KEY POINTS:
Auckland International Airport is hopeful full-year profit will be around levels it has signalled after yesterday reporting a six-month result hit by property value writedowns.
A revaluation in property assets around the airport saw a 79 per cent drop in first-half net profit.
The net profit of $9.8 million in the six months to the end of December was down on the $47.6 million reported the previous year. However, excluding the investment property devaluation, profit after tax was up 8.3 per cent to $51.6 million.
Chief executive Simon Moutter reiterated the company's forecast for full-year profit at the lower end of the $100 million to $110 million range before revaluations.
It was possible that the property portfolio may be subject to further non-cash devaluations given weakening commercial real estate values.
During the past six months total passenger volumes rose 2 per cent to 6.6 million, driven by continuing growth in domestic travel. Total aircraft movements were also up 2.2 per cent, reflecting new services, increased frequency, and smaller planes being used on the shorter sectors.
International passenger numbers (excluding transit and transfer passengers) were down 1.2 per cent.
Moutter said his six months in the job had been a baptism of fire.
The global economic environment had been volatile, reflected in the decline in international passenger volumes for the period, particularly from the long-haul flights from the Northern Hemisphere.
However, the short-haul market, particularly transtasman, had remained strong through the introduction of new capacity and airlines and the consequent competition on transtasman airfares, which was helping to maintain passenger demand.
Moutter said during the coming months there were indications of a 1-2 per cent increase in capacity, but this could change.
"We can see all that but we have poor visibility of forward bookings - at the moment we're hearing from airlines that forward bookings are relatively soft but there's so much action at the moment, particularly in the Tasman that that could change," he said.
"At the moment there's no reason to believe that it will be bad but we wouldn't be betting our house on it being highly positive at the moment. We're being circumspect and highly cautious."
Domestic passenger numbers rose 4.1 per cent to 2,872,775 as a result of strong competition in the domestic market and a full six months of service from Pacific Blue compared with two months of service in the previous period. Passenger numbers were affected by the withdrawal of some Qantas services towards the end of the period.
Non-aeronautical revenue increased 8 per cent to $100.7 million, driven by improved rentals from completed developments and rental reviews, combined with further revenue in utility services and general income.
Aeronautical income continues to fall as a proportion of revenue - now 45.3 per cent, down from 45.9 per cent - but increased 5.4 per cent to $83.3 million during the half-year.
More aircraft movements and terminal service charge rises contributed to the increased aeronautical revenue.
Moutter said he wanted to make aeronautical charges more flexible for airlines.
"It's an area of personal challenge for me. I will be looking at how we can make the aeronautical charging structure better - provide more options for airlines, differentiate their service options more to pay a range of prices rather than a single one-size-fits-all model."
The company has no debt due within the next 12 months and has committed available bank funding lines of $289 million. Its debt to enterprise value ratio stands at 34.5 per cent.
The company will pay a fully imputed interim dividend of 3.75c a share, down 2c on last year. Last year's dividend was higher because the company wanted to use surplus imputation credits that would have been lost in a possible change of ownership, in the failed bid by the Canada Pension Plan Investment Board.
An analyst for Forsyth Barr, Jeremy Simpson, said the result showed the airport's resilience in a difficult market. He was forecasting a full year profit on the lower side of $106 million.
Shares in Auckland Airport closed down 2c yesterday at $1.89.
