Good afternoon, and welcome to [Foreign language] , South Port New Zealand Limited's interim financial result investor presentation. Presenting is Lara Stevens, our Chief Financial Officer, and myself, Nigel Gear, Chief Executive. The process today is that we will work through the slides and take questions at the end of the presentation. Note that, any questions can be added to the Q&A section in Teams. Firstly, key messages. We are very pleased to say that the company has had a record, a record interim performance across profit, revenue, and cargo volumes. This result is on the back of a strong economic performance in the Southern region, that also included the resumption of normal cargo activities at the New Zealand Aluminium Smelter.
Contributing towards this result also was Project Kia Whakaū to deepen our channel to 10.7 m at high tide, which has been very successful and continues to exceed our expectations. This project has improved the safety margins for ship movements, providing greater capacity for vessels to take on additional cargo and increase the efficiency of vessel movements through the port. The company is always looking for the next opportunity to add value to our current offering of services at the port, and has recently made a strategic investment that will be covered off in a case study later on in the presentation. Finally, our expectations looking forward, based on today's information, is for these positive cargo trends to continue for the second half of the financial year. Note, however, that this outlook is tempered by geopolitical uncertainties that may influence the port's future performance.
[Foreign language] . As Nigel mentioned, we've had a very strong start to the financial year. Our total cargo volumes are up 17.8% on the comparative period to almost 2 million tons, with Bulk Cargo volumes up 10% as a result of stronger demand for fertilizer, fuel, and sulfuric acid. This reflects the fact that the agricultural sector continues to perform well in Southland. This resulted in record interim cargo volumes for the port. The volumes across the Tiwai Wharf have increased by 30%, with the Tiwai Aluminium Smelter operations now back to normal, after having to shut a potline last year due to an electricity demand response. Total containers through the port for the half year were 24,800 TEU, up from 20,600 TEU in the half year 2025, representing a 20% lift.
These increased cargo volumes have resulted in additional ship calls during the period, up from 151 vessels last year to 213 for the half year. Of these vessel calls, we saw 24 container ships visit the port, compared to only 15 in the prior interim period. Our operating revenue has seen a similar increase to our cargo volumes, up 17.6%. Again, another interim record for the company. Despite our revenue increasing by 18%, our EBITDA has lifted by 23.4%, and our underlying or normalized net profit after tax is up 36%. This shows the port has strong operating leverage, the business growing efficiently as we take advantage of economies of scale and better cost management. Our net debt has reduced by NZD 6 million to NZD 29 million from this time last year.
The NZD 6 million reduction in our net debt during this period reflects the strong operating cash flow of the business during this time. For the half year, the board has made the decision to increase the interim dividend by NZD 0.01 per share to NZD 0.085 per share. Our interim dividend has sat at the same level for many years now, despite the total dividend being increased a number of times. When setting the full-year dividend later in the year, the board will take into account a number of factors, including profitability, free operating cash flows, and future maintenance and CapEx requirements of the port.
Touching on business performance in these next few slides, we will have a more in-depth review of our cargo performance. Total volumes for the half year have reached an impressive 1.99 million tons, and the graph highlighting this shows a noticeable jump in volumes compared to the previous nine periods. Bulk Cargo activity continues to be the backbone of the business, with record volumes once again being shipped across the Island Harbour. The New Zealand Aluminium Smelter, located at Tiwai Point, remains a major contributor to the cargo profile, with 26% of the total volume handled through the port. Containerized trade is now at 14% of total throughput and has hit a new record in export tonnage. Taking these factors into consideration, the volume mix of cargo being handled through the port is both healthy and diversified.
