AIRPORTS operator BAA yesterday attacked the proposed
abolition of duty-free retailing for travellers within Europe and said it would continue lobbying against the changes.
The company, which runs Heathrow, Gatwick, Glasgow, Edinburgh, Aberdeen, Stansted and Southampton airports, reported a 17.9% increase in pre-tax profits from #407m to #480m for the year to March 31.
Stripping out exceptionals, which include a #102m windfall tax payment and #8m income from property disposals, after-tax profits were 11.4% ahead at #371m. UK passenger numbers grew by 6.7% to 104.5 million.
Net revenue - boosted by the US acquisition Duty Free
International, since renamed World Duty Free Americas - grew by 22.3% to #679m. This fell to 5% on a like-for-like basis.
BAA shares closed 15p lower at 663p on profit-taking after reaching an all-time high of 678p. There was also some criticism of the capitalising of interest on preparation for the Heathrow airport Terminal Five.
The dividend total is up from 12.4p to 13.65p.
Finance director Russell Walls said BAA is raising its forecast for traffic growth this year from 5% to 6% after a ''good start in April'' with a substantial number of bookings.
Walls warned that if Europe abolished duty-free shopping for travellers within the European Union from July next year, the company could lose 40% of its UK duty-free business. ''We are looking at how we can protect ourselves against the downturn,'' he commented.
BAA will recover some income by increasing the landing charge per passenger. A 70p per person increase will be phased in next year under an agreement with the industry regulator. And the group's US expansion should help offset some of the income lost at home.
World Duty Free Americas, which was purchased for #400m, runs retail outlets at 14 airports in the US, including Chicago's O'Hare, and JFK and La Guardia in New York, gave a disappointing performance in the wake of the Asian crisis and the strong pound.
Operating profits for the first eight months under the BAA mantle showed a 4.8% decline at #15.8m but BAA chief executive Sir John Egan described World Duty Free Americas as ''a well-timed acquisition''. He forecasts an improved performance in the current year.
Meanwhile, BAA enjoyed strong growth in passenger numbers at Gatwick and Stansted where there was an 11% improvement. Both British Airways' low-cost carrier Go and Richard Branson's Virgin Express arrived at Stansted this month.
Group capital spending was up 29% at a record #642m, of which #171m was spent on the Heathrow Express, linking Paddington railway station to the airport and due to be officially launched by the Prime Minister on June 23.
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