Airports Company South Africa records double-digit profit for FY ending March 31, 2017
Aviation - The airport management company, Airports Company South Africa has reported revenue growth of 3.4 percent to R8.6 billion in the year ended March 31, 2017.
September 18, 2017: The airport management company, Airports Company South Africa has reported revenue growth of 3.4 percent to R8.6 billion in the year ended March 31, 2017. The profits during the reported period stood at R2 billion registering a 10.8 percent growth.
Return on equity was 11.3 percent (marginal decline) compared to 11.5 percent in the same period the previous year. Capital expenditure reduced by 31.3 percent to R893 million.
Bongani Maseko, chief executive officer of Airports Company South Africa, said the Company continued to be resilient, despite sluggish economic growth.
The Company reported a total of 20.0 million (2016: 19.4 million) departing passengers from the nine airports it owns and operates.
While domestic passenger growth was subdued at 2.2 percent, the Company reported strong growth of 6.1 percent in international travellers. For the first time, Cape Town International Airport reported a total of more than 10 million passenger movements with King Shaka International Airport reporting a total of more than five million passengers for the first time.
Aircraft landing volumes were flat for domestic flights and up by 2.5 percent for international flights, indicating higher passenger utilisation of scheduled flights.
Maseko noted that “Airports Company South Africa has managed to reduce its debt levels over the past five years significantly. Debt, primarily in the form of bond issues, stood at R9 billion at the end of the period, significantly down from R17 billion in 2012. As a result, the Company’s gearing ratio has reduced from 59 percent in 2012 to 25 percent in the 2017 financial year.
Aeronautical contributed 63 percent to total revenue, but the Company remains committed to continuing its target to grow the non-aeronautical contribution. Non-aeronautical revenue is derived from sources such as retail space, advertising, office rental, parking and car hire.
“The overall financial position of the Company, therefore, remains healthy despite regulatory uncertainty and challenging economic conditions. Operationally, we are adapting well to a new tariff regime from the regulator which required a 35.5 percent reduction for the 2018 financial year with increases in the following two years of 5.8 percent and 7.4 percent,” he added.
Airports Company South Africa met 76 percent of its performance objectives in the period under review, which for the first time included additional measures such as reducing environmental impact, improving connectivity to the regions served, providing equitable access to safe airports, and leadership culture.
“We now have 17 measures of performance that underpin our three-pillar strategy to run airports, develop airports and to grow our footprint. This ensures that the drivers of performance are moving us in the desired direction and that all employees understand how they make a difference,” commented Maseko.
He also admitted that “However, there remain several critical issues to resolve with the regulator, and we plan to continue advocating for a tariff regime without substantial changes from year to year. In addition, we need to resolve matters relating to capital expenditure which is essential to maintaining efficient airports and developing infrastructure for the long term.”
The three-pillar strategy captures objectives of running airports efficiently and introducing innovations, improving capacity and infrastructure, and producing more impactful outcomes for the country.
The Company has refined and enhanced its transformation strategy to focus on seven sectors which account for the bulk of its procurement. These sectors are information technology, construction, property, retail, advertising, car rental and baggage handling.