Fraport Ag Frankfurt Akt

Ladies and gentlemen, welcome to the Fraport AG Interim Figures Q2 6-month 2024 conference call and live webcast. I am Sandra, the course call operator. I would like to remind you that all participants have been listened only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christoph Nuncke, SVP, Head of Finance and IR. Please go ahead.

Thank you, Sandra, and welcome also from my side. Happy that you all called in. despite of probably nice summer weather outside. I have with me at the table Matthias Zischang, our CFO, and he will start the presentation.

Thank you very much, and good afternoon, and also a warm welcome from my side, ladies and gentlemen. My first chart of the presentation shows our traffic performance at the Frankfurt site. As you know from our Q1 presentation, we were meaningfully impacted by strikes and weather-related cancellations in the first quarter, and therefore lost about 600,000 passengers. Please note, this number is just the direct impact, so without any passengers that we may have lost in addition because they didn't book their flights to or via Frankfurt due to the strike-related uncertainties. As a result, The recovery rate in the first quarter was just 85% of the 2019 level. With the beginning of the summer flight schedule, the recovery rate improved to about 86% in the second quarter. Correspondingly, the first six months showed a reported recovery rate of 85.5%. On the chart, you also see the preliminary figures for July. In July, we handled about 6 million passengers. which is a recovery rate of roughly 87% compared to July 2019. On a year-to-date basis, we have therefore exceeded the previous year by around 1.9 million passengers. When considering that last year we handled about 59.4 million passengers, this will mean that we already achieved the lower end of our full year guidance, without any further growth from here on, which is not our base assumption. Moving on to my next slide. On slide number four, you see the development of our international portfolio. Fraport Greece and Fraport Antalya continued their very positive trend in the first six months of the year. While the recovery rate in Greece exceeded the first half 2019 by 16%, the second quarter showed an even better momentum at 18% plus. Here, some airports, such as Corfu, Rhodes, Santorini, or also Chania on Crete, showed a remarkable momentum of more than 20% plus in the second quarter. Antalya Airport also developed strongly, exceeding the 2019 benchmark by 9% in H1, and 6% in Q2. Besides Fraport Greece and Antalya, also the development at Lima Airport is very encouraging. At 101% in Q2 and 103% in H1, Lima Airport is outperforming the 2019 benchmark year two. Here, the traffic development is catching up on the lost performance due to the political unrest situation in the previous year. Thanks to the strong performance of these three investments, our international portfolio, in total, reached and exceeded the 2019 benchmark year in the first six months of the year, and in Q2. The latter one is even more remarkable, bearing in mind that Leica Airport, our biggest Brazilian investment, has been closed since the 3rd of May, so two out of three months in the second quarter. A status update on Porto Alegre is shown on my next slide, number five. As you will know from our Q1 presentation, the airport in Porto Alegre is closed due to the worst flooding which the region of Rio Grande do Sul has ever experienced. Since the beginning of June, intensive cleanup and restoration work as well as tests have been carried out at Porto Alegre Airport, particularly on the runway and taxiways. The test results show that parts of the runway and taxiway system need to be renewed. Following an intense analysis, we decided to gradually restore the operations at the airport from October onwards. By then, we will make about 50% of the total runway length available for flight movements. This will allow up to 50 scheduled movements per day, or about 25% of the movements prior to the flood. Simultaneously, we will continue the works on the remaining runway area. In December, we expect to bring back the second half of the runway and restore the capacities entirely. Financially, as you also saw, this is our second quarter results today. We have in the meantime received the first payment from our insurance coverage to compensate for initial damages. Overall, we expect on a preliminary basis that some 100 million euro will be needed to restore the operations. We expect the compensation to be a blend of insurance coverage and rebalancing from local authorities. Moreover, we also expect to be compensated for the lost earnings under the concession agreement, as was the case during the COVID-19 pandemic. For these compensations, we filed a rebalancing request and are in close talks with local authorities about the rebalancing framework. Once we do have clarity on the financial conditions, we will inform you accordingly. Moving now on to our key financial highlights in the first six months, I am on slide number six. Ladies and gentlemen, the first half of fiscal year 2024 was a very successful one. We exceeded the previous year EBITDA by 18% and also stood well above the level of 2019, which we exceeded by 11%. At more than 2 billion euro, group revenues showed an increase of some 13% compared to the previous year, or 14% when adjusted for IFRIC 12. Key drivers for the increase in revenues were the traffic recovery in Frankfurt and internationally, as well as higher airport charges. At 576 million Euro, EBITDA was 18% higher compared to the previous year and achieved an all-time high result in H1. Also, EBIT reached an all-time high figure at €309 million. Within our financial result, higher interest income compensated for the year-over-year increase in interest expenses. Simultaneously, our Antalya investment recorded improving results. Our group result therefore almost doubled versus the prior year and reached about the same level compared to 2019, a very strong set of results. Taking now a closer look at our Q2 performance on slide number seven. Despite the dropout of the Greek compensation mechanism, which I will talk about later in the presentation, EBITDA in the second quarter recorded a steep At €355 million, EBITDA was roughly 10% above the previous year and even 14% higher than in 2019. Correspondingly, EBIT recorded a strong year-over-year progress to and reached €226 million. At more than €148 million, group result was well above the previous year, too, and even exceeded the 2019 comparable basis by some 8%. Again, ladies and gentlemen, a very good financial performance. Turning now the page to our cash flow and indebtedness situation, which