Auckland Airport affirms earnings guidance

Article – BusinessDesk

Auckland Airport affirms earnings guidance in busy investment year
By Paul McBeth

Oct. 31 (BusinessDesk) – Auckland International Airport affirmed earnings guidance for a year where the key focus is infrastructure upgrades.

The airport operator expects underlying earnings of between $265 million and $275 million in the year ending June 30, up from $263.1 million. Chair Henry van der Heyden affirmed the guidance before handing over to his successor – Patrick Strange – to speak about the year ahead.

Van der Heyden joined the airport’s board in 2009 and took over the chair in 2013. During that period, shareholders received a $454 million capital return through a share cancellation and have seen the stock price almost double to $6.94. The stock trades at a price-to-earnings ratio of 12.67, below the S&P/NZX 50 index average of 17.06 times, and a dividend yield of 4.05 percent.

The airport is now in a phase of major investment, spending $2 billion in a decade-long programme of facility upgrades. Some of the airport’s revenues are regulated by the Commerce Commission given the monopoly nature of the service. That’s tracked through information disclosures and whether the regulator deems profits to be excessive for a given period.

Auckland Airport’s pricing is currently under review with a final report scheduled tomorrow. The commission’s draft report on Auckland Airport’s pricing found the operator hadn’t sufficiently justified its returns and estimated excessive profits of about $47 million over five years.

The airport operator’s executives and directors didn’t directly comment on the upcoming report at today’s annual meeting. However, chief executive Adrian Littlewood noted the 44 percent increase in passenger numbers since 2012 – the start of the previous regulated period – and said delivering new infrastructure takes time.

“When we initially set out on this upgrade path, no one predicted the unprecedented rate of change in travel and trade markets,” he said.

Strange, who also chairs Chorus, the country’s biggest regulated telecommunications network operator, said the airport was in a phase of “elevated investment” for the foreseeable future. That was required to build not only terminals and other physical assets, but also to improve the organisation.

“We aim to operate a vibrant, dynamic and competitive aeronautical market, to connect Auckland and New Zealand to the world, and to grow sustainable trade and tourism for New Zealand,” he said. “And we want to do it in a way which adds value to both you, our shareholders, and to our community.”



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