Fraport Ag Frankfurt Akt

Good day and welcome to the Fraport Q2 2026 question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 1 and 1 again. Please be advised that today's conference call is being recorded. I would now like to hand over to Florian Fuchs, SVP, Head of Finance and IR. Please go ahead.

Yes, hello everybody and welcome to Frankfurt to our 2Q question and answer session. The presentation got released this morning at 7 a.m. CET and is available on the web. And right now, as said before, we do have the question and answer session. With me at the table, we got Dr. Matthias Zieschang, our CFO, and keeping with the previous quarters and previous releases, Please do keep our cautionary language in mind when it comes to forward-looking statements. Having said this, we'd like to hand over back to the operator to start with a Q&A session now.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To answer your question, please press star 1 1 again. We will now take our first question from the line of Carlos Caprassi from Kepler-Chevreux. Please go ahead.

Okay, thank you. Hi, Matthias. Hi, Florian. Thank you for taking my questions. I'll go ahead with these two questions on my side. First, I wanted to focus on the financial results in Q2, the net. financial expense figure, and here excluding joint ventures, was around 100 million. Should we expect this same level in the coming quarters or has this been any kind of one-off? And second, I was wondering if you could provide some visibility on CapEx. I mean, the reduction appears to be progressing a bit more slowly than anticipated. So how confident are you in reaching the 900 million euro full-year target? Thank you.

Starting with the last topic, CapEx, we are absolutely confident to end up with 900 million. You mentioned the run rate in the first six months, which is, in comparison to further years, a little bit higher, but this has to do with that, on one side, now we are closing all open contracts regarding Term 3. So this is a ramp down during the year. and second we had some refurbishment works at our runway and southern runway in our parallel system and here we had a good outflow for this refurbishment and that's the reason why in the first six months capex has been relatively high but this will be fully compensated S-Plant and the second half so that we are absolutely confident to end up with a total capex number of 900 million. First part was regarding the interest results. You have to see that underlying we have the expenses for our total indebtedness you know the average rate of interest for the total debt there will be no change perhaps during the year an increase from 3.4 to 3.6 percent at the end of the year this is a minimal increase on one side on the other side we had this Special effect that we cannot any longer capitalize interest expenses for the construction expenses regarding Terminal 3, so this was a step up. And now we have a new balanced level for the next couple of quarters.

Okay, thank you.

Thank you. We will now take the next question. from the line of Tobias Fromm from Bernstein. Please go ahead.

Hello. Thanks very much for taking my question. I had one on retail. Shopping and services spent per packs dropped by 6% in Q2 and by 4% in Q1 while advertising per packs increased by 25% in Q1 and by another 5% in Q2. I was just wondering when should we expect the inflection point for The shopping and services spent per packs to grow again. Is that with the return of the Middle Eastern travelers or change in exchange rates? And what do you expect over the next two quarters? And then lastly, how resilient is the increase in advertisement per packs? Thank you.

First of all, spend per pucks. You mentioned already the elements working in favor of us or working against us. On one side, we had the positive impact from Terminal 3, where as of today, the increase is about 30% spend per pucks. and of course especially driven also by an increase of advertisement proceeds. On the other side we had a significant loss of Middle East passengers with deep pockets and also willingness to spend a lot of money and looking forward first of all we see and expect and further improvement of the retail business inside terminal 3 on one side and this will be supported by the coming back of Middle East passengers, so that we are also confident that looking forward, the spend per packs will go up based on these two factors. And regarding sustainability of advertisement, we see a huge demand for billboards, so to say, in Terminal 3. and a very good spending behavior of companies or banks and even an increasing demand. We are looking where we can install further billboards inside this terminal because we have an excessive demand and based on this we are convinced that this is a sustainable trend.

Great, thank you.

Thank you. Our next question comes from the line of Christian Nedelcu from UBS. Please go ahead.

