Aeroports De Paris Sa

Welcome to the 2025 9 Months Revenue presentation of Group ADP. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to Cecil Combo, Head of Investor Relations, to begin today's conference. Please go ahead.

Good morning, everyone, and thank you for joining us for our nine-month revenue presentation. I'm here with Christelle de Rovillard, Group CFO, who will go through some prepared remarks before the Q&A session. Before we start, and as usual, I remind you that certain information to be discussed on today's call is forward-looking and is subject to risks and uncertainties that could cause actual performance to differ materially. For this, I refer you to the disclaimer statement included in our press release and on slide 30 of our presentation.

And I will now leave the floor to our CFO, Christelle de Rubillard. Thank you, Cécile, and good morning, ladies and gentlemen. Thank you for joining us to discuss our 2025 nine-month revenue. Let me now turn to slide three for our key highlights. The left part of the slide showcases two solid figures we have recorded over the first nine months, despite a demanding context, as I will comment later. Group traffic is up 4%, while consolidated revenue grew 9% to above 5 billion euros. This enabled us to confirm our 2025 outlook and targets. On strategic matters, we continue to move forward on the key projects that will shape our competitiveness and long-term development. You already know about most of them. The Connect France partnership with Air France, which is delivering its first tangible results, including the short connection pass launched this summer. The CDG-EVU public consultation, completed in July, which has provided valuable insights for our long-term development plan for Paris CDG. And last but not least, our work towards the next economic regulation agreement is progressing well. I am pleased to announce that our proposal will be unveiled on December 10th, marking the start of the formal process that should lead to a new multi-year regulatory agreement starting in January 2027. I will come back to this important topic in a few minutes. On slide 4, a few words on our airport tariffs. On October 17, the Group submitted its Tariff Proposal for 2026, corresponding to a 1.5% increase. As a reminder, our two previous tariff hikes for 2024 and 2025 have fully offset the impact of the infrastructure tax on the regulated scope. We will now be awaiting the approval decision by the regulator within two months, as per the usual timeline. Let's jump to slide 6. Traffic in the nine months evolved broadly in line with our assumption, despite a less favorable context in some geographies. In Paris, traffic was up 3.5% year-on-year, that is a 2% growth in Q3. While domestic traffic remains on the decline, international traffic has been driving growth since the beginning of the year. Traffic with North America remains above 2019 levels, with growth normalizing at 2%. Traffic with Africa is up 5.5%, driven by VFR demand being well above 2019 traffic, reaching 121%. Traffic with Asia-Pacific Human recovery is the most dynamic, growing 8%, exceeding 90% of pre-COVID levels. Among these, China cashes up, but capacities are not expected to increase further. At the group level, trends are mixed, but showcase strong underlying growth dynamics, up 4%, despite headwinds in some markets. South airport traffic is at 5%, especially driven by its international assets, while Turkey saw less dynamism. GMR airport traffic grew by 3%, largely driven by Darabad, while Delhi faced a difficult Q2 and Q3, given geopolitical tensions, runway works, and the partial grounding of Air India fleet. Lastly, despite its unstable geopolitical context, AIG recorded a significant growth of 7.5%. Let me now turn to slide 7, Retail Performance. As mentioned, S-Bank's Pencil Packs stand at €31.3, 5.3% above 2023 levels, but down 0.3% year-on-year. After an outstanding Q1 and muted Q2, This confirms the sequential slowdown we had commented upon. As a reminder, our full year outlook guided for an underlying 1% decline or growth in SPP versus 2024. As discussed earlier this year, the cause of this trend is to fold. Previously flagged effects inherent to ADP's 2025 situation. the adverse comparison against the Olympics-driven advertising in 2024, ongoing works in Terminal 2 Ije, and reopening of terminals with lesser retail performance, but also external headwinds, namely the slowdown in the luxury sector driven by the appreciation of euro against foreign currencies and adjustments in brand pricing policies. Observing this transitory effect, we stand cautious but remain confident in our underlying retail strategy and offering. Moving on to slide 8, revenue reached just above 5 billion euros in the first 9 months of 2025, a solid growth of 9.4% compared to the same period in 2024. This increase is driven by various trends in each of our segments. In Paris, the aviation segment is up 106 million euros, reflecting both our tariff hike and the continued traffic growth. The retail and services segment is up 178 million euros, which is largely due to scope effects from the acquisition of PS and PEG in late 2024. Excluding those effects, the segments of subdued growth due to the headwinds I mentioned and the end of re-invoicing linked to line 14. International is up 149 million euros. CAEV delivered double-digit revenue growth thanks to its international assets and services companies, while AIG continues its recovery despite geopolitical tensions. Now, let's go through the outlook. Quickly on slide 10 to confirm our outlook for 2025. unchanged since the last publication. You have already noted the reinstatement of the dividend floor of €3 per share for 2025. Looking forward, I can highlight that our 2026 out-token targets will be provided upon our 2025 full-year publication in February next year. Now on to slide 11 to conclude this presentation with a word on our next economic regulation agreement. We can now share a clearer timeline for the start of the process. Group ADP will release its public consultation document on December 10th, which will officially kick off the negotiation and approval process. The rest of the timetables remains unchanged. Discussion with the French state and regulator of opinion will unfold in 2026, with the objective to launch the new contract in January 2027. To give you a comprehensive view of our industrial project and the key assumptions, parameters, and causes of our proposal, we will host an investor teaching in Paris on December 11. This half-day meeting will feature a plenary session, followed by deep dive workshops with management, and plenty of time for Q&A and direct exchanges. The plenary will be live streamed for those who cannot attend in person. But we very much hope to welcome many of you in Paris and discuss the details of our proposal face to face. That's all for this section. Let's now open the line for your questions.

