NEW ZEALAND. Auckland International Airport today revealed results for the six months ending 31 December 2017, with retail revenue climbing by +10.2% year-on-year to NZ$88.9 million (US$64.8 million).
The performance was driven by passenger growth, minimum annual guarantees and strong results from duty free, food & beverage and the Strata Lounge.
Retail revenue growth significantly outstripped the overall revenue increase of +6.9% to NZ$332.4 million (US$242.4 million), and the rise in total passengers (+6.4% to 10 million). International passenger numbers (excluding transit passengers) were up +5.8% to 5.1 million, with international transit volumes down by -1.7% to 348,000.
As we reported on a recent visit to Auckland, duty free partners Aer Rianta International and Lagardère Travel Retail completed work on their departures duty free stores in December. That delivered a +30% rise in departures duty free sales in the month compared to a year earlier.
Construction work in the International Terminal (which continues through 2018) has had an impact on international passenger spend rates (PSR), which dipped by -3.6% compared to the prior year. Within duty free PSR was flat for the period, while in speciality retail and destination merchandise they fell by -16% and -10% respectively. Food & beverage PSR grew by +3.4% as new offerings kicked in.
Sales at the new Strata Lounge leapt by +30% as more airlines (14 currently) use the facility.
In the next phase of expansion of International Departures, luxury boutiques and speciality stores will open on a phased basis through the second half of FY2018. The project should be completed in H1 2019 with new F&B facilities and completion of the luxury and speciality offer.
In an investor note, analyst Forsyth Barr made reference to Auckland Airport’s “robust consumer business contribution” and noted that retail income per passenger rose by +4.4% against the prior year, despite the -3.6% decline in international PSR.
Airport company Chairman Sir Henry van der Heyden said: “In the first half of the 2018 financial year, Auckland and New Zealand’s air connectivity has continued to grow, providing new services and new capacity. The first half also saw the company maintain its strong focus on upgrading airport infrastructure and providing the best possible customer experience during a time of significant change.”
Auckland Airport said it is investing more than NZ$1 million every working day on its core airport infrastructure. The extension of Pier B of the International Terminal, for example, will double capacity there when completed next month.
Outside New Zealand, the sale of Auckland Airport’s 24.55% stake in North Queensland Airports for A$370 million/US$290 million (subject to regulatory and counter-party approvals) will allow the company to focus on growing its New Zealand travel, trade and tourism businesses, it noted. It will recycle the sale proceeds into further aeronautical infrastructure at Auckland Airport over the next five years.
Looking ahead, van der Heyden said: “As a result of our strong financial performance we have tightened our underlying profit after tax guidance (excluding any fair value changes and other one-off items) for the full 2018 financial year slightly to between NZ$250 million and NZ$257 million. This guidance would deliver underlying earnings per share growth of between +0.6% and +3.5% compared with the 2017 financial year.”