Auckland Airport announces interim results

Auckland Airport announces interim results for half-year ending 31 December 2010
 

·      Strong growth strategy momentum delivering results

·      Uplift in profits and dividends, and

·      Improved outlook for the full 2011 year

Auckland Airport Chair, Joan Withers, said, “Over the last two years, our goal has been to transform the Company from a high-quality builder and operator of aviation infrastructure, to a sales-led engine of economic growth, powered by an expanded airport footprint in New Zealand and Australia, exposure to higher-growth markets, increased airline connectivity and active route development and promotional activity. The results we are announcing today reflect that focus.”

The half-year to 31 December 2010 saw Auckland Airport gain considerable momentum on its growth strategy and achieve an impressive 14.0% improvement in underlying earnings performance. The Chair commented that for the first time in a number of years, the Company had improved its level of profitability and was increasing its interim dividend to 4 cents per share to reflect the level of confidence the Board held that the strategy was delivering a step-change in performance.

Chief executive, Simon Moutter, said, “We have encouraged new air services, particularly from Asia, that will boost our aeronautical revenues, and will also stimulate demand for travel and deliver increased trade and tourism for New Zealand Inc. We have also invested heavily in those aspects of our businesses, such as retail and property, which leverage commercial opportunities from the growth we have attracted. We are now reaping the benefits from that investment.”

Travel Numbers

Improving global aviation market conditions are having a positive effect on travel demand, with international passenger movements at Auckland, inclusive of transits,  up 5.0%, largely due to the continuing improvement in global conditions, and strong Asian visitor arrivals.

Domestic passenger movements at Auckland were up 2.6% in the six months to 31 December 2010, with a noticeable impact from October 2010 on growth as a result of the withdrawal of Pacific Blue.

Queenstown Airport saw significant growth of 36.9% international passengers and 12.1% domestic passengers in the six months to December 2010. Cairns Airport has also seen significant passenger growth of 29.4% in international passengers (including transits) and 7.1% in domestic passengers in the same period, while Mackay Airport grew its domestic passengers by 13.7%.

Half-year Financial Results

Total revenue for the six months to 31 December 2010 increased 8.7%, with airfield income increasing 11.7% to $36.653 million primarily due to a return to scheduled pricing on top of the volume growth effect. 

Retail revenue increased in the period by 12.9%, up to $54.809 million. This excellent result was largely due to the investment in a high-quality retail environment within the airport’s international departures area and an increase in marketing activity and customer choice.

Earnings before interest, taxation, depreciation, fair value adjustments and investments in associates (EBITDAFI) were $151.001 million for the six-month period compared with $138.300 million in 2009 (an increase of 92%).

Market trends   

It is clear that the rapidly developing economies of the World, particularly across Asia, are driving much of the growth in global travel demand.

Our expanded airport footprint offers us opportunities to work with airlines on route networks, with any increased international traffic potentially flowing on into domestic routes, particularly to Queenstown.

Auckland Airport and our airline customers have announced several new or expanded air services over the last six months. These include a strategically important direct service to the third largest city in China, Guangzhou, with the largest airline in Asia, China Southern Airlines, as well as a new Taipei service with China Airlines, and many expanded services with existing airlines such as Air New Zealand, Jetstar, Emirates, Malaysian Airlines, and Thai Airways. 

Mr Moutter said, “New Zealand’s tourism industry must continue to work and invest collectively to overcome our relative disadvantages of scale, funding and end-of-line location in order to win more than our natural share of visitors from these growth markets. We are far from alone in recognising the strategic importance of Asia – we are effectively in a global competition to become a preferred trade and tourism partner. We must ensure we have sufficient and varied air service capacity, competition and connectivity to reach into each market, stimulate in-bound passenger demand, and in turn make more routes economically viable.”

Looking ahead

“Last year we likened our plan to a ‘blueprint’. Today, it is a reality. With the foundations for success in place, and our business units implementing on a daily basis, we are very confident that this strategy is the right one for our Company and New Zealand. Ongoing shifts in global travel and economic trends only serve to reinforce our confidence”, added Ms Withers. 

The board is optimistic about the full 2011 financial year and expects net profit after tax (excluding any fair value changes and other one-off items) to now be at the top end, or a little above, the previously stated guidance of $112.0 million to $118.0 million, noting with caution any potential impacts from rising fuel prices or impacts on travel demand as a result of the Christchurch earthquake disaster.

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