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Fraport 2018 Fiscal Year: Revenue and Earnings Increase Significantly

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Fraport

Boards propose dividend increase to EUR2 – Outlook remains positive
In the 2018 fiscal year (ending December 31), Fraport AG continued on
its growth path, achieving new records in revenue and earnings.
Supported by strong passenger growth at its Frankfurt Airport home
base and its Group airports worldwide, revenue climbed by 18.5
percent to nearly EUR3.5 billion. After adjusting for revenue related
to capital expenditure for expansion measures at the international
Group companies (based on IFRIC 12), revenue rose 7.8 percent to over
EUR3.1 billion. About two-thirds of this increase can be attributed
to Fraport’s international portfolio – with the airports in Brazil
and Greece, in particular, making a significant contribution.
Fraport AG’s executive board chairman Dr. Stefan Schulte said: “We
are pleased to look back on another very successful year, especially
for our Group airports around the world. Here in Frankfurt, however,
2018 presented challenges due to the constraints in European airspace
and the strong traffic demand. For the medium and long term, we are
very well positioned both at Frankfurt Airport and in our
international business. Moreover, we are laying the foundations for
further long-term growth by implementing our expansion projects.”
Revenue and earnings targets achieved
The operating result (Group EBITDA) climbed markedly by 12.5 percent
to over EUR1.1 billion. The Group result (net profit) rose even
stronger, by 40 percent to EUR505.7 million. This includes earnings
gained from the sale of Fraport’s stake in Hanover Airport, which
contributed EUR75.9 million. However, even without the positive
effects from the Hanover transaction, Fraport already achieved its
revenue and earnings targets. Operating cash flow slightly dipped by
2.0 percent to EUR802.3 million. This was mainly due to changes in
the net current assets related to the reporting date. After adjusting
for these changes, operating cash flow rose by 18.8 percent to
EUR844.9 million. In line with expectations, free cash flow fell
sharply by 98.3 percent, because of more extensive capital
expenditure for Frankfurt Airport and Fraport’s international
business, while remaining in positive territory at EUR6.8 million.
Given the positive business development, the Executive Board and
Supervisory Board will propose to the Annual General Meeting that the
dividend be raised to EUR2.00 per share for the 2018 fiscal year
(2017 fiscal year: EUR1.50 per share).
Passenger traffic rises noticeably at FRA and internationally
Serving some 69.5 million passengers, Frankfurt Airport (FRA)
achieved a new passenger record in 2018 and growth of 7.8 percent
compared to 2017.
CEO Schulte commented: “We are pleased that the airlines have
significantly expanded their flight offerings at Frankfurt Airport
for the second year in a row, thus improving connectivity and
prosperity for businesses far beyond the Frankfurt Rhine-Main Region.
Until the first pier of the new Terminal 3 opens in late 2021, we
will focus on maintaining a high level of service quality at
Frankfurt Airport – while dealing with the constraints affecting the
entire aviation industry. In particular, enhancing the situation at
the security checkpoints will be a top priority for us.”
In response to strong passenger growth, Fraport hired over 3,000 new
staff members at Frankfurt Airport in 2018. Despite the constraints
experienced at some central process points in the terminals during
peak periods – particularly at the security checkpoints – global
satisfaction of passengers with Frankfurt Airport was at 86 percent
in 2018 – thus even posting a slight increase compared to the
previous year (2017: 85 percent). To provide additional space for
security checkpoints, Fraport is investing in an extension to
Terminal 1 for installing seven extra security lanes in the summer of
2019.
Fraport’s international portfolio also posted a significant gain in
passenger traffic during 2018. In Brazil, the two airports of Porto
Alegre and Fortaleza reported a 7.0 percent increase to 14.9 million
passengers in 2018 – Fraport Brasil’s first year of operating these
airports. At the 14 Greek airports, traffic rose by almost 9 percent
to 29.9 million passengers. Antalya Airport in Turkey grew by a
significant 22.5 percent to 32.3 million travelers, a new historic
passenger record.
Outlook: Growth expected to continue
Fraport is forecasting sustained growth at all of the Group airports
in fiscal year 2019. At Frankfurt Airport, passenger volume is
expected to rise between around two and roughly three percent.
Fraport expects consolidated revenue to increase slightly up to
around EUR3.2 billion (adjusted for IFRIC 12). Group EBITDA is
expected to reach a range of around EUR1,160 million and
approximately EUR1,195 million, despite the non-recurring revenue
from the sale of Fraport’s stake in Hanover Airport. The application
of the IFRS 16 accounting standard – which changes the accounting
rules for leases – will not only make a positive contribution to
Group EBITDA, but will also lead to much higher depreciation and
amortization in fiscal year 2019. As a result, Fraport expects Group
EBIT to be in the range of about EUR685 million and around EUR725
million. The company also expects to post a Group result (net profit)
of around EUR420 million and about EUR460 million. The dividend per
share is expected to remain stable at the higher level of EUR2 for
the 2019 fiscal year.
Fraport’s four business segments at a glance
Revenue in the Aviation segment increased by 5.5 percent to slightly
over EUR1 billion. This was due partly to higher revenue from airport
charges resulting from increased passenger traffic at Frankfurt
Airport. At EUR277.8 million, segment EBITDA increased by 11.3
percent year-on-year, while segment EBIT rose 6.5 percent to EUR138.2
million.
Revenue from the Retail & Real Estate segment dropped 2.8 percent
year-on-year to EUR507.2 million. A major reason for this drop was
significantly fewer proceeds from the sale of land (EUR1.9 million in
the 2018 fiscal year versus EUR22.9 million for the same period in
2017). In contrast, parking income (+ EUR8.3 million) and retail
revenue (+ EUR0.8 million) grew. Net retail revenue per passenger
fell 7.4 percent year-on-year to EUR3.12. Segment EBITDA increased by
3.4 percent to EUR390.2 million, while segment EBIT climbed 2.8
percent to EUR302.0 million.
Revenue in the Ground Handling segment rose by 5.0 percent
year-on-year to EUR673.8 million. The strong growth in passenger
traffic resulted, in particular, in stronger revenue from ground
services and higher infrastructure charges. On the other hand,
passenger growth also led to higher personnel expenses at the
FraGround and FraCareS subsidiaries. Accordingly, segment EBITDA
declined by EUR7.0 million to EUR44.4 million. Segment EBIT dropped
considerably by 94 percent, but at EUR0.7 million still remained in
positive territory.
At nearly EUR1.3 billion, the International Activities and Services
segment significantly advanced by 58 percent compared to the previous
year. After adjusting for the EUR359.5 million in revenue related to
IFRIC 12, the segment’s revenue rose by 20.1 percent to EUR931.4
million. This revenue growth received major contributions from the
Group subsidiaries in Fortaleza and Porto Alegre (+ EUR90.9 million),
as well as Fraport Greece (+ EUR53.2 million). Segment EBITDA
increased a noticeable 28.3 percent to EUR416.6 million, while
segment EBIT jumped 40.7 percent to EUR289.6 million.
You can find our 2018 Annual Report and the presentation from the
press conference on our financial statements (as of 10:30 a.m.) on
the Fraport AG website.

