Sydney Airport Holdings Pty Ltd (ASX: SYD) has reported its FY18 result to the market this morning.
Sydney Airport Holdings is the company that operates the Kingsford Smith Airport, it currently has a 99-year lease on the airport but it will revert back to government ownership at the end of this century. According to Sydney Airport, it generates $30.8 billion in economic activity a year, which is equivalent to 6.4% of the NSW economy.
Here’s What Sydney Airport Reported
Sydney Airport said that total revenue increased by 6.8% to $1.585 billion and EBITDA grew by 7.2% to $1.28 billion (click here to learn what EBITDA means). These figures were driven by 2.5% growth of total passengers to 44.4 million, with international passengers growing by 4.7%.
Some of the countries that reflected the biggest increases in passengers were from the United States of America, China, India, Taiwan and Japan. Sydney Airport said this growth reflected its increasing diversity in airlines, routes, destinations and nationalities.
Net operating receipts increased by 9.4% to $860.9 million, which allowed the business to increase the 2018 distribution by 8.7% to 37.5 cents.
Sydney Airport has been focusing on keep a tight control on costs with total expenses excluding security (and ‘normalised’ for hotels) increasing by 1.8%.
The airport operator said that it retains a strong balance sheet with more than $1.3 billion in undrawn facilities to cover future debt maturities and fund ongoing investments.
Sydney Airport Management Comments
Sydney Airport CEO Geoff Culbert said: “Sydney Airport is a business that continues to perform well in all cycles and this year was no exception.
We are seeing ongoing opportunities for growth across our aeronautical and non-aeronautical businesses and have an investment program underway that will continue to deliver capacity and service excellence for our customers.”
Is Sydney Airport A Buy?
Sydney Airport has guided that the 2019 distribution will be 39 cents per security, which is expected to be more than covered by net operating receipts (NOR).
This guidance represents an increase of 4% compared to FY18 and a distribution yield of 5.6%, which isn’t bad but I would prefer to consider Sydney Airport shares if they offer a yield above 6%.
However, as an income idea I would rather consider one of the proven shares in the free report below.
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