Fraport Ag Frankfurt Akt

Thank you, Caio, and welcome also from my side to Fraport's third quarter analyst conference call for 2023. I have with me at the table our CEO, Stefan Schulte, and our CFO, Matthias Thiel. They will guide you through the presentation, and thereafter there will be time for questions. Stefan has to leave at 3 p.m. CET, but certainly we will continue also thereafter if there are any open questions. So I think let's start.

Yeah, thanks very much. Good afternoon also from my side. Ladies and gentlemen, here from Frankfurt. On my first slide, that's slide number three, you see the key financial highlights of the past third quarter. Revenues, EBITDA, and EPS achieved all-time high figures. So far, so really a good development. Matthias will also talk about this in detail, but Frankfurt Aviation and our international airports were the key drivers of our financial performance, with aviation achieving the best ever FTA and our international airports being clearly above 2019, so pre-COVID level. In Frankfurt, we also recorded an improving trend in our ground-tending division, while retail and real estate remained, let's say this way, robust, despite macro headwinds, but more on the financial performance later. Besides the P&L development, we again achieved a clear positive week cash flow in the third quarter, so that's really a very good result overall. Moving on, slide number four. Here we have the cumulative figures on the first nine months. Driven by the good performance in the third quarter, also our nine-month figure for revenues and EBITDA achieved all-time high marks, which is a really good development. As I mentioned already, bottom line, our earnings per share are also clearly improved compared to the previous year. Compared to 2019, however, the financial headwind from our increased leverage becomes visible. 3.40 earnings per share is the best result of a third quarter in our group history and led to a clear reduction in our net debt to EBITDA key leverage ratio. The operational performance at Frankfurt Airport, which contributed to the strong Q3, is shown on slide number five. After a modest start into the year, we recorded an improving traffic trend at Frankfurt Airport over the second and third quarter. The traffic ramp up was also positively impacted by market reopenings, as you can see with China on the chart. During the third quarter, we also lifted the movement cap greatly and are now in October back to the same number of slots per hour offered as pre-COVID. and with a very stable operation, improving punctuality. Consequently, October recorded our best recovery with post-COVID and reached about 88% of 2019. Besides the year-to-date performance, you also find our outlook on the winter flight schedule on the chart. At about 90%, we expect continued traffic momentum for the fourth quarter and for the first quarter of next year. As a result of the gradual traffic ramp-up this year, we expect that Frankfurt Airport will show year-over-year traffic growth also in the next year. Moving on to our international portfolio on slide 6. Let me start with the very positive message here. Our international portfolio is back, so traffic is back. During the third quarter, our international airports in total handled the same number of passengers as pre-COVID. The traffic recovery was especially driven by Fraport Greece and Fraport Antalya, which showed the strongest recovery. especially if you take Fraport Antalya, knowing that a lot of Russian passengers couldn't go there. That's really a very, very positive result for Antalya. You also see single assets like Ljubljana Airport or Fraport Twinstar. They are still lagging behind, but thanks to our diversified international portfolio, we were able to balance the company, and yes, we were right on our international strategy. We clearly benefit from our international diversification, which has become very evident since the breakout of the pandemic. And I'm also optimistic for the next years regarding Ljubljana or proper Twinstar, because Ljubljana, we see a growth over growth over the years. The reduced numbers are due to the insolvency of Adria Airlines, and they are coming, the frequencies are taking up, but other airlines now And on proper twin star, we had good discussions with the Bulgarian state on further marketing initiatives by the Bulgarian state of their destination. Staying with our international portfolio for a moment, looking at Lima. I'm on the next slide. As you are aware, we already completed the new second runway this year, with the first flight taking place already in April. Also, our second project on site, the new midfield terminal is progressing very well. On the chart, you see the progress of the main hall and main pier. The outer shell will soon be completed and will move with full speed into the interior. Thanks to the very rapid construction progress, we are confident to deliver the first phase of the new terminal already end of next year, 7 December 2024. The second part of the new terminal then will follow in the second half of fiscal year 2025. So a very good progress in Lima, which is developing on time and on budget, and also the traffic figures are going up because the political violences are coming down and getting more and more stable over there. Further steps we have also taken at Frankfurt