid in June year. With respect to the balance sheet at the June, we’ve drawn bank debt of 107,000,000 and undrawn bank facilities of 73,000,000.

Our debt coverage ratio at the June was 1.48 times, including the benefit of business interruption insurance income. Now I hand back over to Todd.

Todd Dawson, Chief Executive, NetReport: Thank you, Kristin. The economic environment remains challenging for many of our regional primary sector based customers and the global uncertainties resulting from the impact of changes in trading conditions internationally making forecasting even more difficult. This is likely to be the case for a while, however, we continue to see supportive demand for the food and fibre trading through Napier Port, giving us confidence to continue our investment programs that will enable our shipping line customers and cargo owners to see further gains in productivity and service improvements at Napier Port. Apple exports have been a real positive for the year to date, and we continue to see solid export volumes as we enter the tail end of the export season. Growers and exporters are more optimistic looking forward as a result of a very good season this year.

Looking forward to the new financial year starting in October, cruise bookings are currently 61 for the upcoming season, which is a reduction from last year’s or last season’s 78 cruise vessel calls. The industry is foreshadowing bookings will remain subdued for the coming Australasian season with recovery likely to be two to three years out in the line with cruise industry planning cycles. Industry, government and port sector are working positively to resolve some of the challenges in New Zealand related to cost and barriers to entry, including biofailing requirements. In respect of earnings guidance this morning, we’ve indicated we are now expect underlying results from operating activities for the year to thirty September twenty twenty five, around the top end of the previously communicated range of between 59,000,000 and 63,000,000 assuming a continuation of current operating conditions and excluding any insurance claim income. Overall, I’m pleased with our progress, and I look forward to presenting our end of year financial results in November.

I’ll now hand back over to Kristin.

Kristen Lee, CFO, NetReport: Thank you. That concludes our prepared remarks. I would like to provide the opportunity for those on the call to ask questions related to our presentation, and therefore, I’ll hand back over to the moderator to do so.

Moderator: Thank And today’s first question you. Comes from Grant Lowe at Jarden. Congratulations

Grant Lowe, Analyst, Jarden: on a good result. Just a couple of questions for me. Just around the guidance, you’ve held the the range, albeit targeting the top end of that range. That that seems fairly conservative based on a mean term to date on my numbers. I think that implies a $12,000,000 fourth quarter, whereas you did sort of 12.3 last last year.

What what was the thinking around setting that guidance range? And where do you see the key risks for hitting that?

Kristen Lee, CFO, NetReport: Well, I mean, we’re obviously tracking, I guess, all the different parts of of the business. The I guess, we pointed around the top end of the range. So there is a there is a, I guess, an achievable outcome where it’s a bit higher than that. Obviously, it will depend on, I guess, the the tail end of the apple season. We talked about key things around, I guess, the log flow.

So we would typically see a reasonable sort of strong q four as far as logs. Activity in that space, I guess, is sort of remaining steady but subdued. And then I guess and, you know, if you’re comparing to q four last year, there’s a couple of moving parts there in terms of WPI was exiting during that period last year. And then the comps, you know, I think Panpack had reasonable timber numbers in the q four last year, but was still pretty early days in terms of obviously, there’s a few moving parts here if you’re trying to compare the compare the two. Does that help?

Grant Lowe, Analyst, Jarden: Yeah. I I just yes. It does. I just so just on that WPI exiting last year, what what’s your your point there? Was that did that result in increased volumes?

Like, the the reduction in volume?

Kristen Lee, CFO, NetReport: Q four last year still had, I guess, the the benefit of WPI’s Right. See. Yeah. Volumes.

Grant Lowe, Analyst, Jarden: Yeah. Okay. You got it. Got it. For past period.

Yeah. Okay. And then just like okay. Yeah. So yep.

That’s good. Then then around the OPEX side of things, so it was a very good result on OPEX, I think, up point 5,000,000 in the in the quarter, which is, you know, good in the context of container volumes being up to 12% or so from memory.

Paul Grant, Private Investor: What what what do you to what do

Grant Lowe, Analyst, Jarden: you sort of attribute that, you know, strong performance there? Was there anything in the previous period last year which which was elevated that might have come out? Or is that just an underlying improvement in the optic space?

Kristen Lee, CFO, NetReport: Yeah. Thanks thanks, Grant. So I’ll start in total total edge, but we’ve had some of our, I guess, drivers of expense growth in the past, I guess, improved year on year. So I’d call out, I guess, insurance and plant expenses. So we’ve

Todd Dawson, Chief Executive, NetReport: yeah. That that those are

Kristen Lee, CFO, NetReport: in a better better position and not escalating at the sort of anywhere close to the recent history rates. And then I guess in terms of head count, I guess, well. We’re obviously, it’s one of our key focus areas and trying to to to sort of manage sort of the general nature of uplifts in that in that space.

Todd Dawson, Chief Executive, NetReport: Yeah. That’s that’s know, that’s what I was gonna say as well. A lot of focus around just trying to do more or less at the moment and just trying to contain costs right across the organization. And then the team has done very well at at doing that. So, yeah, real hit real focus around trying to do more or less.

Grant Lowe, Analyst, Jarden: Yeah. Okay. So do do you expect the sort of, yeah, run rate to sort of continue on through the next quarter, sort of, you know, modestly up on on on the fourth quarter last year, but, you know, sort of similar sorts of levels. Would that be a reasonable assumption?

Kristen Lee, CFO, NetReport: That’s our aspiration. Yeah. Yeah. I mean, we had some recent, I guess, reports on the collective agreements and rates, which will be kicking in sort of q four, things like that. But, yeah, that is our aspiration.

Yeah.