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

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US$163 million Port Canaveral Cruise Terminal 3: Go for Launch!

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The event theme, “Go for Launch,” was a nod to the Port’s key role with the U.S. space program and Port Canaveral’s new terminal with its futuristic design, which was inspired by nearby Kennedy Space Center. The $163 million terminal project – the largest in the Port’s 65-year history – is scheduled for completion in May 2020 and will be ready for the arrival of Mardi Gras to her year-round Port Canaveral homeport in October 2020.

At a space-themed ceremony today, the Canaveral Port Authority and longtime cruise partner Carnival Cruise Line officially broke ground for construction of Port Canaveral’s new Cruise Terminal 3 complex. The new terminal, dubbed the Launch Pad, will be the home of Mardi Gras, the cruise line’s newest and most innovative ship, beginning in 2020. Port Authority Commissioners and the Port’s leadership team joined Carnival Cruise Line executives for the ceremonial groundbreaking at the project site as NASA’s “Spaceman” planted a Carnival Cruise Line flag on a simulated lunar landscape.

“Today’s groundbreaking is a historic milestone for our Port and underscores the long-standing partnership we have with Carnival,” Port CEO Capt. John Murray said. “The trust and confidence we’ve earned with our great cruise partner has been the foundation of success and we are excited for what the future holds. We’re building a great new terminal, for an innovative new ship, and looking forward to welcoming home Mardi Gras.”

Added Carnival President Christine Duffy, “We began our operations from Port Canaveral nearly 30 years go – coincidentally with our original ship of the same name. We’ve had a great relationship with Port Canaveral during that time and we’re proud, honored and excited that our newest and most innovative ship, Mardi Gras, will sail from the new Terminal 3. We are pleased to be the port’s number one cruise line and Mardi Gras promises to be a spectacular addition to the Space Coast.”