you can see on slide number 8. the operating cash flow and capital expenditure developed overall in line with our expectations. Reflecting the positive traffic and financial result performances, the operating cash flow was clearly up compared to the previous year and close to the level of 2019. At 359 million euro, the operating cash flow would have also been sufficient to achieve a positive free cash flow in H1, without considering the expansion capex in Frankfurt and at Lima Airport. Our group net debt increased accordingly to 8.2 billion euro at the end of H1. Despite the higher net debt, our net debt to last 12 months EBITDA leverage ratio improved due to the increase in operational result from 6.8 times to 6.4 times. Moving on to our repayment profile, I'm now on slide number nine. Despite the negative free cash flow, our liquidity position remained at a high level of 3.8 billion or 4.7 billion euro, including for unused project finance and committed credit lines. Gross debt, on the other side, was slightly down compared to Q1. from more than €12.1 billion to about €12 billion, reflecting minor repayments. Looking ahead, residual repayments amount to less than €200 million this year, which we expect to refinance in Frankfurt. As a result of the continued refinancing and Lima project finance drawdowns, our average cost of debt increased slightly from 3.1% at the end of Q1 to 3.2% at the end of H1. On the other side, our available funds also reflected an increased profitability. While we started last year with an average yield in Frankfurt of about 0.8%, we are now standing at an average yield of about 3%. which helps us to improve our financial result. Coming now to our segment development, starting as always with aviation on slide number 10. While we just handled 86% of our pre-COVID passenger numbers, the second quarter aviation charges exceeded the 2019 level by 11% or 24 million. Compared to the previous year, the increase amounted to 13% or 28 million euros respectively. In addition to the traffic recovery, the increase in airport charges was driven by the 9.5% increase in airport fees from the 1st of January onwards. Cost-wise, We recorded higher staff costs, among others, from the second phase of the collective labor agreement at the Frankfurt site. Despite the increase in staff costs, the aviation segment showed very strong incremental revenues to earnings translation. At 109 million euro, most of the 32 million euro higher revenues were reflected in the EBITDA growth of 24 million euro. Correspondingly, the segment showed a clear improvement in the EBITDA margin from just under 30% to 34%. All in all, a very good result of our aviation segment in the first half of the year. Moving on to our retail and real estate segment on slide number 11. revenues and EBITDA, also in this segment, exceeded the 2019 benchmark year. That's 133 million euro revenues were 6% higher compared to 2019, while EBITDA was some 2% above the value of 2019. Compared to the previous year, so 2023, We recorded good progress in the retail and parking divisions, while real estate was slightly below the level of 2023. Regarding the retail activities, the picture remains mixed. While advertising revenues per passenger caught up on the 2019 performance in the second quarter, shopping and service revenues remained flat. at €3.10 total retail revenues per passenger were on the 2019 level and exceeded the previous year's second quarter by some 3%. For the year ahead, we are confident to see the spend per passenger outperforming the previous year and the 2019 benchmark year on a full year basis. Regarding the segment EBITDA, we still recorded temporary headwinds from elevated costs for maintenance in the second quarter. At 97 million euro, EBITDA was slightly down compared to the previous year, while earnings remained higher compared to the 2019 level. Moving on. to our ground handling segment on slide number 13. Despite increasing OPEX from a higher staff amount and collective labor agreement effects, ground handling showed an improvement in segment ABDA. At 194 million Euro, revenues were close to be sufficient to cover the main OPEX drivers from rising staff and temporary staff cost. At minus €4 million, ABDA almost reached break-even in the second quarter. Looking ahead, we expect a better cost coverage from higher passenger numbers in the third quarter, as well as from a reduced number of temporary staff from external contractors. Our final segment, international activities and Services is shown on slide number 14. The international segment continued its outperformance. Revenues and EBITDA remained well above the previous year and pre-crisis level. The increase in EBITDA is even more impressive bearing in mind that Fraport Greece needed to pay the variable concession charges as a percentage of EBITDA for the first time in This effect alone led to higher OPEX of around 27 million in the period under review. On the other side, we recorded a first insurance payment to compensate initial flood damages at Porto Alegre Airport in the amount of about 9 million euro. Key drivers for the strong underlying earnings development were traffic growth at the Lima a positive development at Fraport Greece, earnings growth at Ljubljana and at Twin Star Airports. The latter one resulted mainly from higher airport charges as of April this year. All in all, we are very satisfied with the performance of our international segment despite the headwind from the temporary closure of Porto Alegre Airport and higher OPEX from variable concession charges. Coming now to my last slide of today's presentation, our outlook on slide 15. Following the completion of the first six months of fiscal year 2024, we kept the guidance ranges unchanged and stick to our financial outlook and Frankfurt traffic expectations. Reflecting the year-to-date performances and the expectations for the upcoming quarters, we however specified the guidance ranges. As a result of the strike impacts, which directly impacted Q1 and indirectly Q2, as well as persisting Lufthansa capacity constraints due to delayed aircraft deliveries, we now expect to be in the lower half of our traffic guidance for Frankfurt Airport. passengers. Thanks to a good traffic momentum outside of Frankfurt, here in particular at Fraport Greece, but also at Lima Airport, we are, however, confident to reach about the midpoint of our full year financial expectations for group EBITDA and group result. Consistently, we expect the net debt to EBITDA key leverage ratio to stay at about the same level compared to the prior year. Having said this, ladies and gentlemen, I'd like to thank you for your attention, and we can now start the Q&A session.