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Fraport reports solid revenue and earnings performance in first nine months of 2019

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Fraport AG continued its growth trend in the first nine months of the 2019 business year, achieving an increase in both revenue and earnings.

This positive performance was driven by solid traffic growth at Frankfurt Airport (FRA) and the Fraport Group’s airports worldwide. However, the growth momentum has been slowing down during the year to date.

Fraport AG’s executive board chairman, Dr. Stefan Schulte, said: “Our industry is being impacted by the weaker global economy and consolidation of the European aviation market. Furthermore, regulatory interventions by the German government – such as the planned increase to the national air traffic tax – are also affecting our sector.

After a phase of rapid traffic growth, airlines are cutting back their plans and thinning out their winter schedules. Nevertheless, we are maintaining our full-year outlook for the 2019 business year – also backed by the ongoing positive performance of our Group airports worldwide. Thanks to Fraport’s large and diversified portfolio of international airports, we are well positioned for the future.”

International activities boost growth in revenue and earnings

In the January-to-September 2019 period, Fraport’s Group revenue increased by 12.0 percent to €2,852.2 million year-on-year. After adjusting for proceeds related to expansion investments at the Group‘s airports worldwide (based on
IFRIC 12), revenue rose by 5.2 percent to €2,486.7 million. At Frankfurt Airport, factors contributing to revenue growth included higher proceeds from ground handling services, airport and infrastructure charges, as well as security services. Retail, parking and advertising revenue also increased significantly. However, Fraport’s international portfolio clearly continued to be the largest revenue driver. In particular, the Group company in Lima (up €30.5 million), Fraport Greece (up €25.4 million) and Fraport USA (up €21.8 million) contributed substantially to the Group’s adjusted revenue growth.

The operating result or Group EBITDA (earnings before interest, taxes, depreciation and amortization) rose by 7.7 percent to €948.2 million in the nine-month reporting period. The first-time application of IFRS 16 had a positive effect on EBITDA, adding €34.0 million year-on-year. From the beginning of January 2019, the mandatory IFRS 16 international financial reporting standard establishes new rules for the accounting of leases – specifically affecting the accounting of lease contracts concluded by Fraport USA. At the same time, the application of IFRS 16 alone resulted in a €32.8 million increase in depreciation and amortization. Group EBIT saw a correspondingly moderate rise of 2.6 percent to €595.3 million. The Group result (or net profit) grew noticeably by 9.4 percent to €413.5 million. This was due to the improved operating result, as well as the markedly higher contribution from the Group subsidiary in Antalya, which is consolidated using the at equity method.

Solid traffic performance achieved despite slowing growth momentum

Passenger traffic at Frankfurt Airport advanced by a solid 2.3 percent to about 54.2 million travelers during the first nine months of the year. This growth momentum, however, decelerated noticeably over the course of the year. Based on current planning by the airlines, FRA will see a four percent reduction in the number of flights for the 2019/20 winter schedule (effective October 27) compared to the same schedule in the previous year. This reduction is due entirely to the 5.6 percent decline in European traffic, while scheduled intercontinental flights will climb by nearly 2 percent.

Fraport’s Group airports worldwide also saw passenger traffic largely increase in the first nine months, despite some airlines reducing flight offerings or even filing for bankruptcy. Only at the Fraport Twin Star airports of Varna and Burgas, combined passenger traffic dropped noticeably by 11.6 percent year-on-year.

Outlook confirmed

Fraport AG’s executive board is maintaining its full-year traffic outlook for Frankfurt Airport. Given the reduction in flight offerings for the current winter schedule, FRA’s passenger growth is expected to reach the lower end of the forecast range of about 2 percent to 3 percent. The executive board is also maintaining the financial outlook for the full 2019 business year. Group EBITDA is expected to be reach between approximately €1,160 million and €1,195 million, while Group EBIT is forecast between about €685 million and €725 million. Group EBT is projected to be around €570 million to €615 million, and the Group result (net profit) between approximately €420 million and €460 million.