Looking more closely at Bulk Cargo, strong import volumes were driven by fertilizer, stock feed, and cement demand. Export growth was supported by wood chips and the shipment of fertilizer on the New Zealand coast. The port's well-balanced import and export mix is a strategic advantage, enabling backload efficiencies and enhancing overall margin performance for the shipping companies. Noting the Bulk Cargo revenue graph on the right-hand side of the slide, the higher average revenue per tonne for the half year reflects both product mix and the continuation of the Kia Whakaū levy. Reviewing some of the market dynamics impacting Bulk Cargo, agricultural inputs have again continued with their impressive growth from the previous period, as highlighted on the top graph of the slide. This has occurred through a structural shift in the region's use of stock feed, with these practices now applied consistently throughout the full season.
This shift has been driven by strong payout levels, enabling producers to maximize milk solid production. Fertilizer application has also normalized as offshore market conditions improve, particularly in sheep and beef sectors. Looking more closely at forestry, wood chip exporters have benefited from the increased draft, which improves the vessel economics, and as a result, has lifted volumes through the port. Log exports have remained relatively flat. That reflects the current market conditions in China. Containerized export growth has been promising for the half year, with increased volumes across both the agricultural and manufacturing sectors. This is despite the supply chain pressures that persist globally, especially with conflict in the Middle East and the impact on vessels transiting through the Red Sea.
As Lara mentioned earlier, we have had a noticeable increase in the number of MSC vessel calls to the port, and we will be watching with interest the establishment of the new Eagle Service that recently commenced calling to New Zealand in February, and what impacts this will have on volumes being moved through the port. The Container revenue graph at the bottom of the slide depicts a continued growth in revenue per TEU, reflecting higher handling activity for the year. Looking more closely at some of these sectors, dairy exports have recovered following a weather event in the half year to 2025 that impacted volumes handled through the port. The red meat sector has improved as a result of buoyant offshore market conditions, and aluminium volumes packed on the Island Harbour and shipped on MSC have significantly increased, as illustrated on the graph.
In the half year, there was a strong uplift in Tiwai volumes following the disruptions in the previous year due to a demand response call from Meridian. This response call reduced the supply of electricity to Tiwai by 50 MW, leading to a reduction of aluminum being produced at the plant. As at first of February 2026, hydro lake levels are at 113% of the historic mean for this time of year. In the comparable period for the half year 2025, the lake levels at this time were at 97% of the historic mean. Taking a look also at the revenue per metric ton graph, a large percentage of the revenue streams are fixed, therefore, revenue per ton can vary with volume changes.
We will now take a look at the financial performance of South Port over the past six months. Touching on revenue for the half year, again, we are happy to note another record for an interim period, with our operating revenue up NZD 5.2 million, or 18% to NZD 34.8 million, supported by strong Bulk Cargo volumes, increased container activity, and a recovery of volumes and revenue related to the Tiwai Aluminium Smelter. Looking at the chart, you can see that Bulk Cargo noted a 21% lift in revenue, which was driven by strong fertilizer, sulfuric acid, and stock feed volumes through the port, supporting the buoyant agricultural sector in Southland. Revenue was also generated by the handling of wind farm components or project cargo through the port, supporting the Stage 2 development of Mercury's Kaiwera Downs Wind Farm near Mataura.
While this activity is not seen through the port every year, we expect to handle more wind farm components in the coming years, which I will touch on further later in the presentation. Container activity was also up on the prior year. Total TEU through the port up 20%, with revenue per container growing by 8% compared to the comparative period. While the smelter activity was up by 30% in the half year, total revenue only increased by 27%, which reflects some fixed revenue streams received from the smelter. While our revenue was up by 17.6%, our EBITDA reflects a 23.4% increase compared to the prior corresponding period.
As noted earlier, this shows strong operating leverage at the port and economies of scale, with being able to spread some of our fixed costs associated with being an infrastructure business across larger trade volumes and increased operating revenue. Some of our operating costs have increased in the half year as activity levels have risen, such as employee-related costs and other operating expenses. We are pleased to report that the company's EBITDA margin has increased from 42% in the half year 25 to 44% in HY26, as seen in the chart. Each year, South Port reviews the EBITDA margins of all New Zealand ports, and this shows we compare favorably with the average of 38% for FY 2025.
