Frankfurt Airport.
Revenue and earnings grow despite difficult framework conditions.
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 euros, 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 euros to 511.5 million euros in the reporting period. This amount includes a 22.8 million euros 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 euros 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 euros and by a 5.8 million euros increase in interest expense. Thanks to an overall improved financial result, the Group result (net profit) rose by 24.1 million euros or 17.1 percent to 164.9 million euros 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 EUR367.5 million. In contrast, free cash flow decreased noticeably – as forecast – by 282.5 million euros to minus 305.7 million euros. 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 torise 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 euros and 1,195 million euros; Group EBIT between about 685 million euros and 725 million euros; Group EBT between about 570 million euros and 615 million euros; and Group result (or net profit) between about 420 million euros and 460 million euros.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
