Alright, everybody, thank you all for joining us this morning. As stated, my name is Kristen Lie, CFO of Napier Port . 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-month 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'll open up the line for any relevant questions. Let's get straight into it, and I'll hand over to Todd to get things underway.
Yeah, thanks, Kristen. 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, contributing to nine-month revenue of $120.6 million, up 12.6% on the same period last year. Our operating profit has reached $50.9 million and increased to 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 result. 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 Gabrielle, favorable seasonal growing conditions, which led to an early apple harvest with higher fruit volumes sustained throughout the season, increased DLRs of discharge load and resto, 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 Pan Pac's 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. Third, we've maintained a focus on cost management.
Despite continuing cost pressure points, we're 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 2.03 million tons versus last year's 2.19 million tons. We're making good progress on our capital investment program to deliver our transformation projects, asset management plan, and plant renewals. The dredge vessel construction is progressing well, and we're on track to enter into our principal commercial contracts and commence preliminary works for our container terminal transformation in the fourth quarter. Kristen will now provide more details on the numbers for you.
Thank you, Todd. With our third quarter 2025 trade volume release 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 27.6% third- quarter- on- third- quarter, and supported by higher containerized general cargo imports and empty containers to support that export cargo growth. With the nine months to June, compared to the same period of 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 Pac's full return, and other container movements increased 61.5%, mainly due to increased resto activity and transshipments following service changes among container shipping lines. Container services revenue for the quarter of $29.4 million increased 21% from $24.3 million in the same period last year.
For the nine months, container services revenue increased by 24.6% to $72.2 million, as higher container volumes were amplified by higher revenue per TEU. Average revenue per TEU for the nine months increased 9.9% to $373 million from $339 million 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 $12.3 million from $11.1 million in the same period last year, as bulk volumes increased 2% to 0.78 million tons. For the nine months, bulk cargo revenue increased by just over 1%, 1.1% to $37.7 million from $37.3 million, while volumes decreased 6% to 2.49 million tons. Log export volume for the quarter incread by 6.1% to 0.68 million tons, and for the nine-month period, decreased by 7.3% to 2.03 million tons.
Prior year volumes included logs sourced from Central North Island Winstone forests and additional Pan Pac log exports, albeit this was tapering off in the third quarter last year. Average revenue per ton for the nine months increased 7.5% to $15.16 from $14.10 in the same period last year, driven by changes to cargo mix and vessels together with tariff and levy increases. Our 2025 cruise season completed with 78 vessel calls with nearly 110,000 passengers, contributing $8.3 million to group revenue, down from $9.1 million for the prior year. In terms of core operating results, we're demonstrating very strong operating leverage again this year, as revenue growth has translated strongly into operating profits. The result from operating activities for the third quarter increased 44.6% to $17.7 million from $12.3 million in the prior comparative period.
For the nine months, the result from operating activities increased 28.4% to $50.9 million from $39.6 million. We're seeing some ongoing cost pressures related to labor, including our contracted stevedore 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 Gabrielle-related net insurance income and income tax changes in the prior year, increased by 75.6% to $8.4 million from $4.8 million in the same period last year. For the nine months, this increased by 46.1% to $23.2 million from $15.9 million. Reported net profit after tax for the nine months increased 49.9% from $19.1 million to $28.6 million.
In terms of capital management, over the nine-month period, Napier Port has invested $19.1 million in capital assets across growth and replacement categories. We're tracking towards approximately $30 million of spend for the full financial year, with a relatively wide range around that dependent upon approvals and timing of contractual matters. Despite a $9.1 million increase in cash tax payments between the comparative periods, operating cash flow increased by $1.6 million or 3% to $53.9 million from $52.3 million in the same period last year. Underlying operating cash flow, excluding insurance receipts and native-related taxes, held steady at $45 million, up from $44.8 million. We've made $25 million in dividend payments within the current financial year, including the $5 million or $0.025 per share special interim dividend paid in June this year.
Respect to the balance sheet at the end of June, we've drawn bank debt of $107 million and undrawn bank facilities of $73 million. Our debt coverage ratio at the end of June was 1.48x , including the benefit of business interruption insurance income. Now hand back over to Todd.
Thank you, Kristen. 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 make 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 fiber 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've continued 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 season's 78 cruise vessel calls. The industry is foreshadowing bookings will remain subdued for the coming Australian season, with recovery likely to be two to three years out and aligned with cruise industry planning cycles. The 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 bio-failing requirements. In respect of earnings guidance, this morning we've indicated we are now expecting an underlying result from operating activities for the year to [3rd] September 2025, around the top end of the previously communicated range of between $59 million and $63 million, 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 Kristen.
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.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two . If you are on a speaker phone, please pick up the handset to ask your question. Today's first question comes from Grant Lowe at Jarden. Please go ahead.
Oh, good morning, team. Congratulations on a good result. Just a couple of questions for me. Just around the guidance, you've held the range, albeit targeting the top end of that range. That seems fairly conservative based on momentum to date. On my numbers, I think that implies a $12 million fourth quarter, whereas you did sort of $12.3 million last year. What was the thinking around hitting that guidance range, and where do you see the key risks for hitting that?