Ladies and gentlemen, if you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Eric Lamarie from Cirque IC Market Solutions. Please go ahead.

Yes, good morning. Thanks for taking my question. I got three if I may. The first one on India. Maybe could you update us on Delhi and the difficulties the airport is currently dealing with? Do you see a better Q4 in particular for Delhi? And what about Noida airport? I think it is open now. Are you still comfortable with the situation and with the competition from Noida and do you see any risk there? My second question on X-Time, could you maybe tell us more on your guidance given the performance so far in 2025? And how do you see Q4 so far? And the last question on the regulation, do you see the current political situation as a risk for your future economic agreement negotiation? Maybe a risk of delay? I don't know. And in particular, would it be an issue for you if the Minister of Transport, for instance, changes sometimes in 2026? Thank you.

Thanks, Eric, for all these questions. So maybe beginning with India and the daily difficulties. Indeed, there were some conjunctural difficulties in daily regarding the traffic over the past few months, but this is something more conjunctural as I highlighted in the presentation, especially, unfortunately, the impact of the crash of Air India, which leads to have some check on the aircraft. Second element, some works on the runway, which are now finalized and should help to increase the traffic in the months to come. And lastly, some geopolitical tension due to the conflict with Pakistan, which can also uh to decrease the the traffic but all in all we are confident that all of these elements are more conjunctural and that we will have a still an important exposure to traffic growth in the midterms regarding your second question in india for noida so this has not the airport is not still open it will be the case in a in a few few weeks just to remind you that your airport is located 75 kilometers from Delhi city center which implies a two or three hour journey by car so not so easy with an initial capacity of 12 million passengers it will primarily address the catchment area located in its direct vicinity like Noida and other cities from the state of Uttar Pradesh with the opening of the new terminal one Delhi airport has a 100 million passenger capacity So airlines do not have any development constraints in daily airports. Jura airport, as for itself, may primarily host some flight flights and short-haul flights operated by regional or low-cost airlines. So all in all, we are confident that there won't be any impact on daily traffic due to competition. Regarding your second question in terms of retail, So indeed, there was a slowdown this Q3, especially due to the luxury sector impacted by the significant Euro appreciation against US dollar first, but also against Chinese renminbi. That leads to our prices much less competitive. in this context and all the more as brands have not readjusted fully their pricing and prefer to maintain momentum in the local markets impacted by this FX move. Conversely, we can also notice at the same time that there is a strong momentum in categories driven by X time, especially beauty. On top of this macroeconomic element, there is also the impact of specific elements due to ADP previously flagged unsupportive headwinds. I mentioned in my presentation the rebasing of advertising post-Olympics, the works in terminal 2EK, the full year impact on summary of opening of some which are less performance in terms of retail. But all in all, our performance is consistent with the outlook for the full year, and we have confirmed our guidance, which is a growth between 4% to 6% compared to 2023. And lastly, on your question regarding regulation, clearly we do not expect the current political context to affect DERA discussion, which are more technical discussions than political ones. So we are still in a position to have technical discussion with the different technical services. Regarding specifically the regulator, as you know, it's an independent authority, so clearly no issue here. And regarding your specific question of the transport minister, we are confident that there is continuity of the state so that there will always be a government representative to sign an era. Thank you.

