16.03.2018 – 07:00
Fraport Fiscal Year 2017: Strong Results Supported by Significant Traffic Growth at All Group Airports
Targets for revenue and earnings fully reached - Fraport's international business makes important contribution to earnings
The Fraport Group can look back on a highly successful 2017 fiscal year (ending December 31), in which revenue and earnings targets were fully reached. Supported by significant traffic growth at all of the Group's airports, revenue climbed by almost 13.5 percent to EUR2.93 billion. A major revenue contribution from the Greek airports (which Fraport began operating in 2017) boosted the company's revenue by EUR234.9 million.
Operating earnings (Group EBITDA) slipped slightly by 4.8 percent to EUR1,003 million, due to lower other operating income. The main reasons for the decrease were, in particular, positive one-time effects in the corresponding period of 2016. Adjusting the previous year's figures for the compensation payment received in connection with the Manila project, for the proceeds from the sale of shares in Thalita Trading Ltd., and for other extraordinary effects (provisions for staff restructuring and depreciation and amortization tied to FraSec and Airmall), EBITDA increased by approximately 18 percent or about EUR150 million. The Group result (consolidated earnings) fell by 10.1 percent to EUR360 million. However, compared to the corresponding adjusted 2016 figure, there was a noticeable increase of about EUR60 million - up more than 20 percent.
Dr. Stefan Schulte, Fraport AG's executive board chairman, said: "In Frankfurt, the strategic decisions that we have taken are allowing us to benefit from considerable market growth once again, and we can look back on a very strong year indeed. Internationally, we achieved important milestones with the operational takeover of 14 Greek airports and the acquisition of two concessions in Brazil. With these developments, we are securing the Fraport Group's long-term growth prospects, while diversifying our portfolio with a broader and stronger foundation for the future."
The operating cash flow of EUR790.7 million in 2017 exceeded the previous year's figure by 35.6 percent, particularly due to the contribution from operations at Fraport Greece and the growth at Frankfurt Airport. Correspondingly, the free cash flow rose markedly by about 30.3 percent to EUR393.1 million.
Traffic growth achieved by all of the Group's airports provided the basis for Fraport's strong business development in fiscal year 2017. Frankfurt Airport ended 2017 with a 6.1-percent gain in traffic to more than 64.5 million passengers. In Fraport's international business, the airports of Ljubljana (LJU), Varna (VAR) and Burgas (BOJ), St. Petersburg (LED), Lima (LIM), and Xi'an (XIY) each posted new annual passenger records. The 14 Greek regional airports, which joined the Fraport Group in April 2017, welcomed a total of 27.6 million passengers in 2017 - thus posting a new annual record in combined passenger traffic. Following a difficult 2016, Antalya Airport (AYT) on the Turkish Riviera registered renewed growth with passenger traffic rising by 38.5 percent to more than 26.3 million passengers.
Fraport is expecting continued strong growth for the 2018 fiscal year. At Frankfurt Airport, the company is forecasting annual passenger volume ranging from about 67 million to 68.5 million. Furthermore, the company expects overall positive development at its airports outside of Germany. In particular, the airports in Antalya, Lima, and Xi'an are expected to record high traffic volumes again this year. Fraport expects its Brazilian airports in Fortaleza and Porto Alegre, as well as the 14 Greek airports, to experience single-digit growth rates, in the middle range.
Dr. Stefan Schulte explains: "In the current fiscal year, Fraport's international business is focused on progressing with various expansion and construction projects in Greece and Brazil, so that we can increase capacity and enhance the travel experience of our passengers. We are also continuing the demand-driven development of infrastructure at Frankfurt Airport, and are on schedule with the construction of Terminal 3. We plan to commence construction of Pier G in the second half of 2018."
For the current fiscal year, Fraport is expecting consolidated revenue to reach up to EUR3.1 billion (adjusted for effects of IFRIC 12). Group EBITDA is forecasted to be in the range of about EUR1.080 billion to approximately EUR1.110 billion, with consolidated EBIT of about EUR690 million to about EUR720 million. The company also expects to post a significantly higher Group result between about EUR400 million and approximately EUR430 million. A corresponding increase in the dividend for the 2018 fiscal year is anticipated. The financial outlook also includes the two airports in Fortaleza and Porto Alegre, Brazil. However, they will not yet make any significant contribution to Group result.
The Executive Board and Supervisory Board will propose to the Annual General Meeting (AGM) that last year's raised dividend remain at the same level for the 2017 fiscal year - with distribution of EUR1.50 per share once again.
Fraport's four business segments at a glance:
In the Aviation segment, revenue increased by 4.8 percent to EUR954.1 million year-on-year in 2017. Positive factors at Frankfurt Airport included passenger growth, the increase in airport charges (as at January 1, 2017) by an average of 1.9 percent, as well as higher revenue from security services. EBITDA rose by 14.5 percent to EUR249.5 million year-on-year. This positive development in operating results, along with significantly lower depreciation and amortization (due to the impairment of goodwill related to the Group's company FraSec in the amount of EUR22.4 million in 2016) led to a significant 87.1 percent increase in EBIT to EUR131.7 million.
The Retail and Real Estate segment posted revenue of EUR521.7 million in 2017, up 5.6 percent year-on-year. The positive revenue development can be attributed to a variety of factors, including passenger traffic and higher proceeds from the sale of land. Net retail revenue per passenger decreased by 3.4 percent year-on-year to EUR3.37. In addition to the depreciation of various currencies against the euro - which led to reduced purchasing power - the reasons for this decrease also included changes to the passenger mix caused by a disproportionate increase in passenger numbers on European routes. EBITDA increased by 2.6 percent to EUR377.5 million, while EBIT climbed by 3.6 percent to EUR293.8 million.
The Ground Handling segment reported a slight 1.8 percent gain in revenue to EUR641.9 million in 2017. This is due mainly to increased revenue from ground services thanks to traffic growth at Frankfurt Airport. EBITDA increased by 48.1 percent to EUR51.4 million, mainly resulting from lower additions to the provisions for the staff restructuring program. There was a corresponding increase in EBIT, which rose by EUR17.1 million to EUR11.6 million following a loss of EUR5.5 million in 2016.
The International Activities and Services segment achieved revenue of EUR817.1 million in 2017, representing a 48.1 percent jump year-on-year. Revenue growth was driven mainly by the Group companies Fraport Greece (+EUR234.9 million), Lima (+EUR19.9 million) and Fraport Slovenija (+EUR5.7 million). Revenue included EUR41.7 million in connection with the application of IFRIC 12 (previous year: EUR19.9 million). The segment's other income decreased significantly due to the compensation payment received in the previous year from the Manila project (-EUR241.2 million) as well as the gains from the sale of shares in Thalita Trading Ltd. (-EUR40.1 million). EBITDA dropped by 25.1 percent to EUR324.8 million, due primarily to a decrease in other income. Higher depreciation and amortization, in particular in connection with Fraport Greece, led to segment EBIT of EUR205.9 million (-40.4 percent). Adjusting for the one-time effects mentioned above during the corresponding period in 2016, EBITDA and EBIT for this segment rose by EUR122.3 million (+60.4 percent) and EUR84.3 million (+69.3 percent), respectively.
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