Airport. On slide number eight, you see the first images of how the new launches in Tunnel 3 may look like. While we stand in the process, we have meanwhile closed the data room for potential tenants. During this process, 13 parties, airlines and private operators showed interest. Currently, we are entering in discussions with possible tenants to clear remaining questions. Here we expect to take a decision on the new tenants, most likely in the first quarter. of the next year. By then, or later in the second quarter, we'll also have visibility on the new retail tenants that will move into terminal three. Here we also started the process for high-end luxury stores, fashion outlets, food and beverage operators, and car renters. Further progress at the Frankfurt site we're experiencing in total one, I'm on slide nine, Here we launch the security relocation in Concourse B. We also talked about this project in previous presentations. The new centralized security checks will connect the Schengen airside area of Concourse B with the Schengen airside area of Concourse A. In total, we discussed the implementation of 14 new technology security lines They will replace 24 security lines with the current technology, so better and quicker process because the throughput is more or less three times on a new one, but with much higher comfort for the passengers who don't have to take out any longer laptops or liquids. So it's very positive regarding process time, but it's also very positive regarding passenger comfort. In addition, the security relocation will turn about 5,000 square meters of land-side retail space into more attractive air-side areas. The relocation itself will take place in two phases. The first phase will be completed probably around end of 2025. The second phase we expect to complete end of 2027. Besides the security relocation, we are also upgrading the remaining security control checks in Terminal 1 and 2. Here, we have meanwhile equipped 19 lanes with new CT technology. By spring next year, the number will grow to 40 CT scanners, so a clear acceleration of our services, which also means more time to shop and a better passenger comfort. And acceleration will also be visible regarding our ESG activities. We meanwhile completed the test once for our new solar system, a vertical design to limit the impacts on the biodiversity. After receiving the final permits, we will immediately start with the construction of our new solar park, which is along the Tech of Runaway. With a total length of 2.8 kilometers and with 90 meters, Weiss Solar Park will be one of the largest parks in the mine mine area. Simultaneously, we plan to construct another second solar park, this time next to the new landing runway northwest. The two solar parks will form the heart of our energy transitioning onsite. In addition also, our wind park project, where we signed a power purchase agreement two years ago, is moving ahead as planned. Here the electrical connection will soon be implemented, while the pillars for the windmills are being constructed too. Completion of the wind park is still scheduled to be in the second half of fiscal year 2026. Ladies and gentlemen, let me summarize our development in the first nine months. Our international airports have fully recovered their pre-COVID passenger traffic. Their financial development has even outperformed the 2019 benchmark. Frankfurt Airport is showing an improving traffic momentum too, while our major construction projects are making good progress. Furthermore, we are staying highly focused to deliver OPEX control measures, consequently We continue to target the upper area of our financial guidance for this year. With regard to the EBITDA, this will be about the level of 2019 or even slightly higher. So thank you, ladies and gentlemen, and now Matthias with more financials.

Thank you, Stefan, and a warm welcome also from my side. Let me start my presentation today with one of the most relevant topics these days, our cash flow and indebtedness situation on slide number 30. Overall, the operating cash flow and capital expenditure developed in line with our expectations. Reflecting the traffic increases and financial result performances, the operating cash flow was clearly up compared to the previous year. At 732 million euro, the operating cash flow achieved about 92% of the 2019 level and was clearly sufficient to cover the maintenance CapEx needs on a group-wide basis of about 240 million euro. Due to the continued growth investments in Frankfurt, so Terminal 3 and the Lima terminal construction, our nine-month free cash flow was negative again. still at minus €316 million, the free cash flow developed in line with our expectations. Reflecting the positive free cash flow in the third quarter, our group net debt decreased slightly from €7.5 billion at the end of Q2 to €7.4 billion at the end of Q3. Correspondingly, our net debt to last 12 months EBITDA key leverage ratio improved from 6.8 times at the end of Q2 to 6.4 times at the end of Q3. Looking ahead, we are confident with our full-year capex and net debt outlook. Here, we continue to expect a net debt level of between 7.5 to 7.75 billion euro and a brick-and-mortar capex range of about 1.35 billion euro. Moving on to our updated repayment profile at the end of Q3 on slide 40. Reflecting the positive