- Passenger Recovery Rate: 85% in Q1, 86% in Q2, 85.5% for the first six months, 87% in July compared to 2019 levels.
- Group Revenue: More than EUR2 billion, a 13% increase compared to the previous year.
- EBITDA: EUR567 million, 18% higher than the previous year, all-time high in H1.
- EBIT: EUR309 million, all-time high figure.
- Group Result: Almost doubled versus the prior year, reaching about the same level as 2019.
- Operating Cash Flow: EUR359 million, sufficient to achieve a positive free cash flow in H1 without considering expansion CapEx.
- Net Debt: Increased to EUR8.2 billion at the end of H1.
- Net Debt to EBITDA Leverage Ratio: Improved from 6.8 times to 6.4 times.
- Liquidity Position: EUR3.8 billion, EUR4.7 billion including unused project finance and committed credit lines.
- Gross Debt: Slightly down to about EUR12 billion.
- Average Cost of Debt: Increased from 3.1% to 3.2% at the end of H1.
- Aviation Segment Revenue: Increased by 13% or EUR28 million compared to the previous year.
- Aviation Segment EBITDA Margin: Improved from just under 30% to 34%.
- Retail & Real Estate Segment Revenue: EUR133 million, 6% higher compared to 2019.
- Retail & Real Estate Segment EBITDA: EUR97 million, slightly down compared to the previous year.
- Ground Handling Segment Revenue: EUR194 million.
- Ground Handling Segment EBITDA: Minus EUR4 million, almost reached breakeven in Q2.
- International Segment Revenue: Continued outperformance, well above the previous year and pre-crisis level.
- International Segment EBITDA: Increased despite higher OpEx from variable concession charges.
- Insurance Payment for Porto Alegre Airport: About EUR9 million to compensate initial flood damages.
Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fraport AG (FPRUF, Financial) reported a strong financial performance in the first half of 2024, with EBITDA exceeding the previous year by 18% and achieving an all-time high result.
- The company's international portfolio, including Fraport Greece, Fraport Antalya, and Lima Airport, showed significant growth, surpassing 2019 benchmarks.
- Despite challenges, the company managed to handle about 6 million passengers in July, achieving a recovery rate of roughly 87% compared to July 2019.
- Fraport AG (FPRUF) received the first insurance payment to compensate for initial damages at Porto Alegre airport, with expectations for full compensation for both infrastructure damages and revenue losses.
- The company's liquidity position remained strong, with available funds at EUR3.8 billion, reflecting increased profitability and effective financial management.
Negative Points
- The company faced significant disruptions due to strikes and weather-related cancellations in the first quarter, resulting in a loss of about 600,000 passengers.
- Porto Alegre airport experienced severe flooding, leading to a temporary closure and the need for extensive restoration work, with an estimated cost of EUR100 million.
- Despite positive financial results, the company's net debt increased to EUR8.2 billion at the end of the first half of 2024.
- The ground handling segment continued to face challenges, with increasing operational expenses and a negative EBITDA of minus EUR4 million in the second quarter.
- Retail revenues per passenger remained flat, with shopping and service revenues not showing significant improvement, impacting the overall retail segment performance.
Q & A Highlights
Q: Could you give us an update on the consultation process and 2025 tariff increase? Will there be any incentives program, and could you quantify the impact on the tariff growth?
A: The consultation process is complete, and all materials have been forwarded to the regulator. We proposed a tariff increase below the current 9.5%, likely around 5%. We are awaiting the regulator's decision. We also offered a three-year contract to the airlines, which was refused, but we remain open to discussions.
Q: Could you shed some light on the potential impact of the Porto Alegre first insurance payment on a full-year basis? Will the full amount be paid in 2024, or could some payments extend into 2025?
A: The preliminary analysis estimates EUR100 million needed to restore operations, primarily for runway repairs. We expect full compensation for infrastructure damages and revenue losses, with EUR25 million from insurance and the rest from the state. The exact timing of payments is uncertain, but we aim to minimize any mismatch between outflows and inflows.
Q: Could you provide an update on the capacity situation at Lufthansa and its impact on your traffic guidance for this year and next?
A: Lufthansa's capacity issues, including non-delivery of aircraft and engine problems, have led to a significant reduction in expected supply. This has impacted our traffic guidance, pushing it to the lower end of our range. We expect some recovery in 2025 as A320neo engines are refurbished and new aircraft deliveries resume.
Q: What are your expectations for retail activities and the main moving parts of the cost base for the full year and 2025?
A: The revenue increase in retail has been offset by higher OpEx, mainly due to the reallocation of security lines and maintenance costs. We expect a modest increase in spend per passenger for the full year and 2025, driven by parking revenues, real estate, and retail improvements.
Q: Could you clarify the EBITDA guidance for Brazil, considering the EUR20-30 million EBITDA loss due to the airport closure and the insurance payments?
A: The EBITDA guidance includes the expected revenue loss from Brazil but also anticipates insurance payments of up to EUR25 million. While we don't expect full EBITDA compensation this year, the numbers will be lower than last year.
Q: What are the building blocks for your 2025 EBITDA guidance, and how do you see the range of outcomes?
A: We expect continued growth in our international portfolio, with positive traffic and fee increases in Greece, Lima, Bulgaria, and Slovenia. Ground handling will see significant fee increases and productivity improvements. Aviation will benefit from solid fee increases and modest traffic growth. The exact traffic growth rate is uncertain and depends on Lufthansa's capacity.
Q: How do you see the environmental protests affecting your operations, and what measures are you taking?
A: We lost about EUR1 million in EBITDA due to recent protests and are filing claims for compensation. It's challenging to protect an airport entirely, and such incidents can happen again. We are taking measures to minimize the impact but cannot guarantee complete prevention.
Q: Could you provide more details on the consultation process and your relationship with Lufthansa regarding the tariff increase?
A: The consultation process is complete, and the proposal is with the regulator. While the relationship with Lufthansa remains good, the willingness to accept higher fees has decreased due to the inability to pass on costs to passengers. This is a natural response to current market conditions.
Q: What is your dividend policy, and when do you expect to resume dividend payments?
A: Our policy is to pay dividends out of positive free cash flow, typically 40-60% of net income. We aim to resume dividend payments once we achieve a positive free cash flow, which we expect in the near future.
Q: Could you clarify the CapEx guidance and whether it includes the EUR100 million additional in Brazil?
A: The CapEx guidance does not include the EUR100 million for Brazil. The exact timing and form of compensation are still under negotiation. We aim for full compensation, but the details are yet to be finalized.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
