Auckland International Airport

After a year of major construction activity over its property, Auckland International Airport releases its full year results today. They are expected to reveal underlying earnings between $100 million and $105 million boosted by the property development and car parking earnings despite a predicted drop in retail income.

The airport is in the middle of a major property redevelopment plan to maximise the value of its assets including its landholdings.

It generated $115 million of property development in its Airport Business District in the 12 months to July.

The four most recent projects to be confirmed were a centre for Food Innovation Manukau, a training facility for Travel Careers & Training, a Jasmax Architects-designed 4900sq m office building and a 3600sq m office and warehouse for DSV Air & Sea.

International airports such as Dubai, Seoul, Hong Kong and Singapore inspired its vision for the Airport Business District, its general manager of property Peter Alexander told NBR last month. Talks are under way for entertainment activities such as high ropes, mini-golf and paint ball.

Tainui Group Holdings is developing a 263-room Novotel hotel just metres from the international arrivals gate at the airport, due to be completed in June 2011 and a low-budget hotel Formule 1 is being built closer to the Airport Business District.

Credit Suisse anticipated that the NZX-listed company would report underlying earnings of $104.5 million, while Forsyth Barr predicted a close $104.6 million.

All the development at the airport meant that it was expected construction had disrupted retail income but Credit Suisse said it expected a strong rebound for retail income the year to June 30, 2011.

Forsyth Barr, which expected revenue to be down 1% to $365.5 million, confirmed this view.

“Despite successful business development initiatives to increase airline capacity, the tough operating environment is likely to keep near-term outlook comments relatively subdued, although [the June 2011 full year results] will be boosted by the expanded retail operation,” Forsyth Barr said.

The value of its property portfolio was expected to have changed because of  zoning changes that meant 162ha of land went from being only zoned for rural use to commercial.

Forsyth Barr expected earnings to be boosted by income from the airport’s car parking ventures.

“Aeronautical revenues are expected to be flat, with a fall in the airfield income [smaller planes and less domestic plan movements], offset by an increase in the passenger service charges as a result of the terminal expansion in recent years,” Forsyth Barr said.

While international passenger numbers looked to be improving earlier this year, growth from Australia has slowed.

Forsyth Barr said it also expected an update about its investments in Queenstown airports and North Queensland.

“Estimated forward earnings multiples are in line with historical averages,” Credit Suisse said.