Despite Airports Company SA (Acsa) reporting a slump in operating profit of almost 59% for its full-year to March 31, acting CEO Bongiwe Mbomvu says the parastatal is in a good financial position compared to other state-owned enterprises.
“We pay dividends and don’t need bailouts,” she said during a results presentation in Sandton on Tuesday, which showed that Acsa’s profit fell by R325 million to R227 million for the year.
Acsa operates nine airports in SA, including the country’s three major international airports – OR Tambo (ORT) in Johannesburg, Cape Town International and Durban’s King Shaka International. It also has airport concession contracts in India and Brazil, in addition to undertaking airport advisory work across Africa.
Mbomvu says Acsa has a heathy balance sheet, having paid off R10 billion in debt since 2012. This has seen its gearing fall from 63% in 2010 to 18% at the end of its latest financial year.
Following multi-billion-rand upgrades at its airports ahead of the 2010 Soccer World Cup, including spending R7.8 billion on the new airport in Durban, Acsa’s debt peaked at R17 billion in 2012. Mbomvu notes that debt is now just below R7 billion, with the group paying off R2.3 billion in its 2018/19 financial year alone.
“We entered our 2020 financial year in good shape with a strong balance sheet,” she says. “The business is stable and in good hands.
“Acsa is well positioned to now undertake its next phase of airport infrastructure upgrades, with most of the focus on Cape Town International and ORT International.”
Mbomvu tells Moneyweb that Acsa plans to spend more than R10 billion on major infrastructure expansions over the next five years. This includes R7.3 billion on Cape Town International for a new, realigned runway as well as a new international terminal and a reconfigured domestic passenger terminal.
At ORT International, Acsa’s immediate expansion project includes the construction of new remote aircraft apron stands as part of a R2.5 billion development. Acsa is also spending R887 million on the first phase of its new R4.5 billion mixed-use 180 000 m2 Western Precinct that will include office, retail and hotel space.
New head office
“We are glad to report that the first phase is fully let and will also become home to Acsa’s head office,” notes Mbomvu. “This development is expected to boost our non-aeronautical revenue significantly.”
She says another R2.2 billion project to build a new midfield cargo terminal at ORT International is in the design and planning stages, adding that this is a future development and is only likely to be built by 2026.
“In addition, there are refurbishment plans in the pipeline for both the international and domestic terminals at SA’s biggest and busiest airport.”
At King Shaka International, Acsa is investing more than R400 million in current upgrades that include extending a taxiway, construction of new remote aircraft stands and expansions to its retail offering. Moneyweb understands that plans are also in the pipeline for a new office block near the terminal building.
Offer for Mumbai concession
Meanwhile, Acsa acting chief financial officer Lindani Mukhudwani says the group has received an offer for its 10% stake in the Mumbai International Airport concession, valued at around R786 million.
“We will only pursue a fair and reasonable offer,” she said, and did not reveal the name of the potential buyer.
On the sharp decline in profits, Mukhudwani says Acsa has seen a steep increase in operating expenses, such as security and staff costs. She notes that profits were also impacted by fair value adjustments on its property assets. Acsa has also seen a small growth in passenger numbers of around 1.3%.
She reiterated Mbomvu’s comments, saying that Acsa has a strong balance sheet and is still profitable. “In fact, we paid R160 million in dividends for the year and also achieved an unqualified audit.”