Thank you.

The next question comes from Andrew Lobenberg from Barclays. Please go ahead.

Hi. Can I ask two questions? Coming back to that last point on regulation, where you say that you think that the ERA debate is technical. When you present your plan to us on the 10th of December, it will reflect plans to expand the airport. And surely decisions over airport expansion are not technical, but they are policy. And how highly any one government weights the environmental agenda compared to a growth agenda or something like that does become very political. So I'd just be curious to see what you say to that. And then my other question again is, sorry, it's going to come back to the retail. It seems that you guys have been guiding us to expect weakness in your sales per packs for about a decade because of 2AC and Hall K. But it never came, and it never came, and it never came. And certainly, This quarter we do see that weakness. I'm just wondering about the timing of these headwinds. I mean, is it that they've just started appearing and so we should expect the headwinds to be material for the coming quarters? Or perhaps is it the case that the headwinds have been there in previous quarters but underlying trading was so strong that it overcame them? So how should we think about the timing or the duration of the headwinds on retail?

Thanks. Thank you, Andrew, for your question. So you're totally right. The discussion around capacity expansion is not technical and can have some political impact. But for that, we are totally confident because, as you know, we have shared and we have launched, over the past few months, two consultations regarding the target vision both for EARLY and CDG. So speaking specifically of CDG, the consultation generated over 20,000 contributions across more than 700 municipalities, so giving us a clear view of stakeholders' expectations and the long-term vision for 2050. So we can consider that this political debate has already been addressed through this consultation. We have different priorities that have emerged from this consultation, mobility and intermodality, quality of service, accessibility, sustainability and low carbon energy, and local integration and implement. All these insights that we have received directly feed into our industrial roadmap, strengthening our priorities and environmental ambition, passenger experience and territorial integration. Finally, all these processes that we have voluntarily conducted reinforce the legitimacy of our future ERA proposal as it demonstrates broad stakeholder engagement and secures common elements on our long-term priorities. So that's why we are kind of confident on this political debate. Regarding your second question in terms of retail and the specific headwinds, Indeed, we have spoken of this headwind for a long time, but clearly we now really begin to feel the impact. The work at 2EK will spread over a long period since the boarding lounges will be renovated in a second phase. So just to say that works in terminal 2EK will be continuing in 2026. We have just begun a new phase of work leading to the closure of the beauty and cosmetics area. Some boarding gates are closed due to construction work, as I mentioned, which will lead to transfer to all L and M of the terminal, which will continue to have an impact. So there will still be clearly an impact on those headwinks in the months to come.

Thank you. Thanks.

The next question comes from Dario Maglioni from BNP Paribas. Please go ahead.

Hi, good morning. Thanks for taking my questions. I have three for me. First one, based on the consultation, the outcome of the consultation for Charles Day and Gold, expansion and works. And we published that in the beginning of this month. Should we expect some major works to road access or rail access to the airport? And will this be included in the CAPEX for the next regulatory period? Second question, is it related to what's coming in terms of regulation? Of course, there are debates in France about the French corporate tax rate. How would you deal with this uncertainty in the next regulatory period? And third question about traffic in Paris, which in September was quite weak. So if you can explain why and what should we expect for the winter, also based on the plans by airlines?

