Wellington, May 20 NZPA - Financial market conditions have affected infrastructure investor Infratil and it is prepared for tough economic conditions during the next 18 months, while remaining optimistic about the longer term.

Infratil today said its operating surplus before tax, which it considered the key figure for comparisons, rose 131 percent in the year to the end of March to $87.8 million.

The company reported a net loss of $1.7m for the year, compared to a profit of $68.2m last year. That was due to a $73.3m turnaround in accounting revaluations which the previous year contributed a $60.8m gain and in the latest year a $12.5m loss.

The performance of the past year showed how financial market conditions could overwhelm outcomes, even as energy, airport and public transport businesses delivered good results, Infratil said.

Earnings before interest, tax, depreciation, amortisation, realisations and impairments, and fair value movements of financial instruments (ebitdaf) rose 94 percent to $315.9m.

The increase mainly reflected consolidation of TrustPower for a full year, Infratil said.

During the year $436m of investment was concluded, taking the total during the past two years to $822m.

Infratil chief executive Lloyd Morrison said that while the company had continued investing it had become much more cautious in the past three to six months.

It now felt the "really high risk period" of the credit crunch was probably over, he said.

But he also thought "we could find very difficult economic conditions over the next 18 months which is something we're prepared for".

TrustPower, in which Infratil has a 50.5 percent interest -- about half Infratil's assets -- contributed $49.5m to Infratil's earnings for the year.

Mr Morrison said of key importance for TrustPower, which is developing wind and hydro projects, was a global trend to renewable energy sources and policy responses around renewables.

The Infratil Energy Australia (IEA) group was growing into a substantial energy retailing, trading and generation group with assets of $271m at the end of March and ebitdaf for the year of $12m, Infratil said.

Infratil also has interests in Australian energy, with Mr Lloyd saying a key factor for Infratil was that it had exposure to ongoing privatisation of that industry across the Tasman.

It also has interests in European airports and a 66 percent stake in Wellington Airport, which had an ebitdaf on $60m in the March year, up from $49.7m the previous year.

Passenger numbers at Wellington increased 8 percent to 5.02m in the latest year, with the growth rate accelerating to 19.9 percent for the March quarter.

The key factor in that increase was the entry of Pacific Blue into domestic travel, Mr Morrison said.

Infratil was expecting Pacific Blue to consolidate its position, and was also looking for more capacity on trans-Tasman services.

"We are complete believers in the long term growth of airports," he said.

Despite environmental concerns Infratil believed that there was an irrevocable trend to lower costs for freight and passengers.

Through NZ Bus, Infratil is involved in bus services in Wellington and Auckland.

Last year was tough for NZ Bus, with costs increasing while passenger numbers did not, Mr Morrison said.

That had changed recently with 3 percent growth in Auckland and 6 percent growth in Wellington in the past couple of months.

Around the world policies on public transport would change because of global warming and congestion issues, Mr Morrison said.

But he cautioned, "In New Zealand that doesn't mean we're going to do well because obviously there's still the risk of a different regulatory environment here and one that doesn't incentivise the private sector".

Infratil shares were down 5c to $2.30 at mid-afternoon today, having been up to $3.24 a year ago.

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