Transcription of Presentation by Sydney Airport (ASX:SYD) Managing Director and CEO, Kerrie Mather
Airports are an excellent investment proposition and Sydney Airport (ASX:SYD) has particularly strong fundamentals. When you think about an airport, we’ve got very diverse businesses, everything from aviation to retail, car parking, property, advertising. Everything you see when you go through an airport. So strong growth potential, but also downside protections and of course, leveraged to global aviation growth. So it presents strong cash flows, strong growth and therefore, strong stable returns. So ideally suited to superfunds and mums and dads.
We have three key growth drivers, international passengers, investment and CPI. And we’re the beneficiary of a number of very positive trends in the industry. I suppose the top three trends are new large aircraft, new generation aircraft that are opening up more destinations and making travel more affordable.
The second one is the change in airline business models and the advent of low cost carriers. And we’re going to be welcoming our fifth low cost carrier to the airport shortly. Indonesia AirAsia X with services to Bali. And when they do come into the airport, we will be the fifth largest, in fact the largest long haul low cost carrier airport in the world, because we’ll have five low cost carriers operating here.
And the third major trend is our proximity to the Asian growth story, and China in particular. Again, towards the end of this year, we’ll be welcoming our sixth Chinese airline Xiamen. Xiamen Airlines will be flying to Xiamen and Fuzhou. And that will actually make us the equal second for Chinese long haul carriers in the world, alongside Paris and Vancouver. So lots of positive trends that are opening up more destinations, making travel more accessible, more affordable and presenting strong growth.
And of course, we’re going to be investing strongly to support that growth. Investing in the passenger experience, investing in more capacity and that’s going to provide more growth potential and therefore, more revenues.
Well about 50 per cent of the business is aviation related; the other 50 per cent is commercial. So 20 per cent retail, about 17 per cent property and the balance is car parking and ground transport. And actually that split has been broadly stable over time.
Well it was an excellent result; revenue was up 4.6 per cent and EBITDA up 6.4 per cent. And that reflected strong growth in international passengers, investment and great performances across every part of the business. And we were pleased to provide a strong growth in our distributions. Distributions grew 8.7 per cent on the PCP. And we were also pleased to provide our investors with an upgrade to our distribution guidance of 0.5 cent, for this year. So again, that presents a strong growth of 8.5 per cent on the PCP. So it’s a strong result and very pleasing.
It’s a very exciting outlook over the next 12 months. We’ve got four new airlines commencing in the next six months. We’ve got American Airlines, ANA (All Nippon Airways), Xiamen Airlines, Indonesia Air Asia X, all providing significant new seat capacity and a number of new destinations for Sydney Airport. We recently retendered all of our commercial contracts, all on improved terms. But importantly, with a number of new business initiatives, which will present us with exciting growth potential and opportunities.
We’ve also, I suppose the focus over the next six months, is going to be the transition and integration of Terminal Three. The rollout of the service level improvements and the transformation of Terminal One, in terms of the passenger experience, but also the commercial offerings and amenities for passengers. The continued focus on our ground transport improvement. So the rollout of our internal road works, which will provide more capacity and make it easier to travel to and from the airport.We’ve got new hotels commencing; we’re improving the food and beverage offering over in Terminal Two. So lots happening. So a strong pipeline of opportunities to complement what is a very positive outlook.