Thanks. Thank you for these three questions, beginning with the consultation of CDG. So as I mentioned, it's generated many, many contributions, and we have really tried to feed those feedbacks in our industrial roadmap. But regarding specifically your question in terms of road access, no, that's not a major part of our industrial project. We will give you much more color, and this will be the whole point of the presentation in mid-December. But clearly, there is not the same topic as it used to be the case when we were talking of a brand new Terminal 4, which led to an important investment in terms of road access. Regarding your second question of the French corporate tax and the impact it can have on regulation, just to tell you that the regulated work we are taking into account is based on the current corporate tax rate, excluding any temporary surcharges or one of additional contribution. For the next economic regulation, you know that this work will be fixed over the entire duration of the era. But of course, we are totally aware that given the current context in France, we could be exposed to tax volatility. So that's why we are exploring adjustment mechanism that could partially offset any gap between the forecast and actual tax burden. Let's have this conversation more in detail on the events of December. Cecile, you want to take the third one?

Yeah, on September traffic indeed. As we pointed out in previous disclosure, we were expecting a progressive softness in traffic evolution. In September, what you might have noticed in particular in CDG reflects mainly capacity reallocation, not an issue regarding underlying demands. Several airlines actually reduced or shifted some traffic from Schengen and North America which were previously allocated to CDG too early and they did that after the summer so that's what is reflected in the September traffic so that weighed on CDG's short-haul traffic while long-haul growth North America and Asia kind of posed at the same time, reflecting here as well some elements that we had largely commented upon. So these capacity evolutions are seen as short-term adjustments and comparison as well for the rest of the year will ease towards year end because ATC descriptions that you had seen at the beginning of the year as well as Middle East tensions from the late of last year, 2024, will fade from the comparison basis, so improving the comparison. Thank you.

Thanks.

The next question comes from Tobias Fromm from Bernstein. Please go ahead.

Good morning. I have two questions, please. One more on retail. X time duty-free was essentially flat year-over-year in Q3. And just to sort of quantify what you had said before, is that the trajectory that we should expect also for Q4 and maybe going into 2026? And then the second one on aviation, your tariff proposal for 2026 is 1.5%, which, you know, we all expect to be signed off. which very simplistically gives us a unit revenue increase by 1.5% for sort of airport fees. Could you give us a steer on how you see aviation OPEX operating costs on a per unit base evolving in 2026?

Thank you. Thanks for this question. Clearly, regarding the SPP, we remain confident and conscious of the macro environment that could still play on the performance and impact the performance for the rest of the year. Looking forward in 2026, it's a little bit early. But as I was mentioning, as the specific headwinds that weigh on ADP performance will be continuing in the 2026, especially the works in Terminal 2EK. As I was mentioning, we are entering a more important phase in terms of work with the closure of the beauty and cosmetics area. That should also weigh on the 2026 performance. rest of the year for 2025, we are nevertheless totally confident in our capacity to reach the guidance which is a growth between 4% to 6% growth compared to 2023. Regarding your second question in terms of the increase in tariff and the link with the evolution in terms of As you know, the main driver of our OPEX basis is the opening of new infrastructure and the surfaces. Having said that, when you look specifically on each of our items, external services, the evolution will be driven by the increased in traffic growth for specific items and also our efforts towards quality of service. Regarding also the staff cost, which is an important item in our OPEX basis, it will remain dynamic in Paris, reflecting both the structural salary increase baseline of 2.5%, as you know, on average per year, as well as the impact of the last recruitment we made over the past 12 months. Regarding the specific items in terms of taxes, we will continue to follow the impact of the finance project bill that could have an impact, but it's clearly too early to say as the process is ongoing. The proposal we made with a tariff increase of 1.5% is in line with our OPEX evolution assumption for 2026. Thank you.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Christian Ndelsu from UBS. Please go ahead.

