Airports Company achieves its best-ever profits

29th September 2017

By: Keith Campbell

Creamer Media Senior Deputy Editor

     

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Airports Company South Africa (Acsa) achieved a profit of R2-billion for the 2016/17 financial year (FY), it announced recently, up from R1.9-billion for FY 2015/16. “This is probably the best set of results we’ve presented in the history of the company,” affirmed CEO Bongani Maseko

at the results presentation.

“It’s been a stellar performance, with very good financial results,” agreed acting CFO Dirk Kunz. It was the most profitable year the company has ever had.

While domestic departing passenger volumes rose by only 2.1% and unscheduled flight departing passenger volumes fell by 11.9%, regional departing passenger volumes increased by 4.5% and international ones by 5.8%. In terms of aircraft landing volumes, domestic and regional flights saw no change, unscheduled flight landings decreased by 3.3%, but landings by international aircraft rose by 2.7%. Kunz credited international flights as being the key to the company’s growth during 2016/17. “Airports like Cape Town and King Shaka (Durban) reported very strong growth,” stated Maseko.

Overall, the company showed itself to be resilient, despite the sluggish national economy, and maintained a strong financial profile, despite the country’s credit ratings downgrade (as a predominantly State-owned company, Acsa’s credit ratings are coupled with those of the country). Revenues came to R8.6-billion (up from R8.3-billion in 2015/16); earnings before interest, taxes, depreciation and amortisation (Ebitda) were R5.1-billion (down from R5.2-billion in the previous financial year); but the ratio of net debt to Ebitda was 1.19, down from 1.48 in 2015/16. Return on investment was 11.3%, a decline from 11.5% during the previous year.

The company also received an unqualified audit opinion from the Auditor-General and fulfilled 76% of its preplanned targets. It developed a transformation strategy that embraces seven business sectors, namely advertising, baggage handling, car rental, construction, information technology, property and retail. “We were able to exceed our target with regard to preferential procurement,” reported Maseko. The value of preferential procurement came to R2.8-billion during the financial year.

While Acsa owns and operates nine airports in South Africa, it also has shareholdings in Chhatrapati Shivaji International Airport, in Mumbai, in India, and Guarulhos International Airport, in São Paulo, in Brazil. It also provides technical advisory and consulting services for Kotoka International Airport, in Accra, in Ghana. “Mumbai has exceeded our expectations,” he observed.

The company also provides technical advisory and consulting services for the non-Acsa Mthatha and Wonderboom (Pretoria) airports. “We continue to have a focus on non-Acsa airports in South Africa,” noted Maseko. The company was already talking with Mthatha Airport, in the Eastern Cape, and planned to start talking with “colleagues in Limpopo”.

Acsa also plans to continue to expand its presence in airports outside the country, elsewhere in Africa and in other emerging markets. However, as, in many African countries, international airports are still seen as sovereign assets, the company sees itself as providing consultancy services for, and not taking equity participation in, airports in other African countries. Acsa expects that a lot of international airports across the continent will be upgraded and improved in the coming years.

Last year its Regulating Committee cut the airport tariffs (aircraft landing and parking tariffs and passenger service fees) that Acsa could charge by 35.5%. This cut came into effect on April 1 and so will reflect in the company’s results for the current financial year (2017/18). However, in FY 2018/19, these charges will rise by 5.8% and, in FY 2019/20, by 7.4%. “In December, we got the tariff reduction, but at least we now know, for the next three years, what tariff we can charge,” said Maseko. Overall, he believes that Acsa made significant gains with regard to the regulatory framework within which it operates and that this was now more predictable.

The company also has major capital expenditure projects lined up for the near future. These include new runways at Cape Town International Airport, the redesign of the arrivals terminal at Cape Town, the construction of new aircraft parking aprons at Johannesburg’s OR Tambo International Airport and some remodelling at the departures terminal at Cape Town. Also, the international facilities at King Shaka could be expanded, if the international traffic growth at that airport continues.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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