Auckland Airport reported profit and underlying profit up

Auckland Airport announces interim results for half-year ending 31 December 2011

• Reported profit and underlying profit both up
• On track for higher end of full year guidance
• Good passenger growth at all four airports
• Dividend increased to 4.40 cents per share
• Growing need to address constraints at Auckland domestic terminal facilities

Overview

Auckland Airport today announced a reported profit after tax of $69.103 million for the six month period ended 31 December 2011, up 5.5% on the same period last year. Underlying profit after tax was up 15.0% to $70.791 million.

“Initiatives to lift Auckland Airport’s performance contributed to another strong result in the six-months,” said Auckland Airport’s Chair, Joan Withers. “Our efforts have been rewarding for investors. The interim dividend has increased to 4.40 cents per share, underlining the Board’s confidence in the execution of strategy. The last two
financial years have seen total shareholder returns per annum in excess of 20%, and we are on track for another solid performance this year. These results reflect our efforts to deliver excellent value to shareholders, passengers, business partners and New Zealand.

“We have seen rising travel demand across all four of our airport interests, and we have helped to stimulate that demand by encouraging sustainable growth in air-service capacity. Recognising the changing architecture of global travel and trade, we have continued to focus our market development efforts on expanding sustainable access to those markets that are experiencing faster growth.”

Auckland Airport’s chief executive, Simon Moutter, said, “We have also further honed the performance of our aeronautical, retail and property businesses, by expanding choices and amenities for customers, improving the service experience, and driving operational efficiencies wherever we can. Each part of our business is performing well relative to their peers and to market conditions.”

Domestic terminal

Mr Moutter also said that considerable effort has also gone into necessary future planning. “As previously indicated, we are experiencing capacity constraints and sub-optimal performance at the current domestic terminal. The heart of the domestic terminal was built over 40 years ago. Today, it is becoming increasingly inadequate in terms of available space and passenger handling capacity, especially with the increasing use on domestic routes of new, larger aircraft such as the A320.”

While an expansion of the security screening area at the domestic terminal in time for RWC 2011 relieved some pressure, more A320 services are due to be progressively introduced over the next few years and passenger numbers are expected to grow.

“All the parties involved recognise the need to address this situation before it becomes a major issue,” said Mr Moutter. “Over recent months, we have been consulting actively and constructively towards the best pathway for a new domestic terminal solution with our airline partners and with input from independent experts. That process is continuing and we expect to see an outcome in the next few months,” said Mr Moutter.

Passenger Numbers

Total international passenger movements at Auckland Airport, including transits, increased 6.5% to 3.964 million in the six months to 31 December 2011. Total domestic passenger volume growth was more muted, up 0.9% to 3.130 million. The six-month period saw particularly strong growth out of Singapore, China, Australia and, reflecting the RWC 2011 influence, the major rugby playing nations of Europe in September and October. New Zealand outbound travel also increased.

Queenstown Airport had another big international passenger volume increase of 30.1% to 118,840. Its domestic volumes also reflected increases in air-link capacity, growing 3.9% to 399,070.

Cairns Airport experienced good international passenger growth, up 6.7% to 423,735, while its domestic operations reflected the flat Australian domestic tourism market, largely driven by the strong Australian dollar which is motivating outbound international travel, steady at 1.731 million. Mackay Airport bucked the sluggish Australian domestic travel trend, with the booming resources sector continuing to fuel strong domestic growth, up 6.3% to 570,497.

Results in more detail

The half-year financial results reflect consistent execution of growth strategy across all parts of the business.

Revenue was $215.867 million, up 8.9% on the previous corresponding six month period. In particular, there was a strong performance from the retail and car-parking businesses. There were also pleasing income increases in both the aeronautical and property businesses, with aeronautical up 6.0% and the property division’s income up 10.0% on the previous period.

The dividend has been increased to 4.40 cents per share. The Company’s dividend reinvestment plan will not apply to this dividend, but will be reconsidered by the Board for future dividends.

While there remains a focus on tight management of costs, expenses were up 15.3% to $54.506 million. This was largely the result of expenditure on operational support and maintenance ahead of the RWC 2011, phasing of investment in air-service route development, which will ameliorate in the second half of the year, and an increase in
master-planning activities. Depreciation expenses were $31.751 million, up 10.5% on the previous corresponding period.

Earnings before interest, taxation, depreciation, fair-value adjustments and investments in associates (EBITDAFI), were up 6.9% to $161.361 million. Earnings per share on underlying profit was 5.3 cents per share for the six months ended 31 December 2011, compared with 4.7 cents per share from the corresponding period for the six months ended 31 December 2010.
Share of profit of associates (comprising North Queensland Airports, Queenstown Airport and Auckland Airport Hotel Holdings Limited), was $2.713 million up 219.9% on the corresponding period, reflecting a significant increase in return from North Queensland Airports, and the commencement of returns from the Novotel Auckland Airport hotel.

North Queensland Airports had an excellent six months, with our shareholding return in cash received relating to the period up 27% to AUD4.836 million. This was underpinned by revenue growth of 7.4% to AUD 57.320 million, with EBITDAFI up 16.2% to AUD 37.513 million.

Queenstown Airport reported a small decline in profit, down 5.1% on the prior corresponding period to $2.817 million. While revenue growth was solid, up 9.9% to $8.478 million, and EBITDAFI was also up 4.9% to $6.154 million, there was an increase in costs arising from higher aeronautical costs from longer terminal opening hours, increased marketing support to airlines and one-off snow clearing expenses following two winter 2011 storms.

The RWC 2011 was a major operational success at Auckland Airport. Alongside all our airport partners, we delivered a successful, safe and smooth airport experience for many thousands of travellers, fans, players and officials. Financially, we believe that the tournament delivered an additional non-seasonal peak to the business in terms of passenger volumes and retail spend, which we estimate to have delivered a modest one-off boost to the bottom line.

Looking ahead

The second half of the 2012 financial year has started well, particularly in terms of passenger volumes, with January 2012 notable for featuring the busiest week for international arrivals and departures ever recorded at Auckland Airport.

At the beginning of the 2012 financial year, we outlined our expectations that the net profit after tax (excluding any fair value changes and other one-off items) would be in the $130 millions. We are firmly on track to meet the higher end of this guidance, subject to any material adverse events, significant one-off expenses, non-cash fair value changes to property, and further volatility in global market conditions or other unforeseeable circumstances.

Ends
Refer pdf attachments: Financial Report / Results at a Glance / Company Report / NZX Appendix
http://img.scoop.co.nz/media/pdfs/1202/Media_Combined.pdf

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