The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is on watch today after the company released its full-year FY19 results.
At the time of writing, market reaction has been somewhat muted with Sydney Airport shares trading 0.71% lower at $8.38 apiece.
What did Sydney Airport announce?
For the full year, Sydney Airport reported that earnings before interest, tax, depreciation and amortisation (EBITDA), excluding other expenses, came in at $1,336 million. This result was up by 4% on the prior corresponding period (pcp).
During 2019, overall passenger traffic was flat, increasing by 0.1% to 44.4 million people. This result was driven by international passenger growth of 1.1%, which was offset by a decline in domestic passengers of 0.5%.
The company reported it observed the positive impact of a range of new stores that are now in place in its revamped Terminal 2 (T2). This consists of an additional 78 rooms at the Ibis Hotel and new revenue that will be generated from its advertising and valet services from Terminal 3 (T3).
In terms of balance sheet strength, Sydney Airport's cashflow cover ratio has increased to 3.3x, up from 3.2x at 31 December 2018. Meanwhile, the company's net debt to EBITDA ratio remains at a record low level of 6.6x.
Segment revenue
With regard to revenue generated by individual business segments, aeronautical increased by 2.4% during the year. This reflects strong international passenger growth and continued capital investment that the company has made in aeronautical infrastructure.
The retail segment saw a 5% increase in revenue following the company's escalation in the Duty Free and other retail contracts. This growth in retail revenue was also driven by the opening of 12 new stores in T2 as well as the inclusion of T3 advertising revenue.
The property and car rental segment was reported to be up by a pleasing 5.5%. This was supported by the delivery of 78 additional Ibis Budget rooms in the first half of 2019, as well as the renegotiation of freight leases on more favourable terms.
Within the car parking and ground transport segment, there was a decline in revenue by 0.1%. This result reflects lower domestic passengers which, however, was offset by the contribution from the company's T3 valet parking from 1 July 2019.
Investment in future capacity growth
During 2019, capital expenditure came in at $300.8 million. The company currently expects to invest somewhere between $350 million to $450 million in 2020, and between $600 million to $800 million over the two-year period of 2020 and 2021.
This includes a focus by the company on its capacity pipeline where it will deliver additional international bays and expand the number of bays by up to 27% across several projects.
Sydney Airport is also undertaking ongoing retail upgrades across all terminals which includes the delivery of its first arrivals lounge in Terminal 1.
Outlook
Sydney Airport will continue to invest for capacity growth with some new projects currently underway in 2020.
In today's FY19 announcement, the company spoke to its resilience as a business with a proven ability to recover quickly from one-off disruptions and macroeconomic shocks.
