Fraport interim report – Nine months 2014: Fraport Group achieves positive financial performance thanks to traffic growth

In the first three quarters of the 2014 business year, Fraport AG’s adjusted Group revenue increased by 2.3 percent to €1.79 billion compared to the same period in 2013.  Group EBITDA (earnings before interest, tax, depreciation and amortization) grew by 6.4 percent to €621.3 million year-on-year, while the Group result rose by 1.7 percent to €219.6 million.  Operating cash flow markedly improved by 10.1 percent to €408.9 million.  Likewise, free cash flow soared to €204.4 million in the first nine months of 2014, up from €41.3 million in the same period last year.

The Fraport Group achieved positive financial performance thanks to traffic growth in the first three quarters of 2014.  Frankfurt Airport (FRA), the Fraport Group’s home base, recorded a 3.2 percent rise in passenger figures, despite several strike days that led to almost 3,700 flight cancellations and affected over 430,000 passengers.  FRA posted new monthly passenger records every month from May to September 2014.  A new historic daily record was achieved on the last Friday in September 2014, when Frankfurt Airport served some 214,000 passengers in a single day.  Cargo (airfreight and airmail) throughput also increased, rising by 2.1 percent to some 1.6 million metric tons.  While aircraft movements remained stable at 357,016 takeoffs and landings (down 0.1 percent), maximum takeoff weights (MTOWs) rose by 2.2 percent to almost 21.9 million metric tons – due to airlines deploying larger aircraft types.

Traffic figures continued to grow not only at FRA but also at airports in the Group’s international portfolio.  Fraport AG (which is listed on the German MDAX index) has expanded its portfolio twice this year by acquiring U.S.-based Airmall Group – which markets retail space at North American airports – and by winning the bid for a majority stake in Aerodrom Ljubljana, the operating company that runs Ljubljana Airport (LJU) in Slovenia.

Commenting on the positive result, Fraport AG’s executive board chairman Dr. Stefan Schulte said:  “Our latest financial figures show that we are on track to meet our full-year outlook for 2014.  As our international portfolio is truly contributing to the company’s financial success, we are delighted that Fraport could gain two new international investments this year.

Overview of Fraport’s Four Business Segments:

Aviation:  Revenue in the Aviation business segment climbed by 4.9 percent in the first nine months of 2014, from €642 million to €673.4 million – mainly due to higher passenger traffic at FRA and the average 2.9 percent increase in airport charges (effective January 2014).  Despite higher personnel expenses resulting from an increase in pay for security personnel under collective wage agreements, segment EBITDA rose by €17.8 million, or 9.9 percent, to €197.7 million.  Segment EBIT soared by 17.3 percent to €109.9 million, an increase of €16.2 million.

Retail & Real Estate:  With €334.9 million in the first nine months of 2014,  revenue in the Retail & Real Estate business segment contracted by 3.3 percent year-on-year.  This can be attributed to lower revenue from land sales as well as from energy supply services and utilities (due to the mild winter weather).  Revenue in the Retail sub-segment declined, largely reflecting a change in the passenger structure and a reduction in purchasing power related to the persistently high exchange rate of the euro against many Far Eastern currencies.  Correspondingly, the key performance indicator “net retail revenue per passenger” dipped from €3.44 to €3.27 (down 4.9 percent).  Thanks to lower expenses related to land sales and energy supply services and utilities, segment EBITDA remained almost flat in the reporting period at €264.1 million, down €0.4 million or 0.2 percent.  Due to slightly higher depreciation and amortization, the segment’s EBIT edged down by €1.5 million (down 0.7 percent) to €202 million.

Ground Handling:  Stimulated by growing passenger figures and the deployment of larger aircraft types as well as the rise in airport charges, the Ground Handling business segment recorded a 1.3 percent increase in revenue in the first nine months of 2014, growing by €6.2 million to €496 million.  Whereas personnel expenses rose slightly because of the increase in pay for staff under collective wage agreements, material and other operating expenses fell because of one-off effects in 2013 and strict cost management.  Overall, segment EBITDA markedly improved by €8.8 million (up 33.3 percent) to €35.2 million.  With depreciation and amortization declining slightly, segment EBIT increased by €9.7 million, from the previous year’s negative territory of minus €2.5 million to €7.2 million in the reporting period.

External Activities & Services:  Revenue in the External Activities & Services business segment fell by 9.3 percent in the first nine months of the year to €292.6 million.  Adjusted for the IFRIC 12 accounting standards (lower recognition of earnings-neutral capacitive capital expenditure in the Group’s Twin Star and Lima airport companies), segment revenue recorded an underlying increase of 5.3 percent – advancing from €270.7 million to €285.1 million year-on-year.  The revenue gain was mainly due to passenger growth at the Group’s international investment airports.  Segment EBITDA rose by 10 percent to €124.3 million, due to organic revenue growth and lower expenses.  A rise in depreciation and amortization – resulting, among other things, from the inauguration of new passenger terminals at the two Bulgarian airports in Varna (VAR) and Burgas (BOJ) in the previous business year – caused segment EBIT to rise by €4.4 million (up 6.1 percent) to €76.9 million year-on-year.