Grant Lowe, Analyst, Jarden: Yeah. Okay. Excellent. Alright. Thank you.

That’s all for me. Cheers.

Moderator: Thanks, mate. Thank you. And our next question comes from Wade Gardner with Craigs Investment Partners. Please go ahead.

Wade Gardner, Analyst, Craigs Investment Partners: Hi there, guys. Just a couple of things. At the half year, you you had 66 cruise ships booked now 61. What’s is there any reason for that for that drop? I mean, clearly, boats pulled out, but are are they saying why?

Should we expect that to go down further?

Todd Dawson, Chief Executive, NetReport: Yeah. It’s it’s just just yeah. Cruise ships pulling out. Sort of similar to the the rhetoric that you’re hearing, Wade, in the market about what’s happening in the cruise industry. The the they’re effectively just prioritizing their capacity to other parts of the world because of some of the challenges they’ve had here in New Zealand, but equally with the with the where they’re making their best returns on the on the cruise ship capacity, which is in the Northern Hemisphere predominantly.

So a number of the other some of the some of the cruise lines, particularly some of the smaller sort of the, like, dictionary type of lines that they’ve have pulled out of their of their bookings.

Wade Gardner, Analyst, Craigs Investment Partners: So how confident are you around 61? I mean, what’s generally, what’s the lead time if someone is gonna pull out and and and re re prioritize?

Todd Dawson, Chief Executive, NetReport: Oh, look. We would we’re reasonably comfortable here. I think, you know, we we always anticipate that we’ll lose a few, but mainly due to weather conditions rather than cancellations of bookings just because they’re not coming. At this stage, we’d we’d be saying we’re comfortable with that number and probably would expect to lose a few just due to weather and things throughout the year.

Wade Gardner, Analyst, Craigs Investment Partners: Okay. CapEx, again, at the half year, your guidance was 25 to 29. Now you’re saying 30. Where’s the additional?

Kristen Lee, CFO, NetReport: Well, so we’ve flagged, I guess, the program over a three year period, really, elevated program up to 120,000,000. So that’s all just related to timing. So we’ve got a pipeline of projects to work. We’re working through where they actually fall, I suppose, is a little bit dependent on not so much the financial year. But I guess when the work’s done in terms of when we’re ready to to go on contracts and procurement activities and stuff.

So I guess just flagging that it’s probably a little bit the top end of that range, but it could fall either way of of that 30,000,000 number too just depending on timing.

Todd Dawson, Chief Executive, NetReport: Okay. So it’s it’s a it’s

Wade Gardner, Analyst, Craigs Investment Partners: a timing argument rather than additional, you know, additional CapEx.

Kristen Lee, CFO, NetReport: Right. Yeah.

Wade Gardner, Analyst, Craigs Investment Partners: That’s right. And just on for pet fruit, it is you know, it’s been an early harvest. So should we expect, therefore, the q four volumes to be down on last year? I’m just trying to, you know, understand the sort of growth, you know, how that market bounce back versus what the the timing implications are.

Todd Dawson, Chief Executive, NetReport: No. I think from what we’re hearing, Wade, there’s still a reasonable amount of fruit to come. We had a big big influx early in the season because they were trying to move stuff because it’s just literally it can’t hold it all. And then they’ve been playing playing the market in terms of not drip feeding, but, you know, flowing the product out as as the pricing is suited. And what we understand is that there’s still a reasonable amount of volume to to come out of some of the bigger exporters, like CTNGs and mister Apples and things.

So I wouldn’t expect it to be lower than what we’ve seen in previous years across the same, you know, fourth quarter period.

Wade Gardner, Analyst, Craigs Investment Partners: Okay. Cool. That’s that’s all for me.

Moderator: Thank you. Our next question comes from Paul Grant, a private investor. Please go ahead.

Paul Grant, Private Investor: Paul Grant here. Well done, guys. I’m a local Hawke’s Bay man. Usually come to your annual meeting. Just commend you on your cost management and big emergency.

I just wanted to just wondering any threats going forward, like, with those big Apple players, mister Apple and TMG. Any threats like go competing port offers?

Todd Dawson, Chief Executive, NetReport: Not I mean, the the the I guess, one of the strategic advantages that Naked Port has with that particular type of cargo is that it’s so close at hand. And so it’s it’s it’s more economic for them to send it through to Naked Port. So we’re always conscious around, you know, port pricing and bits and pieces as well versus competitive offerings that might come from ports to the South of us or to the North of us.

Grant Lowe, Analyst, Jarden: Yeah.

Todd Dawson, Chief Executive, NetReport: And but but not that I would call out at this stage, Paul. No.

Paul Grant, Private Investor: That’s good. And I’ve missed it, but your answer about the Winston and the Central North Island closure of that pulp mill. And have you been able to retain some of that traffic logs in there?

Todd Dawson, Chief Executive, NetReport: We have. So, basically, once WPI closed its pulp and its sawn lumber mill, the the forest or the logs that were going into those mills transferred onto onto trucks and onto rail and has found its way through the Napier Port. So the tonnage has gone from being pulp and timber to logs effectively. So there’s there’s a nice soft set deal, although it’s not one not a one for one.

Paul Grant, Private Investor: No. In terms of revenue, no. But anyway, guys, well done. I congratulate you on a good effort. Thank you.

You.

Moderator: Are no further questions at this time. I’ll now hand back to mister Lee for closing remarks.

Kristen Lee, CFO, NetReport: Thank you, everyone. Thanks for your questions, and thank you for joining us for the NetFort Holdings twenty twenty five nine months results call. That ends the presentation, and I can wish you a good day and goodbye.

Moderator: Thank you, sir. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Grant Lowe, Analyst, Jarden: Thank you.

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