Wellington, May 18 NZPA - Infrastructure investor Infratil has turned around its performance to post a $29 million net profit after last year's $191 million loss, and the new half-owner of Shell's local fuels business said it expected underlying earnings to improve this year as it sticks to conservative strategies.

But despite success in its sales and purchases over a difficult year, and a prudent approach to capital management and debt reduction, the company said its share price still discounted the value of its assets.

The $220m turnaround for the year ended March 31 included a $68m loss in value of its financial derivatives and an $84m net gain on the sale of assets.

Infratil's operating revenue, after interest and tax, rose 16 percent from $77.6m to $90m, due to the increased earnings and an $18m reduction in interest costs.

The company reduced net debt to $830m from $1.2 billion, and sold $264m worth of assets for $392m.

Infratil had raised long-term debt and equity capital ahead of the global financial crisis, which developed in 2007.

"While the worst of the financial crises is likely to be in the past, and the economic recovery appears to be under way, Infratil will remain careful and conservative," chief executive Marko Bogoievski said.

Infratil saw opportunities as weaker government finances pointed toward more private provision of infrastructure and good returns on the capital invested to reflect the risk.

Over the year, Infratil sold its holdings in Fullers Ferries, three Auckland bus depots, Lubeck Airport, Auckland Airport, and Energy Developments.

Fewer asset sales were expected this year, although Infratil would continue to examine its businesses.

The market value of Infratil's equity rose to $1 billion from $764m a year earlier, but still remained at a significant discount to the value of the company's businesses, he said.

"Further improvements in the market recognition of Infratil's value will come from management delivering to plan and from measures such as the ASX listing of Infratil in June, the introduction of a dividend reinvestment plan and by maintaining good communications with investors and the financial community."

A 1.8 percent increase in earnings to $363.3 million in earnings before interest, taxes, depreciation and amortisation, and revaluation of financial derivatives (ebitdaf), despite the asset sales and difficult economic environment, reflected the positive state of the industries in which Infratil had invested, Mr Bogoievski said.

Ebitdaf was forecast to rise to between $390m and $430m in the current financial year, on the back of investments and the market position of Infratil's businesses.

Strong earnings were delivered by TrustPower ($274m in earnings) and Wellington Airport ($68m).

Infratil Energy Australia recorded $11m in earnings and NZ Bus $29m, despite negative one-off items for both businesses, while Infratil Airports Europe "experienced a difficult year" with a $10 million loss.

During the year, Infratil and the New Zealand Superannuation Fund purchased Shell New Zealand's distribution and retail businesses and a 17.1 percent interest in the New Zealand Refining for just over $900m, with $420m from the parties and the rest from banks.

The purchase showed that Infratil had a reputation as a credible investor with banks, the superannuation fund and its own share and bond holders, the company said.

The company was investigating a bond issue to extend the debt maturity profile of Aotea Energy, the holding company for the Shell operating business.

"Aotea Energy is expected to deliver a similar financial outcome to that of the Shell NZ operations in 2009 ... but a great deal of work is going into delivering better returns in future."

Shares in Infratil closed down a cent at $1.67.