KEY POINTS:
Auckland International Airport says it is still an attractive takeover target, despite rejecting a potential Canadian bidder.
Chief executive Don Huse said yesterday that the airport was set for strong earnings growth and, as a publicly listed company with an open share register, it would inevitably attract overseas
interest.
"The investment characteristics of airports, and particularly port-of-entry ports like Auckland, have become greatly appreciated," Huse said.
He said the company was set to deliver 7 per cent growth in earnings before interest, tax, depreciation and amortisation (ebitda) in the year to next June, in line with analysts' expectations, with prospects further out looking very strong.
Airport assets globally have attracted investors because of their stable, long-term revenue streams, fuelled by a boom in air travel.
Huse said Auckland Airport's passenger numbers would continue to grow, citing bullish economic conditions in New Zealand's main tourist target markets around Asia, such as China and India.
"GDP growth per capita is one of the most significant underpinnings of the aviation industry," he said.
On Wednesday, Auckland Airport rejected the Canada Pension Plan Investment Board proposal for a 39-49 per cent holding - which valued the company at up to $4.8 billion or $3.90 a share - as not in the best interests of shareholders. Shares closed up 1c yesterday at $2.88.
The majority of board members opposed the plan because it would have increased the company's risk of exposure by tripling debt.
Through the takeover process, some analysts queried whether the company would be able to return capital to shareholders.
"You can argue, if you look at our peers, that we could carry more debt. That having been said, you need to make sure it takes account of the long-term corporate aspirations," Huse said.
"It's comfortable, but it's a matter we keep under continual review."
Auckland Airport, which handles more than 70 per cent of New Zealand's international traffic, expects annualpassenger numbers to double to 24 million by 2025.
On August 23 the company reported a 10.9 per cent fall in annual profit to $92 million, but said the outlook was positive.
Ebitda was $252.7 million, adjusted for one-off staff incentive payments.
Analysts surveyed by Reuters Estimates have forecast ebitda of $270.7 million for the current fiscal year.
The airport is near the end of a $500 million upgrade programme, which was boosted on October 26 by the announcement of a further $180 million work on the terminal, which Huse said would be funded by a combination of retained earnings and debt.
Capital expenditure is forecast to fall from $161 million in the June 2008 year to $113 million the following year and below $100 million in 2010 and Huse said once the spending cycle eased and the capacity improvements were in place, the company's performance would be very strong.
In September a bid from Dubai Aerospace for a 51-60 per cent stake in the airport was scrapped amid accusations the airport company had not done enough to promote the deal after it ran into opposition from politicians, the public and minority shareholders.
- Reuters
