Port Authority Financial results healthy and stable
Throughput of freight in Rotterdam fell in 2016 by 1.1% to 461.2 million tonnes. The fall can largely be attributed to dry bulk such as ores and coal. Liquid bulk managed to hold on to the high level reached in 2015. At the time the sector was growing by overt 10%. Last year, 1.2% more containers (TEU) were handled.  Allard Castelein, CEO Port of Rotterdam Authority: “After exceptional 4.9% growth in 2015, we have to be content that most sectors have been able to equal or even slightly exceed these volumes in 2016. The Rotterdam port and industrial complex is facing huge challenges, in particular digitisation and energy transition as well as stiff competition from surrounding ports. Divergent trends provide reassurance that the complex can handle these challenges, such as the major investments in various refineries, a number of projects that should shape energy transition and the new container line sailing schedules that are favourable to Rotterdam.” Paul Smits, CFO Port of Rotterdam Authority: “With turnover remaining virtually the same and increased profit thanks to good cost management, 2016 was, from a financial viewpoint, a healthy and stable year. Investments rose by 16% and they are at least expected to be comparable to 2016 levels over the next few years. At the same time the Port Authority is obliged to pay corporate tax from 2017 onwards. We shall not allow our clients to suffer as a consequence, so we shall be focusing strongly on our costs. Liquid bulk Throughput of crude oil fell by 1.2% to 101.9 million tonnes. Although refinery margins fell slightly, they remained buoyant whereby the level of crude oil input stayed at the upper end of the historical spectrum. Following a rise of 18.0% in 2015, the input and output of oil products increased by a further 0.3% to 88.8 million tonnes. There was less throughput of fuel oil but more gas oil, diesel, kerosene, petrol and naphtha was handled. Throughput of LNG dropped by 26.1% to 1.7 million tonnes following an increase of over 90% in 2015. The reason for this that in 2016 the global market saw less arbitrage relating to LNG prices. The other liquid bulk category rose by 1.5% to 31.2 million tonnes. This is a sum of different types of cargo. For instance more biodiesel was transhipped but less palm oil. In total the amount of liquid bulk fell by 0.5% to 223.5 million tonnes.  Dry bulk Throughput of ores and scrap dropped by 7.8% to 31.2 million tonnes. The main reason for this was the dumping of Chinese steel. On the upside, there was an increase in the export of scrap to Turkey, which has announced anti-dumping measures. The amount of coal handled dropped by 7.3% to 28.4 million tonnes. The most significant causes are the closure of coal-fired plants in the Netherlands and the increased generation of wind and solar power. More agricultural products were received from Europe and fewer from overseas, which meant throughput of agricultural bulk fell by 3.6% to 10.4 million tonnes. The amount of other dry bulk goods fell by 1.4% to 12.2 million tonnes due to fewer raw materials being shipped for construction and industry. All in all, dry bulk fell 6.2% to 82.3 million tonnes. Containers Throughput of containers rose by 1.2% to 12.4 million TEU (twenty feel equivalent unit, the unit of measurement for containers) and a 0.6% increase in weight to 127.1 million tonnes. In the second half of the year, 4.9% more was throughput than in the same period of the previous year. More cargo was shipped to and from the Far East and North America, but less went to South America. Within Europe, both feeder traffic and short sea traffic between Rotterdam and Great Britain, Ireland, Spain and Portugal increased. At the same time, container traffic to the ScanBaltic shipping area decreased, mainly due to the weak Russian economy. In the second half of the year, the two new container terminals at Maasvlakte 2 underwent strong growth. In the first half of the year they jointly handled 0.6 million TEU, rising to 1.1 million TEU in the second half of the year. As in previous years, Rotterdam’s share of the market in de Hamburg-Le Havre range was around 30%. This year has seen a fair amount of shifts in the partnerships between the major container lines. From 1 April, these alliances will operate under new sailing schedules. These are looking favourable for Rotterdam. 
