Auckland Airport: Interim result 2019

If you're a stickler for names, you may prefer Auckland International Airport be re-listed as 'Auckland International Business Park'; the company now earns more from its retail and property investments than from landing fees and other aeronautical charges.

Echoing Sydney Airport's full-year result, Auckland Airport has posted lacklustre numbers for the six months to December: total passengers increased 4% to 10.6 million (more than double the population of New Zealand, we should add), with both international and domestic passenger numbers growing by around 4%.

Fee increases helped to boost aeronautical revenue 6% to NZ$158m. Total revenue, however, increased 12% to NZ$371m, which was helped along by strong growth in retail sales and the company's investment property rent roll, which increased 25% and 15% respectively. The retail figures were high due to an expansion of the Duty Free store's footprint, as well as strong income growth at the Strata Lounge and Collection Point.

Costs broadly rose in line with revenues and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 11% to NZ$277m. Unfortunately, underlying net profit rose a modest 3% to NZ$137m due to higher depreciation expenses and a diminished contribution from the revaluation of the company's property portfolio.  

Several construction and upgrade projects are underway, including a new international arrival area and a new cargo terminal. Various ground transport and parking improvements are also in the works, though the completion of several anchor projects caused a 32% decline in capital expenditure to NZ$132m.

Underlying earnings per share rose 2% to 11.4 NZ cents and the company declared an interim dividend of 11.0 NZ cents, up 2%. Management expects full-year net profit of NZ$265m-275m putting the stock on a forward price-earnings ratio of around 33. With an unfranked dividend yield of 2.9%, we're sticking with HOLD.