Airwork boosts full year profit 58%

Revenue for the year ending June 30 increased by 15 percent to $166 million.

Specialist aviation company Airwork Holdings [NZX: AWK] has delivered a 58% boost in full-year profit to $24.6 million following strong earnings growth in its expanded fixed-wing aircraft business.

Revenue for the year ending June 30 increased by 15% to $166 million while earnings before income and tax was up 51% to $32.7 million, the Auckland-based company said in a statement. Income from external customers is now weighted to the rest of the world, which accounts for $73 million while New Zealand earned $40.6 million, and Australia $52.5 million.

Airwork will pay a fully imputed final dividend of 8c on October 5, taking total dividends for the year to 17c cents per share.

Ebit growth of 91 per cent to $20.5 million in the company's fixed-wing division reflected the fleet expansion first announced two years ago. During the past financial year six B737-400 freighter aircraft conversions were completed and delivered to customers in New Zealand, Australia and Europe while a further two were delivered since balance date, leaving one remaining for delivery later this year.

The helicopter business also posted a solid performance with ebit growth of 16% to $23.8 million though revenue of $85.5 million was similar to the prior year. Two helicopters have been added to the leasing fleet as the company continues to diversify and expand its global footprint with a downturn in the resources sector.

Reduced flying in the oil and gas sector was offset by some high-yielding short-term leases while the result was boosted by a $2 million plus interest favourable High Court judgement in May from a long-running legal spat against Totally Tourism's The Helicopter Line unit over a soured helicopter supply deal.

Expansion of the company's helicopter engineering Maintenance Repair and Overhaul facility at Ardmore was completed during the year.

Although the company sees opportunity in global emergency services and the New Zealand tourism market, it said the helicopter business could have a slowing growth rate or short-term decline in the next financial year due to challenging market conditions, the end of a contract in Africa, and lower flying rates in Papua New Guinea.

Continued earnings growth is expected for the fixed wing business due to the full-year impact of aircraft deliveries and new contracts.

Total capital expenditure increased in the year by $6 million to $89.8 million, funded through operating cash flow and debt with the debt ratio now at 64.6% due to new aircraft investment. The company has capital commitments for aircraft and inventory purchases of $19.5 million of which $15.2 million is expected to be incurred during the 2017 financial year.

Since balance date, a company-owned Boeing 737-400 freighter dry-leased to a European customer overshot the runway while landing. The plane was maintained and operated by the lessee and the insured aircraft has been damaged beyond repair.


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