Infrastructure investor Infratil yesterday reported a lower
profit for the year ended March, something forecast by
broking firms, given TrustPower's difficult year and the
partial sale of Z Energy.
Forsyth Barr broker Suzanne Kinnaird said the only real
surprise was the unexpected dividend.
Infratil will pay a final dividend of 7c per share, up from
6cps a year earlier and bringing annual payments to 10.75c.
The company reported operating earnings of $214.3 million for
the period, down 6% from the $227.4 million reported in the
previous corresponding period.
The before-tax profit rose 51% to $96.2 million, thanks to
lower interest expense and the gain from the sale of Z and
Reported profit was almost unchanged at $69.3 million but the
surplus attributable to shareholders became a loss of $31.2
million following a substantial increase in the loss
allocated to the exit from its unprofitable Glasgow Prestwick
and Kent airports.
However, the company reiterated earnings would grow in 2015.
Infratil's 50.4% holding in TrustPower is its biggest single
investment and accounted for 55% of operating profit in the
full year at $277 million, down from $295 million a year
The utility has already posted its annual results, which
showed the impact of a drop in hydro generation in the face
of dry weather and depressed wholesale energy prices.
The company described 2014 as ''a dynamic year'' including
the successful float of Z Energy, the exit from its
unprofitable Glasgow Prestwick and Kent airports and the
acquisition of a 19.9% stake in retirement village operator
The shares rose 1.8% to $2.33 and had gained 0.9% this year.
Ms Kinnaird said the key features of the result had been the
difficult second half for most of Infratil's businesses,
offset by surprisingly low corporate overheads.
''Our current target price is $2.90 cps and our rating is
outperform. We expect TrustPower to be the main driver for
closing the value gap, as it remains Infratil's largest
investment by a significant margin,'' she said.
Guidance was for an operating profit between $530 million and
$560 million next year, although the operating cash flow was
expected to fall from $407 million in 2014 to between $330
million and $360 million.
The 2014 result included Z dividends.
The company also agreed to invest $A100 million ($NZ108.5
million) in the Australian Social Infrastructure Partnership.
The first $A12 million was to be made post March 31.
The company's 66%-owned Wellington International Airport
provided the second-largest earnings contribution at $86
million, up from $83 million in 2013 on gains in aeronautical
and passenger services income.
Earnings at Infratil Energy Australia Group (IEA) fell to
$A61 million from $A80 million and the decline was inflated
by the effect of translating earnings back into a strong kiwi
Infratil said it had started a review of the Lumo and Direct
Connect Australia units of IEA that could take six months and
would determine whether the businesses were kept as is or
NZ Bus, which operated the bus services in Auckland and
Wellington, reported a 9% drop in earnings to $40 million,
coming in below budget, which Infratil said reflected
disappointing passenger growth and engineering costs to
comply with new regulations.
''Next year, it is expected New Zealand's economy will
continue to drive demand for transport and energy and that
there will be increasing private provision of infrastructure
on both sides of the Tasman,'' the company said.