It's been an eventful 12 months for Sydney Airport Holdings Ltd (ASX: SYD) which has a year-end date of 31 December. Not only did the company simplify its structure via the successful acquisition of minorities which boosted the company's ownership of Sydney Airport from 84.8% to 100%, but it also welcomed many new investors to its register after its 'old master' Macquarie Group Ltd (ASX: MQG) decided to cut its ties with the airport and undertake an in-specie distribution of its shareholding.
The company is solely focused on Sydney Airport these days – it used to have interests in multiple airports around the world – so it's now reliant on organic growth, but the rates of growth the company continues to achieve are remarkable.
For the full year, Sydney Airports has reported a 7.3% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $910 million on the back of solid growth in revenues from its operating divisions.
Aeronautical revenues grew over 7%, property, car rental and car parking revenues increased by over 10%, while retail revenues grew the slowest at 2.3%. International passenger growth was also strong at 4.1%, while overall traffic growth was still reasonable at 2.6%.
Passenger growth benefited from the addition of new direct routes into India and China, served by the addition of new carriers Air India and Sichuan Airlines.
A full-year distribution of 22.5 cents will be paid which at $3.99 per security equates to a dividend yield of 5.65%
Clear skies ahead
During the year, the 2033 Master Plan was approved by the government which is aimed at expanding the airport's assets to accommodate growth in passenger numbers from 38-million passengers today to 74 million in 2033.
January has certainly got off to a flying start, with overall traffic up 4.7% and international up 8%.
Meanwhile, management has provided guidance for a distribution of 23.5 cents per security in 2014 which represents an 8.1% growth rate in the underlying distribution – a rate sure to please income seeking investors who are generally attracted to infrastructure assets such as these.
Foolish takeaway
Like fellow infrastructure companies Macquarie Atlas Roads Ltd (ASX: MQA) and Transurban Group (ASX: TCL), investors in Sydney Airports can sleep well at night knowing they own a slice of critical infrastructure which will continue to attract stable revenues and produce reliable earnings. More so than its toll road peers, Sydney Airports has a number of levers it can pull to grow organically and for this reason it is arguably a better business. The company's first right of refusal on a second Sydney airport is also an extremely valuable option to hold.
The share price is up strongly over the past 12 months which makes it less appealing in terms of the margin of safety. Patient investors may prefer to wait for the opportunity to 'board' this company at a more appealing price in the future.
