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ACSA profit rises as company remains resilient to ‘sluggish economic growth’

ACSA CFO Maureen Manyama-Matome discusses the company's financial results. Camerawork & editing: Nicholas Boyd. Recorded: 29/08/2014.

29th August 2014

By: Leandi Kolver

Creamer Media Deputy Editor

  

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Airports Company South Africa (ACSA) increased its operating profit for the financial year ended March 31 by 7.1% as it remained resilient against the country’s sluggish economic growth, owing to a continuous focus on the efficient use of existing infrastructure, ACSA CEO Bongani Maseko said on Friday.

ACSA’s revenue for the year increased 7% to R7.1-billion, comprising R4.6-billion in aeronautical and R2.6-billion in nonaeronautical revenue, while profit after tax amounted to R1.7-billion.

“We are all aware of the sluggishness of the economy, but this year represents a year in which we have made the most profit as an organisation. It is the fifth year of our commission and I think this is a year in which we are realising the full value of tariffs,” he said.

During the period under review, aeronautical revenue showed a year-on-year increase of 7%, which was attributable, in part, to a 6% increase in international aircraft landings and a 5.5% tariff increase for the year under review, ACSA CFO Maureen Manyama-Matome said.

A total of 17.4-million passengers departed from South African airports in the period, while international air traffic posted an encouraging 4% and 6% increase in passengers and landings respectively. Domestic aircraft landings, however, were 0.9% lower, reflecting depressed local economic conditions.

Nonaeronautical revenue showed 8% year-on-year growth, primarily driven by growth in international traffic, which affected the retail concessionaire revenues positively. Retail revenue grew 17% as a result of guaranteed yearly escalation from ongoing leases and higher turnover-related rentals from an increase in international departing passengers.

Manyama-Matome further noted that ACSA was actively looking at increasing the portion of its revenue derived from nonaeronautical sources, to reduce the company’s exposure to the regulated environment.

“Currently, 64% of ACSA’s business is regulated, so we want to place less reliance on the regulated business and, as a result, pursue other ventures outside the regulated environment. This relates to our commercial business.

“On the commercial side, we are deriving positive benefit from our retail stores, the properties we lease out, car parking, and the investments we have in Brazil and India,” she told Engineering News Online, adding that ACSA would also be pursuing business opportunities in other emerging markets, as well as internationally, in future.

Meanwhile, during the 2014 financial year, ACSA also met 94% of its predetermined objectives and showed a significant improvement from the prior year.

Manyama-Matome explained that ACSA had, in effect, only failed to achieve one of its set targets, being the target relating to capital expenditure, which also translated into job creation.

However, Maseko noted that the company was conducting a review to find ways of improving its performance in this regard.

Further, Manyama-Matome said the group’s balance sheet remained strong and well-capitalised, with total assets of R27.9-billion, while gross debt declined to R12.9-billion, from R14.7-billion previously owing to the deleveraging process that began in the 2013 financial year, when debt of R2.1-billion was redeemed.

A total of R1.9-billion of debt had been repaid in the period under review.

She further noted that the company’s 2015 to 2017 plan was to invest R7.7-billion in capital expenditure, including investment requirements based on industry demand, stating that only about R2-billion of this amount would go towards new infrastructure, with the rest to be spent on aspects such as maintenance.

Cash carried over, plus cash generated from operations, would fund 70% of ACSA’s capital expenditure programme, with the remaining 30% to be funded through various debt instruments.

Meanwhile, also speaking at the ACSA results presentation, Transport Minister Dipuo Peters stated that most of South Africa’s growth and development hinged on intraregional trade and trade between Africa and the rest of the world, with aviation expected to be a growth point on the African continent.

She added that the continent’s growth potential would not be realised if African governments did not collaborate in terms of the aviation industry, stating that this industry also had a critical role in driving the goals of the National Development Plan (NDP) and creating inclusive growth.

“ACSA should be mindful of this role,” she said, adding that government would fully support ACSA in ventures that addressed these objectives and promoted regional integration.

Maseko responded to this, stating that ACSA would have to look at realigning its objectives to match those of the NDP.

Peters also noted that she believed ACSA to be ready to support the development of the African aviation industry.

Maseko stated that the group had recently signed a memorandum of understanding with Ghana Airports Company to provide advisory and technical consultancy services on all airport-related matters in Ghana.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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