Dublin Port continued to play an important role in facilitating trade at the heart of Ireland’s largest market in a year that proved to be the most challenging for the Irish economy in generations. These challenges were reflected in reductions in some of the trades handled. Overall trade levels at 26.5 million tonnes fell by 10.4% during the year and were 14% off record volumes experienced in 2007. Dublin Port continued to handle over four times the level of trade compared to 15 years ago and continues to be the port of choice for those accessing Ireland’s largest market.

 

Almost 80% of Dublin Port’s business is made up of what is termed, ‘unitised’ trade which is comprised of Roll-on, Roll-off trucks (Ro-Ro) and Lift-on, Lift-Off (Lo-Lo) containers. The two components of the unitised trade have been impacted differently. Firstly, Ro-Ro units tend to contain time sensitive exports and imports such as foodstuffs to and from markets close to home while Lo-Lo containers contain less time sensitive consumer goods to and from markets further afield in Europe, Asia and beyond such as manufactured consumer goods and some construction materials. Total Ro-Ro Units at 645,000 were down 8.4% on the previous year, while Lo-Lo trade fell by 19% to 548,000 TEU’s.

 

At the half year stage we had predicted that total throughput would fall by 14% at year end. However, we experienced stabilisation in trade in the second half of the year and further encouraging news came in December, when a monthly increase on the corresponding month in the previous year was seen for the first time in 18 months. From April last total monthly trade levels have stabilised at around 2.2 million tonnes per month and the final quarter showed the most resilient figures with trade volumes of 6.9 million tonnes, which was broadly in line with the same quarter in 2008.

 

Our Bulk Liquid trade is comprised of motor fuels and aviation spirit and we handle 45% of Ireland’s trade in these products. Throughput remained broadly in line with the previous year, which was down by 0.6% to 4 million tonnes. The largest falls in trade levels were seen in the Bulk Solid trades (6% of Dublin Port’s throughput) which comprise items such as animal feed, ore exports and construction material and reflect a difficult year in the agriculture sector and significant falls in construction activity. Bulk Solid trade was down 35% to 1.6 million tonnes.

 

Making waves in tourism development
Supporting Irish tourism remains an important focus for Dublin Port Company. For the first time in decades, we reached the threshold of 1.5 million ferry and cruise passengers using Dublin Port. From a ferry perspective, passenger numbers increased by 18% while cruise passenger numbers were in line with previous years. Tourist cars also rose by 30% to 346,000. Cruise Liner activity was stable and at almost 80 calls during 2009 was in line with the previous year. Of particular note during the year was the visit of the Tahitian Princess, where Dublin Port facilitated a “turnaround” cruise, a cruise where passengers finish their cruise here in Dublin and where new passengers start a new cruise. Now Dublin can prove itself as a ‘Home Port’ especially with its proximity to the Airport and International air lift.

As an organisation we are very conscious of the role we can play in helping to drive competitiveness within the wider economy. The Company has taken significant steps to reduce its own cost base over the past fifteen years. As a result of ongoing rigorous cost management, prices to the unitised trade are 10% lower than they were in 1988. Conscious of the difficult trading conditions that our customers are facing, a 5% credit adjustment was introduced in respect of cargo dues for the 2009 financial year.

 

Financial Review
Turnover for the year was €62.9m representing a decline of €7.7m (11%) on the previous year. However, Operating Profit at €25.6m has fallen by just 4.9% from €27m, reflecting the cost reductions achieved by the Company. Operating Costs at €37.2m fell by 15% resulting in an Operating Margin of 40.8% (2008: 38.2%).

 

Driving efficiencies
Investment in the Port’s infrastructure and facilities continued in 2009 with capital expenditure of €22.3 million. The spend included work extending Berth 50 and the infill of Graving Dock number one. In addition, two new tug boats were purchased during the year to replace the Cluain Tarbh and Deilginis.

Payroll costs in 2009, excluding pension costs, amounted to €11.4 million representing a 7.6% reduction on the previous year. The Company’s continued focus on its cost base means that 2009 was the eighth consecutive year in which payroll reductions were achieved. As a result payroll in 2009 was some 40% lower than in 2001.

