Auckland International Airport reported muscular interim results yesterday, with profit and revenue experiencing double-digit rises, and brushed aside disclosures this week that it was chasing a former employee over $1.84 million in "unexplained transactions".
The country's largest airport reported a 25 per cent lift in first-half profit due to increasing passenger numbers from a rise in tourism, as it plans to spend up to $260 million this financial year to expand facilities.
Net profit rose to $115.8 million in the six months ended December 31, from $92.8 million a year earlier, the Auckland-based company said in a statement. Revenue for the national gateway rose 12 per cent to $280.6 million.
On Wednesday the company issued a statement to the NZX reporting that an investigation by auditors EY had discovered at least $1.84 million in unexplained transactions, resulting in a complaint to authorities and the start of civil action against a former employee. The Serious Fraud Office is now investigating the case.
The Herald understands the staff member involved, who was sacked as a result of the investigation, worked in a non-executive role.
Airport chief executive Adrian Littlewood said while the $1.84 million in unexplained transactions was immaterial, a decision was made to inform the market regardless.
"We simply have a philosophy of wanting to be open. But the statement stands on its own. I'll leave it with authorities: We've done the right thing and notified them and now they're doing their job," he said.
Littlewood said it was likely insurance would cover losses from the episode. "I'd presume so, but I don't know the details to be honest," he said.
Aside from the unexplained transactions, Littlewood described the interim results as "strong", with improvements in performance across the board.
The results come as the total number of passenger movements was up 6.7 per cent to 8.4 million, with international passengers up 7.2 per cent to 4.3 million.
New Zealand tourism over the past few years has been on a growth curve, despite the higher dollar.
Revenue growth was also underpinned by strong retail performance and growth in aeronautical, property rental and transport income.
Auckland Airport chairman Sir Henry van der Heyden said the company had continued growth across the business, underpinned by new routes, new airlines, and increasing passenger numbers.
"This growth pleasingly occurs at a time when we have lifted our capital investment programme, ensuring we can upgrade and expand our terminals and airfield capacity for passengers and airlines, in turn delivering real benefit to the travelling public."
Littlewood said a recently-boosted capex budget for the coming year to $260 million was the result of planning with clients and partners for growth.
He said the major change seen by visitors to the airport would be at the international terminal, which would have an overhaul to the security processing areas and 55 per cent more leased retail space.
"They'll also see some changes at the domestic terminal, as we're adding some facilities there for JetStar's regional launch," he said. Littlewood said the company's fortunes were largely tied to the country's tourism industry.
"New Zealand tourism over the past few years has been on a growth curve, despite the higher dollar. The first challenge we face is ensuring how we as a country and an airport get our share of tourism internationally."
The company's shares closed yesterday at $6.34, up 45c from the previous day.
The stock is rated an average "sell" based on six analyst recommendations compiled by Reuters, with a median target price of $4.65.
Six months to Dec 31
$280.6m revenue, up 12 per cent
$115.8m profit, up 25 per cent
8.5c interim dividend
$260m capital spending, next 12 months
- Additional reporting BusinessDesk