KEY POINTS:
Infratil says investors should look past an almost 50 per cent fall in its first-half net profit and instead focus on the rising value of its investments.
The infrastructure investment firm posted operating earnings of $165 million for the period, up from $69 million a year ago, with the big difference being the inclusion of consolidated results for Trustpower for the first time.
Trustpower, which is 50.1 per cent owned by Infratil, last month posted a $63.1 million first-half net profit, which was ahead of last year's $58.9 million only because of the reduction in the corporate tax rate.
Earnings contributions from other divisions were down on the same period a year ago, with the exception of Wellington Airport, where they rose to $27.7 million from $24.2 million.
Infratil's assets also include European airports Stansted, near London, Prestwick, in Scotland, and Lubeck, in Germany.
Softer earnings from most divisions, combined with a $1.45 million net cost associated with financial instruments intended to mitigate against overseas investment market issues and the $5.6 million write off of Australian energy retailer EnergyOne, saw Infratil's net profit fall to $12.5 million from $24.5 million a year ago, a 49 per cent drop.
"It's not easy to look at comparisons because this is the new period in terms of consolidation of Trustpower and full periods of NZ Bus, plus all the bits of pieces that we've done," said managing director Lloyd Morrison yesterday.
"It's a sluggish result," said Forsyth Barr's Rob Mercer.
"Trustpower had a soft half, the European airports are still some way off the earnings level required, New Zealand Bus is punching below its weight while they negotiate to put in place the investment to regrow passenger numbers, and the electricity business in Australia had quite a lot of volatility."
However, like the market, which sold Infratil's shares down just 3c to $2.90, Mercer wasn't overly concerned by the bottom line.
"We're happy with the investment positions they've got in different areas. We see that they're at a point where we think the overall medium term momentum in each of the key assets is set for improvement and that won't really be evident for 12 months."
Morrison's commentary on the results and prospects was generally upbeat, although he said the company generally had a "very cautious" view.
The financial derivatives which had weighed on net profit were: "A form of hedging for a severe market correction, a form of insurance."
Nevertheless, Morrison said Infratil was well placed.
The company's Tim Brown pointed to a 12 per cent increase in the company's market capitalisation over the half year. He said the valuation had nothing to do with semi-annual profitability, but things like the Government's policy initiatives in respect of renewable energy and the carbon regime and Wellington Airport's re-rating and Infratil Energy Australia's "really good" out-turn.
Infratil declared a 2.5c fully-imputed interim dividend.
INFRATIL: SIX MONTHS TO SEPTEMBER 30
The figures for 2007 include consolidated Trustpower results.
Operating revenue
2007 - $699.1m
2006 - $285.7m
Ebitdaf*
2007 - $165m
2006 - $69m
Operating surplus
2007 - $82.2m
2006 - $29.3m
Net profit
2007 - $12.5m
2006 - $24.6m
*Earnings before interest, tax, depreciation, amortisation and fair value of financial instruments