We're obviously tracking, I guess, all the different parts of the business. I guess we pointed around the top end of the range, so there is an achievable outcome where it's a bit higher than that. Obviously, it will depend on, I guess, the tail end of the apple season. We talked about key things around, I guess, the log flow. We would typically see a reasonable sort of strong Q4 as far as logs. Activity in that space, I guess, is sort of remaining steady but subdued. If you're comparing to Q4 last year, there's a couple of moving parts there in terms of WPI was exiting during that period last year. In the comps, I think Pan Pac had reasonable timber numbers in Q4 last year, but it was still pretty early days in terms of pulps.
There's a few moving parts here if you're trying to compare the two. Does that help?
Yes, it does. Just on that, WPI exiting last year, what's your point there? Was that the result in increased volumes? I wouldn't say there would be a reduction in volume.
Q4 last year still had, I guess, the benefit of WPIs.
Right, I see.
Yeah, volumes.
Okay, four-part period. Okay, that's good. Around the OpEx side of things, it was a very good result on OpEx, up $0.5 million in the quarter, which is good in the context of container volumes being up sort of 12% or so, I think, from memory. To what do you attribute that strong performance there? Was there anything in the previous period last year which was elevated that might have come out, or is that just an underlying improvement in the OpEx space?
Yeah, thanks, Grant. I'll start and Todd will add, but we've had some of our drivers of expense growth in the past improve. Year-on-year side, I'd call out insurance and plant expenses. Those are in a better position and not escalating at anywhere close to the recent history rates. In terms of headcount as well, obviously it's one of our key focus areas and trying to manage the general nature of uplifts in that space.
That's what I was going to say as well. A lot of focus around just trying to do more with less at the moment and just trying to contain costs right across the organization. The team have done very well at doing that. Real focus around trying to do more with less.
Okay. Do you expect the sort of run rate to continue on through the next quarter, modestly up on the fourth quarter last year, but sort of similar sorts of levels? Would that be a reasonable assumption?
That's our aspiration, yeah.
Yeah, I mean, we've had some recent reductions on the collective agreements and rates, which will be kicking in sort of Q4, things like that. That is our aspiration.
Yeah. Okay. Excellent. All right, thank you. That's all for me. Cheers.
Thanks, Grant.
Thank you. Our next question comes from Wade Gardiner with Craigs Investment Partners. Please go ahead.
Hi there, guys. Just a couple of things. At the half-year, you had 66 cruise ships booked, now 61. Is there any reason for that drop? I mean, clearly, boats have pulled out, but are they saying why? Should we expect that to go down further?
Yeah, it's just cruise ships pulling out. Sort of similar to the rhetoric that you're hearing, Wade, in the market about what's happening in the cruise industry. 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 where they're making their best returns on their cruise ship capacity, which is in the northern hemisphere predominantly. A number of the other, some of the cruise lines, particularly some of the smaller sort of expeditionary type of lines, have pulled out of their bookings.
How confident are you around the 61? I mean, what's generally, what's the lead time if someone is going to pull out and reprioritise?
We're reasonably comfortable there. I think 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 say we're reasonably comfortable with that number and probably would expect to lose a few just due to weather and things throughout the year.
Okay. CapEx, again, at the half-year, your guidance was $25 million to $29 million. Now you're saying $30 million. Where's the additional?
We've flagged, I guess, the program over a three-year period, really, an elevated program up to $120 million. That's all just related to timing. We've got a pipeline of projects and 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 and in terms of when we're ready to go on contracts and procurement activities and stuff. Just flagging that it's probably a little bit at the top end of that range, but it could fall either way of that $30 million number too, just depending on timing.
Okay, so it's a timing argument rather than additional CapEx.
Yeah, that's right.
On quarter four pipfruit, it is an early harvest. Should we expect, therefore, the Q4 volumes to be down on last year? I'm just trying to understand the sort of growth, how that market bounced back versus what the timing implications are.
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 just literally can't hold it all. They've been playing the market in terms of not drip feeding, but, you know, flying the product out as their pricing has suited. What we understand is that there's still a reasonable amount of volume to come out of some of the bigger exporters like, see, T& Gs and Mr Apples and things. I wouldn't expect it to be lower than what we've seen in previous years across the same, you know, fourth quarter period.
Okay, cool. That's all from me.
Thank you. If you have a question, please press star and then one on your telephone keypad and wait for your name to be announced. Our next question comes from Paul Grant, a private investor. Please go ahead.
Paul Grant here. Well done, guys. I'm a local Hawke's Bay man. I usually come to your annual meeting. Just commend you on your cost management and bigger margins there. I just wanted to ask, are any threats going forward, like with those big apple players, Mr Apple and T&G, any threats like competing port offers?
I mean, I guess one of the strategic advantages that Napier Port has with that particular type of cargo is that we're so close at hand. It's more economic for them to send it through to Napier Port. We're always conscious around 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. Not that I would call out at this stage, Paul.
That's good. I missed it, but your answer about the Winstone and the Central North Island closure of that pulp mill, have you been able to retain some of that traffic, logs and that?
Yeah, so effectively, once WPI closed its pulp and its sawn lumber mill, the forests or the logs that were going into those mills transferred onto trucks and onto rail and has found its way through to Napier Port. The tonnage has gone from being pulp and timber to logs effectively. There's a nice soft set there, although it's not a one-for-one.
No. In terms of revenue, no. Anyway, I congratulate you on a good effort. Thank you.
Thank you, Paul.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Lie for closing remarks.
Thank you, everyone. Thanks for your questions, and thank you for joining us for the Napier Port Holdings 2025 Nine-Month Results Call. That ends the presentation and can wish you a good day and goodbye.
Thank you, Sir. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Thank you.