Sydney Airport Ltd (ASX:SYD) has released their financial results for the full year ending 31st December 2015. Supported by international passenger growth, the busiest airport in Australia reported increases in Revenue, Profit and EBITDA (Earnings before interest, tax, depreciation and amortisation).
378% Rise in Profit
For the full year 2015, the Airport’s revenue expanded by 5.6% to the PCP, to $1.2billion. Alongside a significant 378% expansion in NPAT, to $283million (2014:$59.1million). EBITDA grew at a 5.8% pace, to $1billion.
Sydney Airport attributes their success in 2015 to a 3% increase in passenger growth, to 39.7million passengers. With International and Domestic passengers 4.3% and 2.3% higher respectively. As a result of the bilateral air services rights granted as a result of the Free trade Agreement with China, Chinese nationals grew 17.8%, becoming the Airport’s second largest market, by residency.
Aeronautical revenue, which contributes 50% to overall earnings, grew at a 6.8% pace in 2015, to $606.7 million. Moreover, Retail revenue, which added 22% to overall earnings, expanded 3.3% in 2015, to $263.5million. Due in part to growth in international peak demand, along with long stay bookings, Car Parking revenue grew 7.6% for the year, to $150.6 million.
Capex on Course
Over the course of 2015, Capital expenditure was $339 million, in line with the Airport’s budget. With expenditure predominately focused on ground transport, baggage improvements, airfield and terminal works, security process improvements, along with the Northern lands bridge.
As of today, Sydney Airport has announced, between the periods of 2016-2020, Capex guidance of $1.3billion. This includes an estimated $400million in 2016 alone. 2016 expenditure is focused on the ongoing improvements of T1, ground access roads, gate, apron and airfield improvements.
Western Sydney Airport Talks Ongoing
The Western Sydney Airport evaluation and evaluation is ongoing. With the Commonwealth government indicating that it may issue Sydney Airport with a notice of intention in 2016. Furthermore, Sydney Airport will then have 4 to 9 months to exercise their option to develop and operate the airport.
Sydney Airport continues to evaluate their option, with their credit rating, cash flow and yield, growth potential, along with downside projections acting as key indicators in their decision.
Positive January Traffic Performance
The first month of 2016 saw the Airport perform rather strongly, with International and Domestic passenger growth of 9.5% and 6.2% respectively, equating to a 7.5% increase to the PCP.
Managing Director and CEO Kerrie Mather attributes their good start to 2016 to Asian market growth: “Asian market growth led the international result, with China the standout market growing 38.9%. Early Lunar New Year has underpinned our demand this month, in addition to capacity increases from new and existing carriers.”
Proposed Dividend Growth of 17.6%
For 2016, Sydney Airport’s dividend guidance is $0.30cents per stapled security, up 17.6% to the 2015 distribution (2015: $0.255cents). However this guidance is subject to aviation industry shocks, along with material forecast changes.
Commenting on their 2016 outlook, Kerrie Mather said: “The macro environment is supportive, and operationally we continue to capitalise on aeronautical and commercial opportunities through investment and innovation. We’re in excellent financial shape, with a strong balance sheet and financial flexibility to support the ongoing delivery of business expansion and ultimately cash flow growth.”
As at 10.49am (AEDT), SYD is up almost 3%, to $6.60.
Author: Ben Khouri
Feb 18, 2016
Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.