Hi, thank you very much. Could I please ask first on Frankfurt traffic for the winter? Some of the data on airline seat capacity showing Lufthansa seat capacity in Frankfurt in Q4 down around 7% year over year. I'm not sure if this data is accurate or if you can make any comments on what you're seeing or expecting on your side. Secondly, just on the free cash flow, could we kindly ask you to comment a bit? You've reiterated the guidance on the free cash flow this year. you know is there a range we should have in mind like low triple digit is that a 100 to 200 million range or a bit more or any color at this stage as we are halfway through the year and if it's not so much trouble could you remind us the building blocks next year the lower capex the Antalya dividend and other building blocks and the last one if you allow me there's a bunch of international tenders that we see in the press at least there's speculation around them I don't know if I think in the past you flagged potentially Egypt or Greece regional airports may be something of interest I don't know if there's any update there if those projects could still be of interest or if there's any timeline there that we should keep in mind to see progress on those tenders thank you

Thank you for your questions, starting with your last topic, M&A activities. As you mentioned, in the market, it could be that Egyptian airports are coming or these regional airports in Greece. So we are going to look at both opportunities, whether they are interesting for us or not. And we are doing a deep analysis, and after this analysis, If they are offered, then we have to decide to go or not to go. But in principle, we are looking at these airports and then we have to see whether this could be of interest for us or not. The rest is not relevant for us because we have our balance sheets and we have our key targets and we have to bring down indebtedness so our firepower is limited. So regarding free cash flow, so the free cash flow development in Q2 was a little bit disappointing. This has to do with temporarily working capital effects, which will level out later on during this year. So this was thought to say up and down like a roller coaster. and especially in Q2, so we expect a full compensation in the rest of the year. So with other words, our metric and our calculation for the free cash flow guidance for this year is robust. The only impact comes from lower traffic at Frankfurt and via lower traffic we have a little bit of reduced EBITDA expectation and this of course translates also into free cash flow. But all the other, what you mentioned, building blocks are stable, are robust, are sustainable. So there is no change compared to this, what we said at the beginning of the year, except the weaker traffic at Frankfurt Airport and therefore a little bit reduced EBITDA expectation. CapEx is, as I mentioned, for this year, It's stable with 900 million and also going one year forward. Next year, we always said it's about 700 million, so there's no change. So nothing will be different to this what we said in the beginning of the year. Traffic, when you look on our international assets, traffic is very solid. In average, it's absolutely in line with our planning. and also looking forward we assume that this will continue this positive performance Frankfurt we are we are weaker than expected and we have on one side the Lufthansa running flat or even with reduced seat capacities in the market on the other side we see Condor delivering what they have guided in the beginning of the year but of course due to the size of Condor this cannot fully compensate the reduction or weakness of Lufthansa so that for the total year we again see a number which is on the level of the previous year more interested is what will happen in in 27 year we see then From today onward another delivery of I think about 10 Dreamliners coming to Frankfurt, to Lufthansa, and we think that this will increase them the seat capacity. Condor is continuing with their growth path. They are, I think, will see six, is correct, six additional A330neos. Yeah, I think they leased right now four new, haven't decided yet how many will come, but also A330s will come to the airport. Four to six long-haul aircrafts, and so that, let me say, for 27, this is not a guidance from today, because we have to see what will happen in the next couple of months, but from today's perspective, we see this number of passengers in 27

Thank you very much.

Thank you. Our next question is from the line of Graham Hunt from Jefferies. Please go ahead.

Hi, Matthias. Hi, Florian. Thanks very much for the questions. Maybe just That's question one. Question two, just on your... I think you had a sort of soft target of coming below five times net debt EBITDA by 27. Do you still see that under current conditions as achievable? I appreciate that it's difficult visibility-wise in the current market, but as it stands today, does that still seem like a reasonable assumption? And then last question, just a quick one, I guess, on... on ground handling any development there around Lufthansa and the contract.

Thank you. Thank you for your questions. Building blocks of free cash flow calculation. What is stable? Stable is the number of 900 million regarding CapEx and no change. Also interest expenses on a net basis. 400 million net result about 100 million tax cash out so as always no change and on the other side we have dividend proceeds primarily from Antalya fully compensated on the other side by fixed concession payments for our assets in the international portfolio So you can say everything is stable except EBITDA where we are coming with our guidance saying up to 1.5 billion. Internally we had a clear target to meet the 1.5 billion based on 65 to 66 million passengers at Frankfurt Airport. Now if you would end up with 63, so if you would go in the middle of the range we are going to lose two and a half million times 15 euro per passenger so we have on the aviation side a loss of 40 million partly compensated by a perhaps a better performance on the international side but just a partly compensation so that The final EBITDA on a group level will be clearly above previous year EBITDA level, but it will be below 1.5 billion. So this difference, let me say, due to the traffic weakness of Frankfurt Airport is a negative impact at the end of the day of the absolute free cash flow number, but it's We are talking about a double-digit million amount. So in other words, all the building blocks that you mentioned are stable compared to what we guided in the beginning of the year. Net debt to EBITDA number, yeah, it will be around five times. Whether it's 4.9 or 5.1 or 5.2, we have to see at the end of the day. I think we have to see how we end up with the net indebtedness at the end of this year and then going forward on one side and what will be the final EBITDA guidance for 27. That's for sure and this depends. I think we will not see any surprise on the international side, a continuation of this very good and the performance and let me say the question mark and the whole calculation will be traffic recovery at Frankfurt Airport in in 27 and you know the matrix 15 euro just in aviation plus a little bit coming from retail if we would have more passengers this is a swing influencing ABDA and wire ABDA of course and net debt to ABDA ground handling nothing new our contract is on the table it's a fair it's a fair offer so we based on the approach that all our Cost items, including cost of capital, must be covered. And it's up to Lufthansa now. So nothing new.

