Fraport Interim Report – 6 months 2014: Financial figures grow as expected

In the second quarter of 2014, Fraport AG’s revenue rose by one percent to €600.1 million compared to the adjusted figures for the second quarter of 2013. The Frankfurt-based airport company recorded a noticeable increase in Group EBITDA (earnings before interest, tax, depreciation and amortization) of 9.6 percent to €219.7 million, as well as a 10.4 percent jump in the Group result to €85.7 million.

For the first six months (January to June) of fiscal year 2014, Fraport reported a one-percent gain in the adjusted revenue to about €1.12 billion. Fraport achieved double-digit gains in both Group EBITDA (up by 10 percent to €354.2 million) and Group result (up by 11.7 percent to €91.7 million). With €82.4 million, free cash flow at the half-year mark was clearly in the positive range, versus minus €25.2 million during the same period in 2013 due to the higher capital investment volumes last year.

This positive financial development parallels the growing traffic volumes. Welcoming some 27.8 million passengers, FRA registered growth of 2.4 percent year-on-year as well as a new half-year passenger record – despite a number of strike days that affected the airport from February to April 2014. The Frankfurt hub’s cargo throughput (airfreight and airmail) grew by 2.2 percent to 1.1 million metric tons. Although aircraft movements remained relatively flat at 229,039 takeoffs and landings in the first half (down 0.1 percent), accumulated maximum takeoff weights (MTOWs) climbed by 1.9 percent to 14 million metric tons – due to the deployment of larger aircraft types. Passenger figures also continue to grow positively at the Group’s international airports.

Fraport AG’s executive board chairman, Dr. Stefan Schulte, explained: “Fraport’s good financial performance in the first half of 2014 can be attributed to ongoing passenger growth both in Frankfurt and at our international airports – and also because of lower capital expenditures. The ongoing growth in demand for air traffic worldwide opens up development opportunities for Fraport domestically and internationally – whereby the timely creation of the required capacities at each airport is vital.”

Fraport’s Four Business Segments

Aviation
Revenue for Fraport’s Aviation segment climbed by 3.9 percent in the first half of 2014 to €418.4 million – mainly due to passenger growth at Frankfurt Airport as well as an increase in airport charges. Reduced expenses for winter services at FRA following the mild winter led to lower segment expenditures. Thus, segment EBITDA jumped by 20.4 percent to €104.4 million. Slightly higher depreciation and amortization resulted in segment EBIT of €46.1 million – a noticeable gain of €16.1 million versus the same period in 2013.

Retail and Real Estate
The Retail and Retail Estate segment reported revenue of €218.7 million in the first six months of 2014, down 4.4 percent year-on-year. Contributing factors here included lower revenue from land sales as well as energy supply services and utilities. The “net retail revenue per passenger” key performance indicator declined from €3.56 to €3.42 during the first half of 2014. In particular, this drop can be attributed to fluctuations in exchange rates and passenger traffic, especially for some destinations having high retail purchasing patterns. Nevertheless, segment EBITDA remained at a stable level of €172.3 million (up 0.1 percent) due to declining costs for energy supply and utilities in the reporting period. Segment EBIT dropped by €1.3 million to €131.1 million.

Ground Handling
The increase in passenger traffic, deployment of larger aircraft types, and the rise in infrastructure charges at FRA enabled Fraport’s Ground Handling segment to post revenue of €317.5 million, up 1.1 percent year-on-year.

Although personnel expenses rose slightly due to pay increases under collective wage agreements, material and other operating expenses for the Ground Handling segment dropped because of one-off effects in the previous year and successful cost management. In total, segment EBITDA improved significantly by €9.2 million to €11.2 million. Depreciation and amortization remained constant resulting in segment EBIT remaining in the red with minus €7.3 million.

External Activities and Services
Revenue for Fraport’s External Activities and Services segment declined by 14.1 percent to €167.8 million in the first six months of 2014. Adjusting for lower realization of earnings-neutral capital expenditures in Fraport’s Twin Star and Lima Group companies (IFRIC 12), segment revenue rose from €160.8 million to €162.8 million in the reporting period (up 1.2 percent year-on-year). The reason for this positive revenue development was primarily the passenger growth at the Group airports.

Segment EBITDA advanced by 8.3 percent to €66.3 million thanks to organic growth in revenue and a decrease in expenses. Growing depreciation and amortization – including for the inauguration of new passenger terminals in Burgas and Varna, Bulgaria, last year – led to segment EBIT of €35.8 million, up €1.4 million year-on-year.