Q&A WITH ADRIAN LITTLEWOOD – CEO, AUCKLAND AIRPORT
Research Team, 25 March 2019
In this video, we talk with Adrian Littlewood, CEO of Auckland International Airport. We hear about their latest results, which countries provide the most visitors, and Adrian's advice when it come to investing. Questions covered include:
- Your earnings were up over 10% for the half, what were the key drivers of this result?
- Some may not be aware of your non-aeronautical revenue sources – can you touch on these?
- What destinations have been the biggest drivers of inbound passenger growth for you?
- What is your expectation for our tourism sector over coming years?
- ESG is now more prominent in many investors’ decision making. How are you addressing corporate responsibility?
- What advice do you wish you were given, when you first started investing?
Craigs: Your earnings were up over 10% for the half, what were the key drivers of this result?
Adrian:Yes, another solid set of results. I think like the past few periods, really underpinned by good, solid passenger growth. Up about 4% across both domestic and international in the period which is pleasing. But also some great highlights from our retail business, up about 25% in the period, and our commercial property business up about 15% in the period. So all round, a good result.
Craigs: Some may not be aware of your non-aeronautical revenue sources – can you touch on these?
Adrian: Our business is obviously dominated by the aeronautical business but in fact it’s only about half our business compared against our non-aeronautical business which includes that retail, commercial transport and property. Each one of those lines has a different mix to it. Our retail business obviously has our in-terminal retail sales which everyone is familiar with. But also a new online channel which we’ve built which is just really starting out but something we’re really committed to for the future. Commercial property business is a very significant business nowadays and made up of many different parts. We have our office portfolio, we also have our hotel portfolio which currently has two hotels with two in the works. And then we also have our very large commercial industrial property portfolio. Mainly made up of large scale warehouses and some mixed office developments around our precinct. We’ve got about 250 hectares left to develop, about 150 already developed. So still long-term opportunities for that business to grow in to the future.
Craigs:What destinations have been the biggest drivers of inbound passenger growth for you?
Adrian: Outside of Kiwis travelling, certainly the biggest changing market in the last few years has been China, up about 60% in the last three years. But the big one we’re all looking forward to is India and how that market evolves. It’s not nearly developed as China has been in the last few years but certainly with a young population who are willing to travel, who speak English, and love cricket, we’d love to see more of them down in New Zealand.
Craigs: What is your expectation for our tourism sector over coming years?
Adrian: I think standing back and looking at tourism and travel, and trade more generally, we still remain quite optimistic about tourism and travel in the long-term. I think IATA (International Air Transport Association) forecast global air travel to double in the next 20 years, so it’s still good, strong underlying prospects.
Craigs: ESG is now more prominent in many investors’ decision making. How are you addressing corporate responsibility?
Adrian: We look across three primary areas of education, employment, and the environment. And we’re trying to use the benefit of the multi-billion dollar program to make some inter-generational change in our part of the country. One specific example we work on is a project called Ara. Which is a about trying to create a jobs and skills hub, partnering with the government, to try and to match local people looking for local jobs with jobs that we have available. And if they don’t have the right skills, giving them micro training for that specific job. It’s been very successful so far. We think this is something for the long-term. In the last half, we put 180 people in to jobs and what we’ve seen is about 80% of those people come from South Auckland and up to 50% of them come off benefits or even more off the benefits track. So to us that’s a great example of how we can make a real difference to our local community as well as building the airport of the future.
Craigs: What advice do you wish you were given, when you first started investing?
Adrian: I started investing in shares when I was about nine, under the guidance of my father. I first bought in to some well-known names back then – Brierley’s, Bendon, and others. The simple advice I’d give is quality costs, and it’s worth investing in, and it pays dividends over the long-term.