After-tax AIA profit rises 11%

Auckland International Airport (AIA) upgraded its full-year profit guidance yesterday, following an 11% boost to its half-year to December after-tax profits to $76.9 million.

Total revenue for the six months was up 3.6% to $223.5 million, while expenses, excluding interest costs and depreciation, were up 4.9% to $57.1 million.

International passenger movements at Auckland, excluding transits, were down 0.2% to 3.65 million but this was offset by a 7.2% rise in domestic passenger volumes to 3.35 million.

''This included over 600,000 passenger movements in the month of December, the busiest month ever,'' chief executive Adrian Littlewood said.

Domestic travel was reflecting the significant positive impact of additional capacity in both Jetstar and Air New Zealand, and robust competition.

Queenstown Airport, in which AIA holds a 25% stake, also reflected strength in the domestic market.

Queenstown delivered another ''notable'' international passenger increase, excluding transits, gaining 16.8% to 139,000, and domestic volumes reflected ''healthy increases in air services'', growing 22.3% to 488,000, Mr Littlewood said.

Queenstown Airport's after-tax profit was up 11.7% to $3.1 million for the period.

AIA's interim dividend was up 30% to 5.75c. After yesterday's announcement, its shares rose 2c to $2.72Craigs Investment partners broker Peter McIntyre said the result was above expectations, with a ''key'' element for investors being AIA's decision to put 100% of after-tax profits towards dividends, up from 90%.

''AIA have completed a long capital expenditure programme and have signalled they are going to reward shareholders for their patience,'' Mr McIntyre said.

AIA's revenue was about $2 million ahead of Craigs' estimate.

''At the revenue level, retail operations were in line, car parking was slightly up, as was the passenger services, while property income was modestly behind our expectation,'' he said.

Forsyth Barr broker Peter Young said the result was above expectations but was mainly attributable to lower-than-expected funding costs.

AIA had increased its full-year 2013 after-tax profit guidance from a range of $143 million-$150 million to $145 million-$153 million.

''While challenges to aviation demand remain, we now have a modestly higher expectation for the full year 2013 period,'' Mr Littlewood said.

Mr Young said it was unclear whether the new guidance reflected net profit after tax or underlying profit, which excludes one-off costs.

AIA's shareholding in Cairns amd Mackay airports in Queensland saw after-tax profits increase by 61% to $A9.4 million ($NZ11.5 million), helping to lift AIA associate income to $4.4 million from $3 million.

Mr Young cautioned that aeronautical income was ''marginally lighter'' than expectations, notwithstanding the strong increase in domestic passengers and decline in international passengers. Mr Littlewood said, ''The global restructuring of recent years has continued, and in some cases, accelerated. These shifts in tourism and trade markets show no sign of abating.''

The changes were ''significant'' during the six months, with the China inbound market growing 26.8%, overtaking the United States as our third-largest market, and then the United Kingdom to become our second-largest inbound market.

''Other important markets such as Japan, India and Indonesia showed encouraging signs of growth,'' Mr Littlewood said.

- simon.hartley@odt.co.nz