 

From fridges to bridges
As an island nation we are hugely dependent on using ports to bring goods that bring enjoyment to our lives. Consumer electronics, cars and furniture are just some of the consumer goods handled on a daily basis at the Port. But there are other more unusual visitors through the Port. During the year 15,000 cubic metres of steel for the roof of the newly constructed Lansdowne Road stadium arrived via the Port, as well as a large number of wind farm turbines including the turbine blades that measure almost 50 metres each. Our largest cargo was the new Samuel Beckett bridge which arrived in May on a 90 metre barge from Rotterdam – so it could be said that Dublin Port handles everything from fridges to bridges.

The Port of choice
Dublin Port continued to be seen by importers and exporters as the most efficient way of accessing Ireland’s largest market. During the year Dublin Port Company secured a number of new customers and services. In August a major new Ro-Ro service for Dublin was secured when the Port was chosen by Cobelfret (CLdN s.a. shipping group) as a hub for four new sailings to and from mainland Europe. The new services will see four new sailings per week using larger ships between Dublin Port and the ports of Rotterdam and Zeebrugge. The size of these vessels reflects the international trend towards larger ships. The new agreement also demonstrates the further development of the “Motorways of the Sea”, an EU-wide initiative promoting a modal shift of goods from road to sea.

 

Also, a twice weekly rail service introduced from Ballina, Co. Mayo to Dublin in August, carrying up to 18 units, is operating successfully and is estimated to take 3,750 trucks off the road in a full calendar year, which will have significant benefits from an environmental perspective, as it is the most environmentally sustainable form of transport. This new service reaffirms Dublin Port as a rail hub for the island of Ireland and we are well positioned to handle additional services given the rail infrastructure that exists within the Port estate. Further underpinning Dublin Port’s popularity among shipping companies to access the market of the Greater Dublin Area, was the decision of Seatruck to replace their older vessels with two new vessels on the Dublin to Liverpool route during the year.

 

External recognition of our strategic importance
The role of ports – and Dublin Port in particular as the gateway to the economy - is rightly coming to be seen and treated as a vital part of our programme for recovery. Real jobs in the real trading economy are being valued once again. Our traded goods sector, our ability to invent, to manufacture and to export will be the backbone of our return to competitiveness, renewal and growth. Dublin Port is embedded in this real economy – helping create, sustain and service it.

 

The importance of Dublin Port was perhaps best reflected in the Indecon Report on the future of Dublin Port, commissioned by the Department of Transport under the National Development Plan and published last summer. This Study examined in detail the cost benefit analysis of several scenarios relating to Dublin Port including:

 

• Relocating all or part of Dublin Port’s existing activities to an alternative location/s
• Existing Port activities continuing to expand with demand
• Port activities continuing at current levels with growth being catered for at alternative locations.

 

The conclusion definitively confirmed the strategic importance of Dublin Port, the gateway to the Irish economy, and the Study stated that the expansion of Dublin Port is the appropriate policy at this stage.

 

The Board of Dublin Port Company has formally endorsed the key conclusion of the Report which found, after a detailed cost/benefit analysis of seven different scenarios, that the retention of Dublin Port in its present location, together with on-site expansion, would deliver the highest net present value in cost/benefit terms.

 

The Board has embraced the challenges for the Company that this key conclusion presents and commits to delivering and securing the economic (net present value) return for the State and all its stakeholders.

 

As the country continues to grapple with the fallout from the national and global downturn, it is important also that we look at our approach to strategic investment, our own “stimulus” spending, to help us get out of the recession. The Government rightly wants to identify and continue the capital programme with major infrastructural projects that will help rebuild our competitiveness long term. These projects will also in the short term provide much needed employment in the construction sector in particular.

 

Good “shovel ready” projects are needed which will directly aid our national recovery from this ferocious recession and will make us well capable of taking advantage of the upturn when it comes. While focusing on cutbacks in some areas of expenditure, it is also a time to invest in key strategic areas that will assist recovery. We need to face the future not stand still. We need to nurse recovery along and have our infrastructure in place when it comes.