Thanks. Maybe just very quick follow-up.

As you mentioned on the net debt, I suppose it was associated with a potential increase in dividend payout. So maybe the question was more, is that still quite a hard limit for you, or is more of a take into consideration everything in the round?

No. Let me say, one thing is absolutely clear. Next year we are paying one euro for this year. This is a given and will not be discussed. The question is one year later on. And this is not exactly hard linked to whether it's 4.95 or 5.07. At the end of the day, we are sitting together in the management team and with the supervisory board and our main shareholders, we are discussing this topic. So with other words, it can even be that we are going to kick in the new regime, even if, for example, net debt to everyday would be given number 5.1.

Thank you.

Thank you. We will now take the next question. from the line of Harishanak Ramamurthy from Deutsche Bank. Please go ahead.

Yeah, hi. Good afternoon, everyone. Thanks for taking my questions. Maybe the first one on APEX. If I look at the cash flows for six months so far, I believe you've spent around 650 million euros. Now, maybe the like-for-like number for the full year guide is the 900 million plus the 100 million for IFRS and others, so 1 billion. Could you help me understand what is changing in H2 for you to be hitting the 350 million level trend rate? Thank you very much. Personal costs move into 2027. Thanks.

Yeah, with regarding wage costs, when you look on the percentage, it's high, especially in aviation. Here we have three elements which I would like to highlight. We had in so far one of that we had to increase provision for bonus payments, for the whole management team, which was significant in Q2, so one of. Second, we had higher as normal also expenses for partial retirement or early retirement. And we had also some structural effects by the tariff agreement, which is sustainable, of course, because when you look on the average, the tariff agreement was Okay, but within so far bias that the low-income people are receiving relatively more than the high-income people and here there was some impact in aviation. But the main elements are one of these again the provisions for bonus payments one side and partial and early retirement on the other side. Looking forward, this is more interesting. We are assuming that this will not continue, this high increase, also the relative percentage number adjusted by the pension reimbursement from last year, of course, will come down, so in favor of us. And looking forward into 27, this is so far open because we are waiting for the newer Tariff agreement, but we think given these macroeconomic situation in Germany, increasing unemployment rates, et cetera, No GDP growth at all. We think that this will lead to more modest wage increases compared to the past, so with other words that we will end up with a mid-single-digit increase in 27 slash 28. Are there further questions?

The first question was on capex and H1.

Again, it was compared to the whole. It was relatively high, as I mentioned, refurbishment of one runway in Frankfurt, also the settlement of open contracts regarding terminal 3. So with other words, looking forward, the capex in H2 will be lower. Just to give you, you could see the increase in the indebtedness in H1. As of today, we have a net debt on the group level of about 8.5 billion as of today. And compared with the net debt from last year, Exactly the same date we are about 100 million higher than last year but in last year we had the first half year proceeds of more than 100 million driven by the sale of 10 percent of daily airport so more income and on the other side in this year we paid 92 million dividends to our shareholders so both elements The negative impact, so to say, of 200 million. But today you see just 100 million difference. And this comes from a total CapEx level, which as of today is accumulated 100 million less than previous year. This will continue. So for the rest of the year, you will see another 100 million reduction. regarding CapEx compared to previous year. And this is one of the main effects generating free cash flow as he predicted in the beginning of the year. And total indebtedness, what we said in the beginning, will be a little bit below 8.2 billion.

Thank you.

So in other words, everything is running in the right direction. despite the fact that we had this hiccup in Q2.

As a reminder, to ask a question, please press star 1 and 1 on your telephone. We will now take our next question from the line of Dario Maglione from BNP Paribas. Please go ahead.

