KEY POINTS:
Takeover target Auckland International Airport has reported a 3.9 per cent fall in first half net profit after tax to $47.6 million.
The company said today that the fall in profit was a result of $5.8 million of costs associated with various ownership proposals considered during the past year, combined with increased interest and depreciation charges.
On a normalised basis, after adjusting for the ownership costs and a reduction in the company's long-term incentive plan provision, profit after tax for the six months to December 31 increased 5.1 per cent to $52.1m, AIA said.
AIA also said that despite speculation, no decision had been made on revising its recommendation that shareholders reject a partial offer from the Canada Pension Plan Investment Board (CPPIB).
Total revenue was up 7.9 per cent to $172.3m.
A fully imputed interim dividend of 5.75 cents per share was declared, compared with last year's interim dividend of 3.75cps.
The company said the interim dividend was increased by 2cps in order to utilise surplus imputation credits that would be lost if the CPPIB offer was successful.
It was expected the final dividend would be reduced by 2cps reflecting the increased interim dividend paid to shareholders now.
CPPIB said it had consented to the 5.75cps interim dividend, waiving a clause of its partial takeover offer to enable the dividend to be paid.
In accordance with the offer, the amount paid under the takeover offer for each AIA share would be reduced by 5.75c to $3.598 to reflect the dividend and the resultant decrease in AIA's equity value.
AIA said solid growth was achieved during the half year in revenue and operating earnings, before interest, tax and depreciation.
It also made significant progress on a range of key business development projects, including completing a renovation of the domestic terminal, development of the international terminal and the start of the first stage of the northern runway.
Operating earnings before interest, tax and depreciation (operating ebitda) increased 7.3 per cent to $135.4m.
Airport chairman Tony Frankham said growth was achieved across all major revenue lines, with retail, car parking and rental income achieving double digit growth.
But the company also had increased operating expenses and, as expected, there was also an increase in depreciation and interest costs directly associated with the company's investment programme, combined with higher interest rates.
In the short term the impact of the global macro-economic environment combined with a slowing in the domestic economy, reduced the expected level of passenger growth for the remainder of this year, Mr Frankham said.
While domestic passenger numbers were growing strongly, there were signs international passenger growth was levelling off, with a higher New Zealand currency and higher oil prices being important factors.
Global credit tightening was also expected to further increase the company's funding costs over time, he said.
In the longer term, directors remained positive about growth prospects.
"The company is ideally placed to benefit from the expected significant growth in traffic, particularly in the Asia-Pacific region, over the medium term," Mr Frankham said.
During the past four years, the company had worked hard and effectively to put in place much needed capacity and enhanced service standards to leverage that growth.
"Our major carriers are actively expanding their fleets and introducing new routes and services."
AIA said total passenger movements increased 4.9 per cent to 6.45m, with domestic passengers up 8.7 per cent, driven in particular by the start of Pacific Blue's domestic services.
International passenger movements, excluding transits and transfers, increased 3.2 per cent to 3.27m, with solid growth in New Zealand and Australian travellers.
Some other key markets, such as Britain and the US showed declines, while strong growth continued from new markets such as China and India.
Aeronautical revenues increased following the completion of several significant terminal expansion and security projects last year and the introduction of new aeronautical prices from last September, AIA said.
Retail income was up 10.4 per cent as a result of new store openings, successful concession tenders, and increased passenger spend rates.
Rental income was up 15.7 per cent higher, with new rental streams from properties completed over the past year.
Chief executive Don Huse said significant progress had been made across a broad range of key initiatives during the past six months.
That included completing the "extreme makeover" and upgrade of the domestic terminal precinct in December.
Progress continued on an expanded arrivals project to be finished by mid-2008, and the first stage of the new Pier B at the international terminal to be finished by September.
Engineering work had also started on the first stage of the northern runway expected to be operational in early 2011.
AIA shares closed at $2.75 yesterday, having ranged between $3.50 and $2.17 in the past year.
- NZPA