 

With this in mind our Dublin Gateway proposal is at an advanced stage of An Bord Pleanála’s Strategic Infrastructure project evaluation. We have completed a very rigorous process including a public Oral Hearing and we await the decision of the Board.

 

Commitment to the local community and the environment
In addition to the investment in our business we also invest in our local community as part of our Corporate Social Responsibility programme. We support a broad range of initiatives, from the environment to arts and education, and from sports to social inclusion which have been identified through our ongoing interaction with the local community, through the Community Liaison Committee. The scholarship scheme entered its ninth year and to date has helped 350 students achieve their educational goals. On the social inclusion front, we are proud to continue our association with the Ringsend Response to Drugs initiative which does tremendous work in helping those with drug addiction problems both giving up and staying off drugs.

 

On the sporting front we have entered into a new sponsorship of the Dublin Schoolboys soccer league, we have renewed our sponsorship agreement with Clontarf Rugby Club while also continuing to support Ringsend’s Clann na nGael GAA club. 2009 also saw the launch of the CD, “Songs from the North Lotts”, which celebrates in music and poetry the stories of East Wall residents. Further details of these initiatives are contained in the Annual Report’s CSR statement.

 

We are proud also of the strides we have made in reducing our impact on the environment. Building on our success in 2008 when we achieved ISO 140001 environmental accreditation we have added a number of new initiatives. Among the additional steps are the saving of 200,000 KW hours of electrical usage in Terminal 1, a reduction in fresh water usage of 50% in the Port estate and ensuring that the operation of Poolbeg lighthouse is carbon neutral. Electric vans are also being trialled in the Port.

Pension scheme
The Company’s pension funding position continued to improve in 2009. The funding strategy has been updated to reflect the maturing profile of the fund. Over the next 15 years the fund will move to 100% funding on a “mark-to-market” basis, whereby assets will be progressively switched to bonds in that period as the fund continues to mature. The pension fund contribution in 2009 amounted to €6.5 million and we will continue to contribute in the region of that amount annually over the next 15 years. At year end the value of the pension fund stood at €203.9 million and continues to exceed the Minimum Funding Standard set out in the Pensions Act, 1990. This is a significant achievement for the Company given it has effectively had to build this fund from scratch over a 13 year period, at a time when the Company also had to set aside almost €300 million for capital investment.

Outlook 2010
Following stabilisation of trade levels in the second half of 2009 we predict that this momentum will be maintained in the first half of 2010. Any significant increase in throughput in the second half of the year will be dependent on a number of factors, including improved consumer sentiment for imports and the strength of the Euro against Sterling which is a particular issue for exporters and renewed growth in the economies of our main trading partners. Should these factors turn in our favour, the uplift in trade could bring our total throughput on an annualised basis close to 28 million tonnes by the latter part of the year.

 

Much work has been done to drive efficiencies throughout the Company and this has been achieved through a combination of change management initiatives and investment. This has positioned the Company well to endure during more challenging trading conditions. Therefore, notwithstanding falls in throughput the Company’s profitability will not be irrevocably adversely affected.

We remain committed and able to pay a dividend to our shareholder and the Company is well placed to fund further infrastructural projects, to ensure that we can continue to play an important role in facilitating trade, which is so crucial to our economy right now.

 

Acknowledgements
The strong position that both Dublin Port Company and Dublin Port finds itself in is as a result of a combination of efforts from our customers, staff, management and Board of Directors. I would like to express thanks to our customers for their continued business and acknowledge the contribution they have made to the Port through their ongoing investment.

This is my last review as Chief Executive, following my announcement of my intention to retire after 33 years with Dublin Port Company and its forerunner, Dublin Port and Docks Board, where I have spent the majority of my almost 45 year career. This Port and this Port Company does not run by itself and there is a tremendous team working hard every day to ensure that Dublin Port continues to play its hugely important role in facilitating trade at the heart of Ireland’s largest market. Throughout my time in Dublin Port, in particular my 16 years as CEO, I have enjoyed tremendous support, counsel and hard work from a Board, management and staff, for which I am sincerely grateful. It is through their combined efforts that I can say with pride about Dublin Port that we’re here, we’re near and you can depend on us.