South Port generated a record reported after-tax profit of NZD 8.45 million for the half year, up 46.8% on the prior year's interim result of NZD 5.76 million. If we ignore the one-off adjustments relating to gains and losses on the sale of assets and the movement in our interest rate derivatives, we also reported a record underlying or normalized net profit after tax of NZD 8.6 million for the half year, up NZD 2.7 million, or 36%, on the prior year's interim result. Due to the reduction in debt, combined with reduced interest rates, we have incurred lower finance costs for the half year, down 21% or NZD 232,000 from half year 2025.
Turning our attention now to the company's balance sheet, South Port's gross debt reduced by NZD 6.8 million between December 2024 and December 2025, and is now sitting at NZD 31.5 million, leaving us with headroom of NZD 18.5 million available for future investment. After several years of significant investment in a number of capital expenditure projects, we have seen only a modest increase in our property, plant, and equipment from HY 2025 to HY 2026, up 5%. I would like to reiterate our sound financial discipline when it comes to investing in new growth CapEx projects. Thorough analysis is undertaken with detailed business cases being built to ensure that all growth CapEx projects generate at minimum a WACC return for the port.
We have experienced a positive movement in our net debt to EBITDA compared to the comparative half year, now sitting at 1.1x , previously 1.5x at 31 December 2024. While our underlying operating free cash flow saw a small increase in the half year compared to FY 2025, this was not aligned to the increase in our operating result due to a number of factors, such as increased maintenance CapEx occurred during the period. We expect our total maintenance CapEx for the full year to be around NZD 1 million higher than FY 2025 levels. Higher labor costs incurred, which are associated with a busier period of operations and increased maintenance spend, with several large maintenance projects included in the budget this year, such as a five-yearly tug survey.
Increased tax payments compared to the previous interim period as a result of the level of profitability experienced in FY 2025. As previously noted, South Port aims to maintain a shadow investment-grade credit rating of at least BB B+ . While this is not based on any official analysis by a rating agency, this demonstrates prudence by the company and a reliable indicator of South Port having good credit quality with a relatively low risk of default. In the following section, we will focus on our community, health and safety, and our people. Our community. South Port supports a number of sporting teams and local not-for-profit organizations in both Bluff and Invercargill, both in terms of monetary support and by way of South Port people volunteering their time to help these groups.
An example of this being the funds donated to a local kaupapa Māori health and social service provider, Ngā Kete Mātauranga Pounamu. For the past several years, we've partnered with Ngā Kete and donated money each Christmas to them, which they have then matched. These funds are then used to supply food hampers to their clients based in Bluff, Invercargill and Riverton, who are less fortunate and really appreciate this gesture at what can be a very difficult time of the year for some. Health and safety. As most people are aware, ports operate within very busy environments where multiple parties interact in shared spaces. Therefore, it is important to all at South Port that safety first is always front of mind and the most important value for us here at the port. The safety of our team is paramount.
During the half year, there have been a number of health and safety initiatives that we have been focusing on. These include developing overlapping duties agreements between the port and our key stakeholders. This has been a progressive journey and has delivered a number of positive outcomes for the port, including clear accountability and improved alignment with the PCBU expectations. Engaging an external party to undertake an extensive traffic management review around the port. Enhancing our contractor management processes to strengthen the prequalification requirements of those contractors operating here at the port. And delivering health and safety training to our team, and implementing more technology to help increase our safety awareness. Of course, critical risks and their controls remain a key focus for us here at the port also. Thinking about our people.
As with any good business, our people are our greatest asset, therefore, we would like to thank the South Port Whānau for their dedicated mahi over the past six months. One of the initiatives we have implemented over the past year is the introduction of medical insurance through Southern Cross for our permanent workforce. We have seen this scheme being well utilized in the last six months, giving our team access to private medical treatment that they would otherwise have had to wait a long time for in the public system. At the request of our staff, we have also upgraded our gym on the port, which a number of staff utilize regularly to maintain a healthy lifestyle. During the half year, a new board committee was established, the People and Performance Committee.