free cash flow during the third quarter, our liquidity position grew to an all-time high figure of more than $4 billion or more than $5.2 billion, including for unused project finance and committed credit lines. Simultaneously, our gross debt was up by close to 300 million. The increase in our gross debt also reflects the project finance at Lima Airport, where we made use of more than 100 million euro financed during the third quarter. Correspondingly, our average cost of debt was up from 2.6% at the end of Q2 to 2.8% at the end of Q3. On the other side, also our available funds reflected an increased profitability. While we started the year with an average yield of about 0.8%, we are now standing at an average yield of about 2.5% on our cash position. Looking ahead, we expect the yield to steadily increase to about 3% by end of H1 next year, which will help to further reduce our cost of carriers. For the remainder of the year, there are also just smaller maturities left, which we will roll forward. As of next year, we will also make selectively use of our cash position and pay down some maturities instead of rolling all of them forward. Moving on to our segment development during the past quarter, starting with aviation on slide number 15. While we just handled 86% of our pre-COVID passenger numbers, the aviation charges exceeded the pre-COVID level for the first time in a post-COVID world. Here, the fee increases which we implemented in the meantime became visible, so 4.3% last year and 4.9% this year. In addition, the segment EBITDA reflected the restructuring measures which we carried out during the pandemic. When adjusting for the higher security revenues and OPEX, which basically come without a margin, our underlying OPEX, so excluding for security, was some 19 million Euro below the level of 2019. The decrease in OPEX and the slight increase in airport charges led to an EBITDA of more than 120 million Euro in the third quarter. which was about 18 million higher compared to 2019, an all-time high, as Stefan already mentioned. At the EBITDA of 247 million in the first nine months, we are very comfortable with the full-year guidance that we gave up of about 300 million euro EBITDA this year. Coming now to our retail and real estate segment on slide 16. Segment revenues achieved the pre-COVID level of about €130 million. The revenue recovery was once again driven by real estate and parking revenues, which reached and outperformed the 2019 benchmark correspondingly. Regarding our retailing activities, the picture remains mixed. While shopping and services revenues were higher than 2019 on a per-passenger basis, advertising revenues continue to underperform the 2019 level. We also show the relevant figures on slide number 17. Regarding advertisement, despite negative year-to-date performance, we are confident that latest as of next year, we will catch up again. Here, we expect the improved passenger mix and increased visibility on passenger numbers to have a positive result. Simultaneously, we expect Q4 to see an improving retail trend as well. Hence, we remain confident to catch up to 2019 on a full year basis. With regard to the segment EBITDA, we are still confronted with headwinds from elevated cost items such as energy costs compared to 2019. Consequently, EBITDA was mildly down against 2019. while it was up against previous year level. Turning the page to our ground handling segment on slide number 18. Let me start with a very positive message here. First, after 14 quarters of negative EBITDA, so three and a half years, ground handling has recorded its first positive EBITDA since the pandemic. While this is certainly good news, we are having a clear view on the full picture. An accumulated loss of 24 million euro, the EBITDA of the ground handling segment has by far not been good in the first nine months. Moreover, Q3 is our high season quarter with more than 17 million passengers handled. This equally means the highest number of volume related revenues with a sufficient cost coverage. At a lower absolute number of passengers in the fourth quarter, it is likely that ground handling will record losses again or be at best break-even in Q4. Having said this, Q3 was a first positive sign, but we have to continue with our efficiency measures in order to improve the segment profitability on a sustainable basis. We will keep you updated on the progress here. Moving on to our final segment, international activities and services on slide number 19. As you can see on the chart, our international segment continued its outperformance against 2019. Revenues in EBITDA stood once again well above the pre-crisis level during the third quarter. Here, especially Fraport Greece performed strongly compared to Q3 2019. While revenues excluding for IFRIC 12 grew by some 108 million Euro in Greece, EBITDA was up by about 44 million. Besides Fraport Greece, also Fraport Brazil and Fraport US showed good earnings momentum, with Fraport US being additionally compensated for the termination of the Pittsburgh lease agreement. At an EBITDA of 245 million, Our international activity segment was once again the biggest contributor on a group-wide basis with an EBITDA share of more than 50%. Having said this, ladies and gentlemen, I'd like to thank you for your attention, and we can start the Q&A session now.