Despite the announcement of Brexit, roll on roll off (RoRo) traffic increased. This not only involves shipping to and from Great Britain, but also Scandinavia, Spain and Portugal. RoRo traffic grew by 1.7% to 22.4 million tonnes. Throughput of other general cargo increased by 3.0% to 5.9 million tonnes, mainly due to the fact that more steel and non-ferrous metals were handled. RoRo and other general cargo combine to form the breakbulk category. This increased by 2.0% to 28.3 million tonnes. Offshore There has been relatively little investment in oil and gas production due to the persistently low oil price and, consequently, the offshore industry has been hard hit. A lot of companies in what is a key industry for Rotterdam had to make employees redundant last year. At the same time, Sif launched the manufacture of monopiles for offshore wind turbines at Maasvlakte 2. Forecast The Port Authority expects throughput volume in 2017 to remain at a comparable level to that of 2016. Container handling is expected to continue on an upward trend. It is uncertain whether the other sectors will equal the 2016 results. Port Authority’s annual financial figures  Last year, the turnover of the Port Authority remained fairly stable at € 675.4 million. As a result of costs being under control, there has been a healthy profit growth. Profit increased by 5.0% to € 222.2 million. The two most important sources of income for the Port Authority are the lease of sites and the sea port dues ships pay when they visit the port. The income from the lease of sites rose by € 8.0 million (+2.4%) to € 348.9 million. This is the sum of new issues, the assimilation of recently signed contracts, indexing of contracts and the extension of contracts at review prices. Port dues fell by 2.3% to € 309.1 million because of a decrease in throughput (-1.1%), a decrease in the average price per tonne and a rise in discounts. The discounts on the port dues that the Port Authority gave to environmentally friendly ships rose by 21.3% to € 4.5 million. In total the operating income remained stable at € 675.4 million. Operating costs fell by 4.5% to € 227.9 million, mainly due to the decrease in costs related to the internal operational management and the release of several reserves. The income from participating interests amounted to € 8.5 million, around € 0.4 million less than last year. As in previous years, the size of this item is being determined mainly by the successful participation in the port of Sohar (Oman).  In spring 2016, the Port Authority surrendered € 100 million of the interest derivate agreed in 2008. A sum of € 59.4 million was paid for this. In 2016, € 32.9 million of this amount was charged against the results. After the surrender, the remaining interest rate derivate was € 900 million. The Port Authority was prepared to reduce the interest rate derivate because the outstanding variable debt is declining sooner than forecast. This is due to stable sales growth, careful cost management and good risk management in investment projects. € 92.8 million dividend  In line with existing long-term agreements, the Port Authority suggests to the shareholders- the municipality of Rotterdam (70.83%) and the State (29.17%) - that it pays a € 92.8 million (+2.0%) dividend over 2016; € 65.7 million to the Municipality and € 27.1 million to the State. Investments vs corporation tax The mission of the Port of Rotterdam Authority is to create economic and social value by realising sustainable growth together with clients and stakeholders. In addition to paying off debts and paying dividends, the Port Authority uses the profits to invest in the development of the port. In 2016 investments were made in projects such as the quay walls for Sif, the berths for Stena Line, the replacement and upgrading of buoys and poles, the development of Maasvlakte Plaza and quay walls for Koole Terminals. In total, the Port Authority invested € 179.8 million last year compared to € 154.4 million in the previous year (+16.4%). Over the coming years, the investment portfolio is well filled with projects such as the diversion of approximately 4 km of the Port Rail along Theemsweg. This is a public infrastructure project to which the Port Authority will contribute almost € 100 million. In competing ports in neighbouring countries, the government pays for this kind of public infrastructure. It is therefore particularly unfortunate that the European Commission has decided that the Port Authority is obliged to pay corporation tax as of 1 January 2017. The Port Authority has appealed against this decision because it violates the principle that there should be a level playing field within Europe.