Infratil posts earnings drop as buying spree tolls

Infrastructure investor Infratil today posted a sharp drop in nine-month profit, as it re-jigged its investment portfolio to include transport company Stagecoach New Zealand and a string of new airport and energy assets.

Infratil said its net after tax profit, before investment realisations, for the nine months to December 31 fell 35 per cent to $13.1 million, from $20.2 million in the same period a year earlier.

Last year's result was buoyed by investment gains of $22.7m, compared with just $200,000 in the current year -- reflecting a change in direction as Infratil embarked on a buying spree.
Infratil bought Stagecoach's bus services and Fullers ferries in November for $253m, including acquisition costs.

In the year to date it also bought Kent International Airport in Britain for $47m, completed a conditional acquisition of 90 per cent of Lubeck Airport in Germany and bought an 11 per cent stake in small oil and gas explorer Austral Pacific for $9m.

After balance date, Infratil purchased Angaston Power Station in South Australia.

Infratil said the acquisitions had expanded its asset base by 20 per cent and put it in fine fettle for making solid shareholder returns in future, despite the short term earnings hit.

Shares in Infratil eased a cent to $3.84 on the news, against a year high of $4.15 and a low of $3.23.

Earnings before interest, tax, depreciation and amortisation rose by 6 per cent to $49.8m during the period.

Infratil said it experienced a similar fluctuation in reported returns a few years ago when it divested from energy distribution and invested the proceeds in to what was then lower cash earning energy generation and airports.

That strategy appeared to have paid off, with Infratil receiving cash distributions from TrustPower and Wellington Airport of $23.8m and $22.9m respectively for the nine month period.

Infratil's other investments include a 66 per cent stake in Wellington Airport, full ownership of the Glasgow Prestwick Airport in Scotland, an 88 per cent stake in Victoria Electricity and a 35 per cent holding in TrustPower.

Debt levels increased from 24 per cent of market capitalisation as at March 31 to 40 per cent, although this was still conservative gearing, Infratil said.

Looking ahead, Infratil expected its mature investments to continue to perform well, and considerable effort would be made to build activity at its new investments.

Progress at Kent and Lubeck had "surpassed initial expectations" but it would be a few years before the pair contributed to earnings.

Stagecoach was a mature business and Infratil has previously said it would be earnings positive in the year to March 2007.

- NZPA