Port of Tauranga shares fell nearly 3.4% on Tuesday after the company announced its Quality Marshalling business had lost a contract.
The port bought Quality Marshalling in February for $34 million. The company says the log marshalling contract at Mount Maunganui and Murupara, which accounts for about 60% of Quality Marshalling's revenue, will cease from 1 January next year.
The shares fell nearly 3.4% on Tuesday and another 1.5% on Wednesday morning to as low as $14.20.
Port of Tauranga chief executive Mark Cairns says while the outcome of the competitive tender process is disappointing, there remain significant growth opportunities for Quality Marshalling in New Zealand.
Chief financial officer Steve Gray says the loss is in the nature of contracting.
"We've got the ability now, we've got the staff and all the IT systems to go out and get more contracts," Mr Gray says.
He believes it is very realistic to make up the lost business from new contracts.
Craigs Investment Partners head of wealth research Mark Lister says Port of Tauranga shares have risen strongly lately, gaining 5% in the last month, so any disappointments are likely to result in big share price falls.
He says when Port of Tauranga bought the business it had annual revenues of about $18 million.
"Now they're telling us they've lost a big contract which represented about 60% of those $18 million of revenue, so presumably they've now only got about $7 million of revenue."
He says although it is relatively minor in terms of the entire Port of Tauranga business, which generates revenue of $240 million a year, it is quite a substantial percentage of the Quality Marshalling operation, which the port had not had for very long.
Mr Lister says that may be why the shares were down 3% on a day the market was up slightly.
