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Auckland Airport announces financial results for half-year

Auckland Airport announces financial results for half-year ending 31 December 2012

Auckland Airport announces financial results for half-year ending 31 December 2012

Reported profit and underlying profit both up

Ambitious growth strategy still driving success

Interim dividend increased

Modest uplift in full-year guidance

Auckland Airport is pleased to record a solid interim result for the six-month period up to 31 December 2012. This continues a run of three consecutive years of profit increase, driven by an ambitious growth strategy and improved operating leverage.

Reported profit after tax for the six-months was up 11.3% to $76.910 million, while underlying profit after tax was up 7.5% to $76.090 million. Total revenue was up 3.6% to $223.552 million, while expenses, excluding depreciation and interest costs, were $57.191 million, up 4.9%.

Shareholders have also benefited from an increase in dividend policy to 100% of net profit after tax, and a more even balance between the interim and final dividends, better reflecting the financial performance of the business.

However, our performance matters to more than just shareholders. Auckland Airport provides and builds connections between New Zealanders and their families, friends, business partners and customers. We play a core role in providing New Zealand exporters and importers with access to markets. Indeed, most New Zealand businesses are dependent to some extent on the air-links provided through our airport infrastructure and through our market development investment. New Zealand’s future economic performance will also be dependent on Auckland Airport’s infrastructure maintaining pace with growth, and its market development work helping to open up more access to business opportunities.

While the effect of the ‘lapping’ of a one-off increase in visitors driven by the 2011 Rugby World Cup tournament has had some effect, this was not especially significant in overall terms. It accentuated the decline this year in visitors from some key markets, particularly United Kingdom and Europe, but total demand for travel, both nationally and internationally, has continued to prove resilient to global upheavals and domestic fluctuations.

The result includes elements that make direct comparison to the prior half-year reporting period to December 2011 difficult, particularly aeronautical revenue reflects the restructuring of aeronautical charging introduced in July 2012 following consultation with substantial airline customers. This includes a reduction in international charges, increase in domestic charges, discontinuance of a terminal service charge, removal of some domestic lease charges and introduction of a domestic and transit passenger charge.

The half-year also saw a continued and ambitious air-service and market development focus on expanding New Zealand tourism and trade opportunities, particularly with the significant, and diverse, Chinese market.

As we have flagged in recent reports, the passenger experience at the domestic terminal is deteriorating and needs to be addressed to accommodate growth in travel demand. Some shorter-term remediation is now underway while the decisions on the best longer-term solution for New Zealand’s primary domestic travel hub near completion. Whatever the final decision in relation to this essential national transport infrastructure, it will require significant capital expenditure and sufficient confidence in an appropriate return on the investment.

We look forward to the second half of the 2013 financial year with growing confidence. Our business strategy remains on track. Future opportunities to capture the next phase of growth and expand our already significant contribution to New Zealand’s economy are, allowing for appropriate returns on our infrastructure investment and continued execution, eminently achievable.

At the beginning of the 2013 financial year, we outlined expectations that the net profit after tax (excluding any fair value changes and other one-off items) would be between $143 and $150 million.

Performance for the first six months has been slightly ahead of expectations, particularly domestic passenger volume growth. While challenges to aviation demand remain, we now have a modestly higher expectation for the FY2013 period. We are therefore lifting our guidance for the full year to between $145 and $153 million, subject to any material adverse events, significant one-off expenses, non-cash fair value changes to property, and volatility in global market conditions or other unforeseeable circumstances.


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