Auckland Airport profit tumbles

Thursday 19th February 2009

Auckland International Airport, New Zealand's busiest gateway, posted a 79% drop in first-half profit after reducing the value of the company's investment property portfolio.

Net income fell to $9.8 million in the six months ended December 31, from $47.6 million a year earlier, the company said in a statement today. Earnings rose 8.3% to $51.6 million excluding property revaluations. Revenue gained 6.8% to $184 million.

"The impact of the global macro-economic environment combined with a likely slowing in the domestic economy will likely put downward pressure on passenger volumes for the remainder of the year," the company said. The long-term outlook "remains positive," reflecting a likely return to demand growth in tourism and the benefits of a weaker currency, it said.

The airport operator reiterated its forecast for full-year profit to be at the lower end of a $100 million to $110 million range, excluding property devaluations. Property values may fall further through this year as land prices weaken, it said. It cut the value of the properties by 8%, or $41.8 million.

The shares fell 0.5% to $1.90 today after the company lowered its first-half dividend by 2 cents to 3.75 cents, fully imputed. The stock has gained 16% so far this year. The company has added a gateway that can accept the new Airbus A380 planes and bolstered its retail space while developing its property holdings around the airport. Increased rivalry on Trans Tasman routes should help underpin short-haul traffic though overall volumes are likely to be down this year.

In December, Auckland Airport announced it was reorganising into three business units, recognising the growing importance of its property holdings while winding back its engineering unit.

The changes represent a shift away from building infrastructure and capacity after the company expanded its retail space and boosted capacity of its air bridges, chief executive Simon Moutter said.

By Jonathan Underhill

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