Hi, thank you very much for taking my questions. Maybe can I start one with the CAPEX for the next regulatory period? I think in the press release last night, you mentioned that during the consultations, the stakeholders appreciated your modular approach to CAPEX. Are you trying to signal here that there will be no meaningful capex increase over the next years? And it's rather a very lengthy that the capex comes gradually over the years with no meaningful increase. Is this what you're trying to say? Secondly, just could I ask you a bit for a bit more detail around the tariff increase for next year? Can you tell us what was the actual regulator return you're expecting to to achieve this year, my impression was that you will be very close to the WACC upper limit of the regulator. So in that context, I'm trying to think how does the math work for next year. You're going to have traffic growth of a couple of percentage points. You're asking for a 1.5%. That suggests to me your regulator return goes up even further. Is your hope the WAC increases for next year already or am I missing any other moving parts there? And then can I also ask you, looking at the next regulatory period, there's a lot of adjustments that you've been talking about, adjusting for risk, adjusting for traffic risk, potentially for the tax rates. I think in the past, there are also adjustments for the capex that you generate or some buffers in place to protect you. I guess my question is, the more adjustments we put in there, the lower the WAC at the end of the day. So I guess my question is, how do you think about balancing the risks that you are willing to take over the next regulatory period versus the rewards, which comes via a higher WAC and a higher tariff? If you could talk a bit about the approach there. Thank you.

Yes, thank you for these three questions. So beginning maybe with the first one in terms of CAPEX. So yes, clearly, as you mentioned, we have a modular approach. We have a totally different approach than the one we had before the COVID crisis to have an industrial project, more modular, more feasible, to find capacity inside the existing capacity first before going and expanding a new capacity outside the existing terminal. Having said that, regarding your question if there is no meaningful capex increase, as you know, it's a little bit early to comment on a precise figure, but having said that, we have always mentioned that we will have important commitments in terms of maintenance, especially because of the aging of our infrastructure. We will have also all the investment dedicated to new capacity, so all in all we know that the investment will be kind of important but let's discuss about our proposal and the precise figure on the 10th of december and once again it has it means something to it's not easy to give you a figure precise figure for the capex without giving you the full picture and especially the way they are financed. So this will really be the objective of the public consultation document to give you a comprehensive view on the economic balance. Regarding the tariff increase and the expected return on Roche, as usual you know, we don't disclose our expectation in terms of in terms of Roche for next year. But having said that, the underlying WACC used for this 2026 tariff proposal is consistent with the regulator WACC methodology. This is important to ensure constructive dialogue with the regulator while securing a tariff approval within the current one-year framework. as you know, which is the last one before the future multi-year framework. So the parameters we have taken into account for 2026 tariff approval are not indicative of the levels that we will apply for the ERA. In regulator view, the level of work and Regarding your third question and the way we can balance the risk and the higher WACC, in regulator view the level of WACC and adjustment factor are not linked. You know in the methodology of the regulator there is an approach regarding the quantitative estimation of the each to calculate each parameter and on top of this quantitative approach comes some qualitative criteria but in those qualitative criteria there is no link with the adjustment adjustment sector on the contrary in those criteria qualitative criteria i think it's important to remind that the duration of the era and the fact to be in the multi-year in a multi-year approach leads to higher work. At the end of the day, so yes, we are working and exploring some specific work on the adjustment factor so as to have a fair sharing of the ring as much as possible. At the end of the day, our objective is to reach a balanced outcome, to have the right industrial project by the right written condition, to ensure at the end of the day that the capital invested is fairly remunerated with a fair level of WACC and while at the same time keeping the system sustainable for all stakeholders. So all the work on the adjustment factor are part of this objective to reach a balanced outcome. Ultimately, all parties in this negotiation have the same goal, a framework that enables the delivery of the right infrastructure at the right cost, and we are confident that we will find this element.

Thank you very much. And if you allow me, I could ask a quick last one in terms of capital allocation. A few quarters back, you were talking about potential M&A in developing markets if interesting opportunities arise. Is that still something in the plan for the next years? Or does the current investment in Paris mean that that is out of the question?

Thank you. Thank you for this additional question. Regarding our M&A policy, as you know, and this has always been the case, we remain disciplined and selective. Our focus is on value creation. not expansion for the sake of scale. So clearly, should we look at some new opportunities, we would analyze very carefully the impact on our balance sheet and the impact in terms of rating. So it's something important for us and this strategy will remain the same in the future.

Very much.

The next question comes from Ashish Ketan from Citigroup. Please go ahead.

Good morning, everyone. Thanks for taking my question. Can you please help us provide some early thoughts on the traffic growth for Paris in 2026? And second question is with regards to TAV. You mentioned that traffic growth has been slower in Turkey so far. So how do you see that evolving in Q4?

