Announcement

INTERIM: AIA: AIA - 1H19 Interim Results 08:30a.m. 
AIA  
22/02/2019 08:30  
INTERIM  
PRICE SENSITIVE  
REL: 0830 HRS Auckland International Airport Limited  
 
INTERIM: AIA: AIA - 1H19 Interim Results  
 
Media Release | 22 February 2019  
 
Auckland International Airport FY19 Interim Results: Positive start to year  
as airport progresses anchor infrastructure projects  
 
Auckland Airport today announced its financial results for the six months  
ended 31 December 2018.  
 
Patrick Strange, Auckland Airport's Chair, says, "As one of New Zealand's  
busiest hubs for tourism, trade and travel - it has been a positive six-month  
period for Auckland Airport, during which we reached some significant  
milestones in our 30-year programme to build the airport of the future."  
 
"We are starting to see the early benefits of our multi-billion,  
inter-generational aeronautical infrastructure programme delivering  
significant new capacity, resilience and choice for our customers, airlines  
and operational partners."  
 
"During the six-month period we completed important terminal and  
transport-specific projects as well as making significant progress on the  
design, planning and procurement phases of our airport of the future  
infrastructure programme."  
 
Total passenger numbers at Auckland Airport grew by 3.7% to 10.6 million.  
International travellers (excluding transit) reached 5.3 million (up 4.4% on  
the first half of FY18), predominantly driven by additional capacity on  
Asian, Pacific Island and North American routes. International transit  
travellers were down 5.2% to 0.5 million. Domestic travellers increased by  
4.0% to 4.8 million, primarily driven by additional capacity on main trunk  
routes.  
 
Auckland Airport recorded revenue growth of 11.5% against the prior  
corresponding period to $370.6 million. Earnings before interest expense,  
taxation, depreciation, fair value adjustments and investments in associates  
(EBITDAFI) increased by 10.8% to $277.1 million. Reported profit after tax  
was $147.2 million with an underlying net profit increase of 2.9% to $136.9  
million.  
 
Queenstown Airport also saw strong passenger growth in the period, with total  
passenger numbers growing by 9.3% to 1.2 million. The underlying profit share  
from Queenstown Airport decreased 4.5% to $2.1 million due to one-off  
expenses relating to its long-term master planning as well as increased  
depreciation and amortisation costs. While occupancy at the Novotel Hotel  
remained strong during the period, higher operating costs resulted in a  
decrease in Auckland Airport's share of underlying profit by 4.5% to $2.1  
million. Our total share of the underlying profit from associates was  
significantly down on the prior period, which is largely attributable to the  
sale of our interest in North Queensland Airports in 2018.  
 
Airport of the future programme  
 
Mr Strange says, "As market conditions have changed over the last two years  
and as we have transitioned into more detailed design and planning stages for  
a number of major projects, we now have greater clarity about the complexity  
of the development programme in our live operating environment and the  
challenges associated with New Zealand's construction market."  
 
"We have made considerable progress over the past six months, working closely  
with our airline partners to understand their requirements for the new  
domestic jet facility and international arrivals projects in particular.  
These deeper design insights will deliver improved project outcomes in the  
future including planning certainty, improved cost control and a realistic  
and achievable build programme."  
 
"This process has led to some scope and sequencing changes for individual  
projects within the airport of the future programme, which we remain  
committed to."  
 
"Changes to the timing of some infrastructure projects and project sequencing  
reviews has supported other aeronautical projects coming forward. Several  
anchor projects are currently in procurement stages - including work on our  
northern stands and taxiways and northern road network. These are critical  
enabling or capacity projects to support the wider airport development  
programme. We have also identified a new location for a new cargo terminal  
facility, allowing us to initiate a staged relocation of current cargo  
facilities away from the terminal precinct," he says.  
 
During the period Auckland Airport continued to improve its benchmark  
customer satisfaction 'Airport Service Quality' (ASQ) scores - in both the  
international and domestic terminals.  
 
"Going into this next phase of construction we are particularly aware that  
our travellers and airlines rely on us to provide safe, timely and efficient  
services every day, and we take that responsibility seriously. This will  
remain at the forefront of our planning and operations as our investment  
journey continues," Mr Strange added.  
 
Major international terminal infrastructure completed  
Mr Strange says, "In the six-month period we completed the second of two  
major terminal expansion projects, delivering a combined 55,000 m2 of newly  
built or refurbished international terminal infrastructure.  
 
"Our airport of the future programme also generated significant new training  
and employment opportunities during the period, with Ara, Auckland Airport's  
jobs and skills hub, having assisted a further 159 local people during the  
period into new roles directly aligned to meeting the future growth and  
development needs of the airport and wider South Auckland community," he  
says.  
 
Aviation markets  
 
Tourism and trade markets performed in line with expectations despite a  
changing aviation market. North America and New Zealand outbound tourism  
remained strong while the Chinese market continued to moderate - offset by  
emerging Asian markets outside China, notably a quadrupling in passenger  
numbers on services from Indonesia and the Philippines.  
 
New capacity was added to the network with Singapore Airlines adding a new  
daily flight to Singapore, Air New Zealand launching new direct services to  
Chicago and Taipei, and United Airlines returning to year-round services.  
 
Outlook  
 
Our profit outlook for the 2019 financial year remains unchanged. We expect  
underlying net profit after tax (excluding any fair value changes and other  
one-off items) to be between $265 million and $275 million. This would  
deliver growth in the underlying earnings per share of up to 4.5% in 2019,  
which is slower growth than in recent years reflecting:  
 
o the second year of lower international passenger charges to airlines of the  
new five-year aeronautical pricing period; and  
o increasing interest and depreciation expenses associated with the recent  
step up in our infrastructure build.  
 
The additional time invested in the formative stages of our key anchor  
projects has led to lower capital expenditure than planned for the first half  
of the 2019 financial year. We now expect total capital expenditure for the  
2019 financial year to be between $280 million and $330 million, down from  
the previously indicated range of $450 million to $550 million.  
 
We are still forecasting that the total value of commissioned aeronautical  
assets for the 2018-2022 financial years will be broadly consistent with the  
five-year forecast envelope released to the market in mid-2017.  
 
This outlook remains subject to factors such as material adverse events,  
significant one-off expenses, non-cash fair value changes to property, and  
deterioration as a result of global market conditions or other unforeseeable  
circumstances.  
 
In regard to Auckland Airport's regulatory and aeronautical pricing update,  
please refer to our press release 'Auckland Airport to reduce prices to  
airlines' issued today.  
 
ENDS  
 
For further information please contact:  
 
Media:  
Stephanie Crush  
+64 27 801 9377  
stephanie.crush@aucklandairport.co.nz  
 
Investors:  
Stewart Reynolds  
+64 27 511 9632  
stewart.reynolds@aucklandairport.co.nz  
End CA:00330910 For:AIA Type:INTERIM Time:2019-02-22 08:30:44