BAA focus on core operations signals retail revenue rise

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BAA today announced pre-tax profits of £530m ($747m) for the year to March 31, an increase of 15.2%, principally the result of a strong performance by its core UK airports business.

Net retail income for the year increased by 6% to £470m ($667m), while net retail income per passenger was £3.78 (up from £3.77 last year). BAA said this comparison was adversely distorted by the abolition of intra-EU duty-free at the end of the first financial quarter last year. The like-for-like performance for the last three quarters of the year was an improvement of 13% to £357m ($507m) in net retail income.

Group retail director Brian Collie said: "Since abolition, we have established a range of revenue targeting initiatives to strengthen our performance across our whole area of operations. Our approach is not only innovative, creative and courageous but also unique in the industry. These results are a vindication of that approach and also show that we are set to further consolidate our position, in the future, as the world's leading airport retail business."

Capital expenditure at the UK airports (excluding capitalised interest) was up 32% to £484m ($687m). The investment programme has included extensive developments at Gatwick South and Heathrow's Terminal 3. Over 45,000sq ft (4,182sq m) of retail space has been added over the past year at UK airports. BAA said it planned to invest over £600m ($852m) per year for the next ten years in further expansion and improvement of its core airports.

Duty and tax-free income, which was affected by the impact of abolition, has risen 9% over the last three quarters. Non-duty free and tax-free income grew by 15% in the year. For the full year, World Duty Free Europe achieved an overall revenue growth of 8% to £322m ($457m) which translated into an operating profit improvement of £18m ($25.5m). The continuing businesses of World Duty Free Americas were ahead of last year, although sales slowed in the latter part of the year, said BAA.

Also, a £7m ($10m) goodwill impairment charge has been made in anticipation of the sale of the World Duty Free Americas' export division to Motta Internacional, which BAA said was well advanced.

In the year to 31 March 2001, BAA's UK airports handled 124.7m passengers, an increase of 5.8%, although the outbreak of foot and mouth disease reduced passenger traffic growth in March and April as in-bound tourists delayed or cancelled visits to the UK.