CT3 ceremonial first dig (L-R) Scott Bakos, Bermello Ajamil & Partners, Inc; Jerry Allender, CPA Commissioner; Wayne Justice, CPA Commissioner; Christine Duffy, President Carnival Cruise Line; Capt. John Murray, CEO Port Canaveral; Micah Loyd, CPA Commission Chairman; Rocky Johnson, Ivey’s Construction, Inc.

Port Canaveral and Carnival Cruise Line executives held a “pre-launch mission” news conference complete with a mock countdown, then grabbed shovels on the terminal construction site for the ceremonial first dig to officially kick off construction. Participants included Wayne Justice, Canaveral Port Authority Commissioner; Christine Duffy, President, Carnival Cruise Line; Capt. John Murray, Port Canaveral CEO; Micah Loyd, Canaveral Port Authority Commission Chairman; Jerry Allender, Canaveral Port Authority Commissioner; Rocky Johnson, Vice President, Ivey’s Construction Inc.; and Scott Bakos, Partner with Bermello Ajamil & Partners Inc., a Miami firm providing architecture and engineering design work for the project.

“We are proud to be building this state-of-the-art facility and looking forward to providing Carnival’s cruise guests with a first-class guest experience,” Port Commissioner Wayne Justice said. “Building the new cruise terminal, like each of our construction projects at Port Canaveral, is an investment in building our community.”

The contract to build the two-story, 187,000 sq. ft. terminal facility and adjacent six-story parking garage was awarded to Merritt Island, Florida-based Ivey’s Construction. The terminal will feature a high-tech baggage processing facility and a state-of-the-art check-in and security area on its second floor, with kiosks and seating for 1,700 guests. The six-story 692,000 sq. ft. parking garage will accommodate 1,800 vehicles.

Construction of the cruise terminal’s marine facility got underway last year with a contract awarded to Titusville, Florida-based contractor RUSH Marine to remove the existing pier structures at the site and build a new 1,309-foot-long berth for Mardi Gras. Substantial completion of the project is scheduled for December 2019.

Port Canaveral’s Launch Pad will be homeport to Carnival’s largest and most innovative cruise ship, Mardi Gras, which will be powered by liquified natural gas (LNG) – part of Carnival Corporation’s “green cruising” platform. Mardi Gras will be the first cruise ship in North America to be powered by this clean fuel technology. Port Canaveral has worked with federal, state and local public safety and regulatory officials to ensure the Port’s safety readiness for the ship’s arrival. Fuel providers will employ widely used and proven safe best practices of a ship-to-ship “bunkering” refueling, which is regulated by the U.S. Coast Guard.

Currently under construction in Meyer Turku, Finland, Mardi Gras will arrive at Port Canaveral mid-October 2020 and will feature BOLT, the first roller coaster at sea, 20 passenger decks and six distinctive theme zones of fun, dining and entertainment: Grand Central; the French Quarter with Emeril’s Bistro 1369, the first restaurant at sea created by famed New Orleans chef Emeril Lagasse; La Piazza; Summer Landing; Lido; and the Ultimate Playground.

After a special eight-day cruise to the Caribbean on Oct. 16, 2020, Mardi Gras will commence year-round seven-day cruises on Oct. 24, 2020, alternating weekly to the Eastern and Western Caribbean. Eastern voyages will take Mardi Gras to San Juan, Puerto Rico, Amber Cove, Dominican Republic, and Grand Turk in the Turks and Caicos, while Western sailings will travel to Cozumel and Costa Maya, Mexico, and Mahogany Bay (Isla Roatan), Honduras.

First-day bookings for Mardi Gras in January 2019 broke opening-day sales records for a new Carnival ship, according to the cruise line.

Carnival named its newest cruise ship after its first cruise ship. The original 27,000-ton Mardi Gras, a converted trans-Atlantic liner, entered service in 1972 and popularized cruise vacations in the United States, helping Carnival become the largest cruise company in the world today. In March 1991, the 1,241-guest Mardi Gras became one of the first Carnival ships to homeport at Port Canaveral, where she offered three- and four-day cruises to the Bahamas until she and sister ship Carnivale were replaced by the Carnival Fantasy in October 1993.

Mardi Gras’ arrival in Port Canaveral in 2020 will mark 30 years that Carnival Cruise Line has been sailing from Port Canaveral, the longest of any of the Port’s cruise partners. The Port Authority Board of Commissioners approved a long-term operating agreement with Carnival in August 2018.

