Christchurch Airport continues strong run

Christchurch International Airport Limited (CIAL) has recorded another record year in FY19. Excluding the impact of fair value gains on investment properties, underlying profit before tax[1] for the year was $66.9 million against $57.2 million for FY18 (+17%). This continues what has been a strong run, with underlying profit before tax having grown from $14.3 million five years ago in FY14 to $66.9 million in FY19.

The CIAL Board has declared a full year total dividend of $43.3 million for FY19, against $40.4 million in FY18 (+7.3%) and $7.6 million in FY14. This is the fourth year in a row the airport company has produced both a record underlying profit and a record dividend for shareholders.

During FY19, the airport handled 6.93 million passengers, up 65,000 on FY18. Passengers travelled on 73,000 flights, up 2% on FY18. Total operating revenue for the year grew to $187.4 million ($177.6 million in FY18, up 5.5%), operating costs were held at the level of the previous year and this allowed EBITDAf[2] to grow to $125.5 million ($115.7 million in FY18, up 8.5%).

Net profit after tax for the year (including fair value gains on investment properties) was $57.5 million, compared to $88.7 million in FY18. This was due to the reduction in the amount of fair value gains on investment properties to $13.1 million in FY19, as compared to $53.7 million in the prior year - noting fair value property adjustments are influenced by completion of new developments and the timing of revaluation reviews.

In key international markets over the past two years, Christchurch Airport (CHC) grew faster than New Zealand has overall, with international visitor arrivals from China up 34.1% (NZ grew 5.8%), Hong Kong up 44.7% (NZ grew 13.5%) and Australia up 7.3% (NZ grew 4.4%).

“The international growth reflects the past five years of positive and committed strategy activation in key markets under ‘South’, the airport’s international marketing programme. ‘South’ has focused on chasing very well defined market segments in these markets which are of higher value to the airline and to the country than pure volume based strategies”, says Chief Executive Malcolm Johns.

The company invested a further $63 million in investment property, which will increase future revenue, dividends and shareholder value. This compares to $68 million invested in FY18.

The company expects Fletchers to complete the overdue Novotel Christchurch Airport in time to open its doors around the end of 2019. “Whilst we’re disappointed it’s overdue, the hotel is looking outstanding and the restaurant, bar and functions rooms on the 6th (top) floor have the most amazing views of Canterbury and Christchurch”, says Johns.

He says the highlight of the past financial year has been the way the whole team has worked incredibly hard to hold operating costs at last year’s levels. “That takes a constant focus on productivity and a positive working relationship with key suppliers to ensure we are optimising what we are doing together to make the airport run every day.

“The airport campus now has around 7,000 people working on site in more than 260 companies and handles an average of around 140,000 members of the public who make a visit every week.

“That’s more than the population of Dunedin on our campus every week of the year”, he says.

Malcolm Johns says the year ahead is looking more challenging, with the domestic market and some key international markets looking softer than they were a year ago.

[1] Underlying profit before tax is defined as profit before tax less fair value gains on investment properties.

[2] EBITDAf is defined as net profit after tax plus interest expense, plus tax expense, plus depreciation and amortisation, less fair value gain on investment properties, less gain on disposal of assets.

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