As announced after last Monday’s regular supervisory board meeting, Fraport AG achieved not only its financial goals in fiscal year 2014 but has also increased its dividend recommendation by 10 euro cents to €1.35 per share. For the fiscal year ending December 31, 2014, Fraport’s Group revenue rose to about €2.4 billion (up 0.8 percent year-on-year; or up by 3.2 percent on an adjusted basis). The operating result or Group EBITDA (earnings before interest, tax, depreciation and amortization) grew by 7.8 percent to €790.1 million, while Group EBIT (earnings before interest and tax) advanced by a noticeable 10.1 percent to €482.8 million. Fraport also posted a 6.8 percent gain in the Group result to €251.8 million. At €2.54, basic earnings per share were 5.8 percent higher – up 14 euro cents – compared to the previous year.
Fraport’s good financial performance can be attributed to positive operational development at the company’s Frankfurt Airport (FRA) home-base in connection with the comparably mild winter, as well as to traffic growth at all of the Group’s airports. Despite numerous strike-related flight cancellations, Frankfurt Airport’s passenger traffic increased by 2.6 percent, reaching a new record of almost 60 million passengers in 2014. Cargo (airfreight and airmail) throughput at FRA rose by 1.8 percent year-on-year to some 2.1 million metric tons.
Fraport AG’s executive board chairman Dr. Stefan Schulte thanked both passengers and the Group’s staff for the good figures: “By choosing Fraport’s airports, our customers help secure employment and a healthy financial performance. The basis for positive development in fiscal year 2014 was our motivated and committed staff, who I would like to thank on behalf of the entire executive board.” Schulte also highlighted the successful expansion of Fraport’s international investment portfolio as a key development for the company in 2014. With the purchase of AMU Holding (Airmall), we established the foundation for Fraport’s airport retailing business in the American market. Furthermore, Fraport won the international bid for Ljubljana Airport (LJU) in the capital city of Slovenia in southeastern Europe.
For the 2015 business year, Fraport expects the positive financial trends to continue within a challenging environment. Passenger traffic at Frankfurt Airport is forecast to grow by two to three percent this year – and by even a higher rate at the Group’s other airports. Looking at key financial indicators, the executive board expects the Group revenue to reach between about €2.55 billion and €2.6 billion. Fraport is also expecting the Group EBITDA to range between about €820 million and €840 million, while Group EBIT could range between about €500 million and €520 million. The Group result is also expected to climb to a level between about €265 million and €285 million. This outlook is conditional on evolving geopolitical matters and also on further possible aviation strikes. Furthermore, this outlook does not take into account any effects from implementing the planned concession for operating 14 regional airports in Greece – for which Fraport was selected last year as the preferred bidder in an international tender process. Originally scheduled to take place by the end of 2015, the takeover of operations at the Greek regional airports could be pushed back into the 2016 business year.
Overview of Fraport’s Four Business Segments:
Aviation: Revenue in the Aviation business segment rose by 4.6 percent to €884.2 million in the 2014 fiscal year. Positive contributing factors here included Frankfurt Airport’s passenger growth as well as greater revenue for airport charges. The loss of the contract for security screening services at FRA’s Terminal 1B had a dampening effect on segment revenue. However, this could be compensated for by a new contract for aviation security services won at Stuttgart Airport (STR). Despite a slight decline in employee figures, personnel expenses increased as a result of the higher collective wage agreement. A decrease in segment costs resulted from lower expenses for Fraport’s Winter Services – due to weather-related reasons. Segment EBITDA increased significantly by 13.9 percent to €236.9 million because of higher revenue and lower expenses. Despite slightly higher amortization and depreciation, segment EBIT markedly grew by 27.5 percent to €115.5 million.
Retail & Real Estate: With€455.7 million, Fraport’s Retail & Real Estate business segment registered a 1.8 percent decline in revenue compared to 2013. The decrease in revenue was primarily due to lower retail revenue, as well as lower revenue from land sales and energy supply services. The key performance indicator “net retail revenue per passenger” fell by 4.7 percent to €3.43, largely reflecting changing passenger structures and reduced purchasing power related to the strong euro exchange rate – especially compared to the ruble and yen currencies. Despite the decline in revenue development, segment EBITDA improved by 1.9 percent to €356.5 million year-on-year. This can be attributed to a drop in expenses, resulting primarily from lower sales of real estate inventories as well as reduced requirements for energy supply services. Slightly lower depreciation and amortization led to a segment EBIT of €275.0 million, up 3.0 percent.
Ground Handling: In fiscal 2014, the Ground Handling business segment reported 1.1 percent growth in segment revenue to €656.2 million – resulting from increased passenger figures, the deployment of larger aircraft at FRA, and greater revenue from infrastructure charges. Whereas personnel expenses rose because of increases in pay under collective wage agreements, cost of material, and other operating expenses fell because of cost management and one-off effects in the previous year. Correspondingly, segment EBITDA increased by 29.5 percent to €44.3 million in 2014. A slight decrease in depreciation and amortization allowed segment EBIT to return to positive territory – reaching €7.5 million compared to minus €4.4 million in fiscal year 2013.
External Activities & Services: Adjusting for the lower recognition of earnings-neutral capacitive capital expenditure at the Group’s Twin Star and Lima companies in connection with the application of the IFRIC 12 accounting standards, segment revenue improved by 10.4 percent year-on-year to €387.7 million. The main reasons for this included the positive development of the Group’s Twin Star subsidiary as well as passenger growth at Lima Airport. The new Group companies, AMU Holdings Inc. and Ljubljana, contributed €27.8 million to revenue growth. The segment’s operating expenses decreased due to lower capacitive capital expenditure in the Group’s Twin Star and Lima companies. Segment EBITDA grew by 8.0 percent to €152.4 million, if adjusted for IFRIC 12, because of positive revenue growth. Increased depreciation and amortization – resulting mainly from the terminal inaugurations at Varna and Burgas airports at the end of fiscal year 2013, as well as the new Group companies – led to segment EBIT of €84.8 million, down 0.7 percent. Thus, the segment EBIT remained almost unchanged over the previous year.