MEDIA CONTACT: Torben Beckmann, Fraport AG, Corporate Communications, Media Relations, 60547 Frankfurt, Germany, E-mail:  t.beckmann@fraport.de , Facebook:  www.facebook.com/FrankfurtAirport

Fraport Group: Stable performance achieved during the first six months of the year

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During the first half of fiscal 2019 (ending June 30), the Fraport Group achieved growth in both revenue and earnings. Group revenue increased by 5.2 percent to €1,513.9 million, after adjusting for revenue in connection with capital expenditures made for expansion projects at Fraport’s Group airports worldwide (according to IFRIC 12). At Frankfurt Airport, factors contributing to revenue growth included higher proceeds from ground handling services and infrastructure charges, as well as from the retail and parking business. In Fraport’s international portfolio, major contributions came from the Lima Airport Partners subsidiary in Peru, as well as from Fraport USA and Fraport Greece.

The operating result or Group EBITDA (earnings before interest, taxes, depreciation and amortization) advanced by 10.9 percent or by €50.2 million to €511.5 million in the reporting period. This amount includes a €22.8 million positive effect resulting from the first-time application of the IFRS 16 accounting standard. When adjusting for this effect, EBITDA grew by €27.4 million or 5.9 percent. The increase can be attributed, in particular, to the positive performance of the Ground Handling and Retail & Real Estate business segments in Frankfurt, with both segments benefitting, among other things, from traffic growth at Frankfurt Airport.

Effective January 1, the mandatory IFRS 16 international financial reporting standard establishes new rules for the accounting of leases. Specifically, this affects the accounting of lease contracts concluded by the Group’s Fraport USA subsidiary. The application of IFRS 16, on the one hand, led to lower operating expenses with a respective positive impact on EBITDA. On the other hand, this positive effect was offset by higher amortization and depreciation in the amount of €21.6 million and by a €5.8 million increase in interest expense. Thanks to an overall improved financial result, the Group result (net profit) rose by €24.1 million or 17.1 percent to €164.9 million in the reporting period.

Fraport AG’s executive board chairman, Dr. Stefan Schulte, commented: “In the first half of 2019, we successfully held our ground amid the overall challenging market environment. I am particularly pleased that we have been able to further increase our passenger satisfaction levels despite intensified peak traffic, while also reducing wait times at the security checkpoints. We remain strongly committed to further optimizing our processes.”

In the January-to-June 2019 period, operating cash flow expanded by 13.0 percent to €367.5 million. In contrast, free cash flow decreased noticeably – as forecast – by €282.5 million to minus €305.7 million. This was due to higher capital expenditure at Frankfurt Airport and some Group airports in Fraport’s international portfolio.

Frankfurt Airport (FRA) welcomed more than 33.6 million passengers in the first six months of 2019, representing an increase of 3.0 percent year-on-year. Most of Fraport’s Group airports worldwide also recorded passenger growth in the reporting period. Only the two Bulgarian airports of Varna (VAR) and Burgas (BOJ) saw combined traffic drop by 12.9 percent, with this trend expected to continue over the course of the year.

For the full year 2019, Fraport AG’s executive board is maintaining its traffic forecast for FRA, where passenger numbers are expected to rise between about two and three percent. The executive board also confirmed the company’s financial outlook for the 2019 business year, as outlined in the Annual Report 2018: Group EBITDA between about €1,160 million and €1,195 million; Group EBIT between about €685 million and €725 million; Group EBT between about €570 million and €615 million; and Group result (or net profit) between about €420 million and €460 million.

You can find the Group Interim Report on the Fraport AG website.

MEDIA CONTACT: Torben Beckmann, Fraport AG, Corporate Communications, Media Relations, 60547 Frankfurt, Germany, E-mail:  t.beckmann@fraport.de , Facebook:  www.facebook.com/FrankfurtAirport