Thank you. Okay, thanks for these two questions. Regarding the traffic growth in Paris in 2026, maybe just a word before regarding the end of 2025. Just to remind you that we expect to have trends similar to those we noticed in the last few months. This means, as I mentioned in my presentation, sequence will slow down in traffic growth because there is a comparison basis that was easier earlier in the year because of air traffic modernization system at the beginning of 2024. Secondly, French domestic traffic should remain down, as you saw at the end of September, and international traffic should remain also the growing factor. Having said that, we expect also the same trend in terms of domestic traffic and international traffic for 2026. At this stage, non-winter capacity are encouraging to this outlook and for further progression into 2026. We remain, of course, attentive as airlines are just at the moment setting up their schedules and adjusting them to actual demand. So all in all, we confirm our guidance for 2025, but we should be in a position to give you more precise 2020 outlooks during our full year 2025 reason because we will have more visibility by then. Maybe on the second question, I let Antoine answer.

Thank you. So on your question regarding traffic in TAV, so just coming back to 2025 figures, we saw indeed a relatively soft performance in Turkish assets, first due to a tougher comparison basis at the start of the year with the weather effects and followed by a deterioration of macroeconomics, strong inflation in the country and geopolitical events. a combination of which affected both domestic and international traffic. Conversely, traffic in TAV's international assets, Georgia and Almaty, remained quite strong. So looking forward, we do expect some growth in TAV traffic for the rest of the year and 2026. With macroeconomic policies being stable in Turkey, we expect some growth to happen, but probably moderate. And we remain very confident also in the performance in the international assets, again, Georgia and Almaty for the traffic of Chile. Thank you.

The next question comes from Dario Maglioni from BNP Paribas. Please go ahead.

Thanks for allowing me to ask a couple of questions. Actually, I have two quick ones. One on the Terminal 2EK. Can you confirm when you expect the works to finish? You said 2026, but when should the work finish? And what are you exactly doing there and why? kind of uplift we could expect in spent passenger. Second question, on the budget under discussion in France, is there any discussion about changing the rate on infrastructure tax that would impact the IDP balance in France? Thanks.

Yes, thank you for these two additional questions. So regarding Terminal 2EK, As I mentioned, and as you understand, we have talked about that for long, so it seems long, but clearly the work will still spread over a slightly longer period. So in 2026, all this work will continue, and as I explained, we are entering a new phase which could have more impact because we are closing the beauty and cosmetics area. it should last over 2026. We don't disclose a specific impact in terms of uplift but maybe more generally what I could say is that X time is clearly central to our retail and hospitality strategy and it will still continue to play a central role in driving our regarding your second question in terms of possible changing evolution in terms of rates of tax infrastructure so maybe just to give you a global overview that given the current composition of the parliament this year's finance bill debate will be especially volatile so there are plenty of measures that will be put forward, amended or canceled between now and the final text. There was to be a clear specific amendment two days ago on a possible evolution of this tax rate regarding tax infrastructure, but as the whole text was not adopted so far in the current version, There is no evolution regarding that. But of course, we will continue to monitor all those elements and their potential impact. And it can really change between the current version and the final version.

Thank you.

Thank you, ladies and gentlemen. That concludes our Q&A session. I give the floor back to the speakers for any closing comments.

Well, quickly to thank you all for joining and for all your questions. Our next major communication milestone will come in December, as you all noticed, with the release of our ERA proposal and the investor teaching on December 11th. We truly hope to see many of you in person in Paris on that occasion. It will be a great opportunity to engage and discuss our project in more detail. Invitations allowing you to register for the teach-in will be sent out in the coming weeks and before that date. And in line with our disclosure policy, we will enter a quiet period starting November 11th included ahead of the publication of the public consultation document. During this period, we will refrain from engaging with the market in order to avoid the risk of disclosing any sensitive information. But of course, until then, Elliot and I at the investor relations team, we remain fully available to answer your questions if you have any. So don't hesitate to reach out. And so with these few housekeeping remarks, let me thank you again for your time and wish you all a very good day. Talk to you soon.

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