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Pierre Dominique Prümm joins Fraport Executive Board

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Pierre Dominique Prümm joins Fraport Executive Board

In its meeting today (Thursday, March 14), Fraport AG’s supervisory board appointed Dr. Pierre Dominique Prümm to the company’s executive board, effective July 2019. Prümm will take over board responsibility for Fraport’s “Airside and Terminal Management, Corporate Safety and Security” strategic business unit and the “Corporate Infrastructure Management” service unit.

Fraport AG’s supervisory board chairman Karlheinz Weimar welcomed the addition of Dr. Prümm to the executive board: “The global aviation industry will continue to undergo profound changes in the coming years. This will also bring multiple and significant challenges to Fraport AG as well as other industry players. Therefore, it is essential that we expand and strengthen our company’s executive board to meet the growing challenges and responsibilities.”

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Weimar also referred to the construction of Frankfurt Airport’s new Terminal 3, which is now fully underway, pointing out that “this project will entail strong changes in the existing traffic and terminal utilization structures. This means that we will not only have to optimally market the new Terminal 3, we will also have to redesign and upgrade our existing terminals – and we will have to do this while serving more passengers than ever before and while maintaining during regular operations.”

Therefore, the allocation of Prümm’s respective board responsibilities is a logical consequence of the challenges ahead, explained Weimar: “We need to align the management of our construction measures even closer to the demands and requirements of the market and our customers. We are confident that Dr. Prümm has the right expertise and know-how for this significant task.”

The Fraport Group is committed to further growth, both at its Frankfurt Airport home base and internationally. In the long and medium term, the Group intends to grow the share of revenue gained from its worldwide activities to 50 percent. Weimar added: “Our international activities, which remain under the responsibility of CEO Dr. Schulte, will play an increasingly important role for Fraport’s business.” In addition to the “Global Investment and Management” unit, Schulte’s board responsibilities will continue to include the “Airport Expansion South” unit, as well as the “Corporate Development, Environment and Sustainability” and “Corporate Communications” units.

Because digital transformation has become a decisive factor in all business segments, expertise in this area will be bundled in a new “Digitization and Innovation Management” department. The new organizational unit will be under the responsibility of executive board member Anke Giesen, who will also serve as Fraport’s Executive Director Retail & Real Estate. Giesen will continue to have board responsibility for Fraport’s “Retail and Properties” unit, as well as the “HR Top Executives” and “Legal Affairs and Compliance” units. Furthermore, the “Information and Telecommunications” unit has been newly assigned to her.

Executive board member Michael Müller, who is also Fraport’s Executive Director Labor Relations, will be assigned board responsibility for the new “Cargo and Logistics Management” unit. Three other units continue reporting directly to Müller: “Ground Services”, “Human Resources” and “Internal Auditing”.

Fraport’s Executive Director Controlling and Finance (CFO), Dr. Matthias Zieschang, will have board responsibilities for the following units: “Integrated Facility Management”, “Central Purchasing and Construction Contracts”, “Controlling”, “Finance and Investor Relations”, and “Accounting”.

Alexander Laukenmann will assume Dr. Prümm’s responsibilities as Senior Executive Vice President of the “Airside and Terminal Management, Corporate Safety and Security” unit. Previously holding the position of General Manager at Hamburg Airport, Laukenmann is returning to Fraport AG and Frankfurt Airport, where he was employed in various positions from 2000 to 2016.

Supervisory board chairman Karlheinz Weimar concluded: “I am convinced that Fraport’s new executive team is excellently prepared to meet the challenges facing us in the future. The entire supervisory board wishes the executive board and the company’s management team success in ensuring a prosperous future for the Fraport Group and its employees.”

A short biography of Dr. Pierre Dominique Prümm

Dr. Pierre Dominique Prümm, who is 45, joined Fraport on June 1, 2006, as head of the “Corporate Strategy” division within the former “Marketing, Corporate Strategy and Committees” department. On January 1, 2007, this function was integrated into the new “Corporate Strategy” unit, reporting directly to Fraport’s executive board chairman.

Following a major reshuffle of the company’s executive structure on October 1, 2010, the “Corporate Strategy” unit became part of the new “Corporate Development” unit headed by Prümm as Senior Vice President. On October 1, 2012, Prümm became Senior Executive Vice President of the “Airside and Terminal Operations, Corporate Safety and Security” unit, before advancing to the position of Fraport AG’s General Manager Aviation on April 1, 2018.

Prümm holds a Doctorate in Economics, as well as university degrees in business administration and political sciences. Before joining Fraport AG, he was a member of the managing board of Flughafen Hannover-Langenhangen GmbH, the company that runs Hanover Airport. Prior to this, Prümm held managerial positions at Start Amadeus GmbH and Kienbaum Management Consultants GmbH.