21 February 2008
There was solid growth in revenue and operating earnings, before interest, tax and depreciation in the first half of the 2008 financial year.
The company also made significant progress on a range of key business development projects, including completion of the domestic terminal renovation, development of the international terminal and commencement of the first stage of the northern runway.
Operating earnings before interest, tax and depreciation (Operating EBITDA) increased 7.3 per cent to $135.396 million. The company has expensed $5.8 million of costs associated with the various ownership proposals considered over the last year. As a result of these costs, combined with increased interest and depreciation charges, profit after tax was down 3.9 per cent to $47.590 million. On a normalised basis, after adjusting for the ownership costs and a reduction in the company's long-term incentive plan provision, profit after tax increased 5.1 per cent to $52.072 million.
There was a strong performance at the revenue line, with total revenue for the first half up 7.9 per cent to $172.325 million.
Auckland Airport chairman, Tony Frankham, said, "The company has delivered another good result, particularly in terms of total revenue. Growth was achieved across all major revenue lines, with retail, car parking and rental income achieving double digit growth. However, the company also experienced increased operating expenses, as well as some one-off costs associated with the ownership proposals. As expected, there was also an increase in depreciation and interest costs directly associated with the company's investment programme, combined with higher interest rates".
Total passenger movements increased 4.9 per cent to 6,449,543. There was strong growth in domestic passengers which increased 8.7 per cent, driven in particular by the start of Pacific Blue's domestic services. International passenger movements (excluding transits and transfers) increased 3.2 per cent to 3,267,504. There was solid growth in New Zealand and Australian travellers. Some of the other key markets, such as the United Kingdom and the United States of America, showed declines. However, there was continued strong growth from new markets such as China and India.
Aeronautical revenues increased following the completion of several significant terminal expansion and security projects last year and new aeronautical prices which applied from 1 September 2007. The company's retail activities performed very well. Retail income was up 10.4 per cent. This resulted from new store openings, successful concession tenders, enhanced service offerings and increased passenger spend rates. Car parking income, up 15.5 per cent, benefited in particular from strong trading at the domestic terminal. Rental income was 15.7 per cent higher, driven strongly by new rental streams from properties completed over the last year.
Don Huse, chief executive, said, "The company has continued to make significant progress across a broad range of key initiatives over the last six months. This included the completion of the "extreme makeover" and upgrade of the domestic terminal precinct in December. Progress continues on the expanded arrivals project (to be completed mid-2008) and the first stage of the new Pier B at the international terminal (to be completed September 2008). Engineering work has also commenced on the first stage of the northern runway. This is expected to be operational in early 2011. Delivery of these major projects has enabled the company to deliver significant value uplifts in terms of business development, service offerings and related pricing adjustments."
Mr Frankham said, "The directors remain positive about the long-term growth prospects for the business. The company is ideally placed to benefit from the expected significant growth in traffic, particularly in the Asia-Pacific region, over the medium-term. Over the past four years, the company has worked hard and effectively to put in place the much needed capacity and enhanced service standards to leverage this growth. Our major carriers are actively expanding their fleets and introducing new routes and services.
In the short-term, however, the impact of the global macro-economic environment combined with a slowing in the domestic economy, reduce the expected level of passenger growth for the remainder of this year. Although there is strong growth in domestic passenger numbers, there are signs of a levelling off in international passenger growth, with a higher New Zealand currency and higher oil prices being important factors. The current global credit tightening is also expected to further increase the company's funding costs over time.
The directors have announced a fully imputed dividend of 5.75 cents per share, compared with last year's interim dividend of 3.75 cents per share. As a prudent measure, the directors have increased the interim dividend by 2.00 cents per share in order to utilise the surplus imputation credits that would be lost if the current takeover offer from Canada Pension Plan Investment Board (CPPIB) is successful. It is expected that the final dividend will be reduced by an amount of 2.00 cents per share, reflecting the increased interim dividend paid to shareholders now.
The interim dividend has a record date of 7 March 2008 and will be paid out to shareholders on 12 March 2008, the day before the CPPIB offer closes.
The terms of the partial takeover offer from CPPIB provide that no dividend shall be declared or paid during the offer period, which is a standard term of a takeover. The offer terms also provide that CPPIB may waive this condition with the result that the offer price per share shall reduce by the amount of the dividend. CPPIB has consented to the payment of this interim dividend and the adjustment to the offer price.
Accordingly, the impact of this is that the offer price under the CPPIB offer will be reduced by the amount of the interim dividend from $3.6555 per share to $3.5980 per share.