AUSTRALIA. Sydney Airport has reported a +5% year-on-year increase in retail revenue for full year 2019, to A$374.9 million (US$248.6 million). Retail represented an overall revenue contribution of 24%.
Growth was driven by a solid (but unspecified) duty free performance; the introduction of 12 new stores in Terminal 2 as Pier B was completed on 1 July 2019; the inclusion of Terminal 3 advertising revenue from the same date; and the Australian Way master concession extension to 2025, the airport said.
As reported, Sydney Airport has extended Heinemann Australia’s duty free contract for another eight years until 31 December 2029.
Average dwell time for international passengers was 133 minutes. The New South Wales gateway noted future growth opportunities in retail including the opening of three luxury stores in T1 this year, featuring Moncler and Yves Saint Laurent. T2 Pier A is undergoing improvement works, including the progressive opening of four new tenancies in early 2021, while Sydney Airport is progressively re-mixing T3 retail.
Retail revenue growth was well ahead of passenger growth, with traffic up +0.1% in 2019, to 44.4 million. However, Sydney Airport said this traffic increase demonstrated “the resilience and diversity of the business in challenging market conditions”. International passengers rose +1.1% while domestic passengers declined -0.5%.
Total revenue grew +3.5% to A$1,639.7 million (US$1,087.4 million). Earnings before interest tax depreciation and amortisation (EBITDA) excluding other expenses increased +4% to A$1,336.3 million (US$886 million).
Sydney Airport Chief Executive Officer Geoff Culbert said: “We are pleased with the result we’ve been able to deliver for 2019 in a year that was characterised by some of the toughest trading conditions we’ve seen since the financial crisis.
“The fact that revenue grew by more than +3% and EBITDA by +4% in a year when passenger traffic was flat speaks to the diversity and resilience of this business, prudent cost control, and the quality and focus of our entire team.
“Underpinning the result was the contribution of our retail and property portfolios.”
Of the Heinemann Australia contract extension, Culbert said: “We are very pleased with the partnership we have with Heinemann and this new, long-term agreement reflects the significant and ongoing retail growth opportunities at the airport.
“The enhancements that we are planning with Heinemann are exciting because they will both improve the customer experience and position the duty free offer for growth.”
Outlook
Culbert addressed the ongoing bushfire crisis in Australia and the COVID-19 outbreak in announcing the full year results, stating that “people, property and travel plans” have been impacted.
“Our first priority in any crisis is people, safety and what support we can provide for our local communities,” he said. “We are working closely with the Federal and New South Wales governments on the response to the coronavirus and have raised and contributed funds to the Red Cross Disaster Relief and Recovery fund in response to the bushfires, in addition to providing support to our employees.
“Through our nearly two decades as a listed entity, Sydney Airport has weathered many significant global events. We will continue to put our passengers, employees and local communities first while delivering strong, stable, and resilient growth. We have a proven history of performance and growth through all economic cycles and disruptions.
“We will constantly seek ways to raise the bar for our customers in a safe and sustainable way, while looking for growth opportunities across both aeronautical and commercial businesses and spending each dollar prudently.
“We will continue to invest for capacity growth with some exciting projects underway in 2020. Our focus will be on delivering for our customers and we are committed to doing so with a mind to a sustainable future for Sydney.”