This committee will provide a better structure to ensure continued focus on areas such as leadership development, staff culture, and finding and retaining talented staff. We will now take a look at a couple of case studies for various activities occurring at the port. Wind farms. During the half year, two vessels arrived at South Port carrying wind farm components for Mercury NZ's Kaiwera Downs Wind Farm Stage 2. During the second half of FY 2026, we will see another three vessel calls related to this development. South Port has established itself as experts in handling this project, with dedicated storage areas now being established on the port. It is no secret that Southland has world-class, or as some may say, better than world-class wind conditions, given the consistency of wind experienced here.
More wind farms are expected to be built in the coming years, with several currently at the consenting stage. Given South Port's experience with handling these components and the transport routes to most sites achievable through Bluff, we expect that it's highly likely we'll see a number of these projects utilize the Port of Bluff for handling this cargo in the future. Looking at warehousing facilities, South Port has recently purchased the ex-cold stores located along the main street of Bluff, now referred to as the Bluff Freight Centre, or the BFC. This purchase results in additional land and warehousing to add to the port's property portfolio: 4,000 sq m of warehousing and 2,400 sq m of hard standing.
We are in the process of converting these warehouses from cold storage to dry storage, with the intention to be operational by the third quarter of the 2026 calendar year. This is a great example of a relatively low CapEx outlay that should provide an immediate payback. There is growing demand in the region for storage options, and our existing warehouses are being fully utilized at the moment. Therefore, we believe the purchase of this facility is strategically important for the business, and we're confident we will find customers to occupy this site.
Looking forward, in this section, we will cover off business priorities, the outlook, and finish off with a summary. Looking at some of the key business priorities undertaken over the past 12 months, the completion of Project Kia Whakaū and the declaration of the new draught was key to providing the company with greater capacity to grow the trade volumes through the port. To accommodate the expected increase in project cargo, a dedicated 2-hectare area was sealed and established on the Island Harbour. We developed and approved a sustainability strategy, which will increasingly guide our future business decisions going forward. And to strengthen operational resilience, we acquired a second pilot vessel, and as Lara highlighted earlier, secured an additional warehousing facility to provide for greater flexibility and support growth in this part of the business.
Looking forward, the port will undertake a comprehensive port planning exercise to ensure the best use of our land resources as the business continues to expand. With rising Bulk Cargo volumes, increased berth flexibility is essential to enable high productive operations at multiple berths. Having improved the marine function through the channel deepening project, our focus will now shift to landside operations, targeting specific projects to enhance the efficiency of Bulk Cargo movements. We are also pleased to be progressing a formal working relationship with the Awarua Rūnaka . Finally, as container volumes continue to grow, we must build the capacity required to support future expansion. To the outlook, volumes are expected to remain resilient, driven by agriculture, supplementary feed practices, and a strong red meat sector. The New Zealand Aluminium Smelter is expected to maintain normal flows, barring any future demand or response calls.
Strong operating free cash flows are anticipated through to the end of financial year 2026. A number of growth opportunities in energy and aquaculture will require targeted investment, and capital allocation continues to focus on capability building and long-term returns. Final slide. In summary, the half year delivered record results across profit, revenue, and trade, backed by healthy market fundamentals. The port is well positioned for growth, backed by resilient trade, a long-term and a long-term commitment from the New Zealand Aluminium Smelter. There are a number of exciting opportunities for the port and region looking forward that will require strategic investment and detailed planning to execute. Workforce engagement and culture continues to remain a key strength of the business. In the second half of financial year 2026, we expect cargo volumes to continue their positive trends, however, with some uncertainty due to geopolitical risks.
Finally, the company is in an excellent position to benefit from growth and maintain a sustainable dividend moving forward. That now brings us to the end of the presentation, today, and we would invite any questions. As there are no questions, we thank you for your attendance and the ongoing support of South Port, and we wish you a great Friday afternoon. Thanks very much.