Hi, thanks for taking my questions. I have three. One on the ground handling contract with Lufthansa. Can you tell us a bit about what alternative Lufthansa have regarding this contract? For instance, I believe they insourced the ground handling in Munich. Could that happen in Frankfurt too? Second question is on Terminal 3 retail performance in the presentations and Nicole, you mentioned a 30% increase spent at PAX in Terminal 3 compared to Terminal 2. Why is that good? I think previous guidance or kind of soft guidance was that there would be a 50% improvement. So yes, directionally good, but how do you get to 50%? or what is missing to get to 50. And then last questions around Lufthansa. You mentioned the capacity growth doesn't look great. Why is that? Is it just city line or something else going on? Maybe Lufthansa is increasing traffic at other hubs. Thanks. Thanks.

The first question, what you mentioned, this is correct. In Munich, they went for an insourcing. So as far as we are informed, they took over the employees from Swiss Ground and to do it on their own. So in Frankfurt, this is not possible because Sysport has a market share of less than 10%. Even if theoretically they would take over all these guys, this is impossible to handle their fleet. So it's theoretical, it's possible. In reality, it cannot work. It's gravity. Regarding Spend per Pax increase regarding Terminal 3. You mentioned the 30% on one side and the 50% guidance. This is not a change of the guidance. So the explanation is that when we went for 50% guidance, of course, we had in mind the given mix of passengers and sustainable structure. Then we had more or less a total loss of Middle East passengers. knowing that their expense behavior is very good it's clearly significant above average and so we now we realized 30 percent in the beginning in a soft opening phase without more or less middle east passengers and we ended now up with 30 percent on the other side we see the recovery or we expect the recovery during the year and with other words with the recovery of these Middle East passengers on one side and further improvements in F&B and fine-tuning in the shops. We are confident to keep to our guidance of 50% higher spend per packs for the passengers in Terminal 3. Third question, what was it? As you mentioned, the grounding of city lines, so you can say we had the war in Iran, then the exploding of Jet fuel prices, then reaction of airlines reducing their seat offers on one side, especially with the aircrafts, which are not so fuel efficient. And then the grounding of city line, and this costs us a lot of seat capacity at Frankfurt Airport, and this is a main reason for the week performance on the Lufthansa side.

Thank you, Matthias.

Thank you. We will now take a next question from the line of Dirk Schlamp from DZ Bank. Please go ahead.

Hi, Dirk speaking. Thanks for taking my question. From my side, you said that international business on average developed broadly as expected. Could you give us a bit more color on that? Which airports are currently showing the biggest deviations from your initial expectations? Thanks.

Yeah, sure. As always, we have in the beginning of the year, we have a plan. And the day after, the plan is not any longer valid. So we have assets which are outperforming. We have assets which are underperforming. Looking back, and we have a proven track record of nearly 20 years, and when we, at the end of the year, always look to what we have planned for the segment, international activities, and what is the final outcome, you can say it's coincidence, we always, in total, we always reached our EBITDA targets as well as passenger targets, having in mind that always some assets are doing better and other ones underperforming. So now coming to our several assets in the portfolio we have on the positive side we have you can say as always Greece with month by month more than five percent passenger growth compared to previous year having in mind that since the pandemic we had year by year a recovery or a growth which has been always better than this what we expected So Greece is in the past and now always on the positive side. And also Brazil is doing very well. Fortaleza is just 1%, but Porto Alegre 10%. So weighted average is about 5%, which is fine. Ljubljana is doing very well with actually 15% increase. So these are the... The positive drivers on the negative side, we have Antalya with minus numbers in the beginning of the year because due to the proximity to Iran and the war on one side and very significant increase on the price side in this hotel business which dampens the demand. Now and so far it's a little bit better that in July the last numbers minus one percent but this is clearly below our expectations the beginning of the year also. Lima is underperforming passenger-wise on the financial side we are we are happy because for the full year we expect an LBDA improvement to including the 10 million one-off We expect an increase of about 30 million euro based on week traffic, which is a good increase. And I hope I have mentioned all numbers. And US market is planned. It's no surprise whether not to the negative and also not to the positive side. Okay, thanks. You're welcome.

Thank you. As a reminder to ask a question please press star 1 and 1 on your telephone. That's star 1 and 1 to ask a question.

There are no further questions at this time.

I would now like to turn it back to Florian Fuchs.

Yes, thank you everybody for the good set of questions. Thank you, Matthias, for the answers. We look forward right now to be in touch soon, maybe on the road or via the phone or here on site in Frankfurt. And with that, we'd like to conclude the question and answer session. Thank you very much and goodbye.