The Lufthansa Group increases revenue by 4.9 per cent to EUR 30.1bn in 2012. SCORE delivers earnings contribution of 618m euros in its first year.
The Lufthansa Group increased its revenue by 4.9 per cent to 30.1bn euros in the past financial year. At 524m euros, the Group’s operating result was down 36.1 per cent on the figure for the previous year. The net result for the period went up from -13 euros in the previous year to 990m euros, primarily as a result of non-recurring effects from the disposal of shares in Amadeus IT Holding, S.A. and the sale of the loss-making British Midland Ltd.
“With our SCORE programme, we have launched a comprehensive, if not one of the largest, process of change ever seen in the history of Lufthansa. In addition to measures concerning costs and income, we have set up a number of major strategic projects, such as the new Germanwings, the turnaround of Austrian Airlines and the pooling of administrative activities in the areas of HR, purchasing and finance,” said Christoph Franz, Chairman of the Executive Board and CEO of Deutsche Lufthansa AG during the presentation of the earnings figures for the 2012 financial year in Frankfurt. “With SCORE, we are creating the financial basis for our extensive investment plans. Our aim: we will make Lufthansa strong. We want to expand our position as Europe’s leading aviation group and considerably boost our profitability in every business segment.”
As part of SCORE, the Group implemented around 800 measures in 2012 to improve earnings and cut costs. As a result, the Company was able to achieve a structural earnings improvement of 618m euros in the first year of the programme, around 300m euros more than originally planned. Making better use of synergies in purchasing, coordinating flight plans being between airlines, adjusting capacities and lowering staff costs through more efficient processes in administrative areas have all played a role here, as have numerous measures which had been initiated before the official launch of SCORE, but whose positive effects on earnings were only felt in 2012. One example of this is the closure of Lufthansa Italia.
Simone Menne, Chief Financial Officer and responsible for Aviation Services at Deutsche Lufthansa AG, emphasised: “The Lufthansa Group has achieved a solid result in a difficult market environment. The SCORE programme delivered an earnings contribution of EUR 618m in its first year. However, the operating result fell sharply compared with the previous year. For this reason, we will continue to press ahead with SCORE in 2013 and boost our operating profit.”
The primary cause of the fall in Group profits was the price of fuel, which was 1.1bn euros higher than in the previous year. The airlines suffered as a result: the Passenger Airline Group segment generated an operating profit of 258m euros, which was 26.1 per cent lower compared with the previous year. The largest single company, Lufthansa German Airlines, reported an operating loss of 45m euros, which represents a decline of 161m euros on the previous year. SWISS posted an operating result of 191m euros. Profit fell by EUR 68m year on year. Austrian Airlines’ operating result of 65m euros was an improvement of 127m euros, mainly thanks to the transfer of operations to the cheaper Tyrolean Airways platform.
In the Logistics segment, the Group reported a profit of 104m uros, down 145m euros.
Christoph Franz said: “SCORE strengthens our core business segment and makes us less susceptible to external factors. Initial measures were implemented in 2012, with more being prepared and vigorously promoted. This includes modernising our fleet with 236 new, modern aircraft which are currently on our order list. In this year alone, we will bring 34 new, fuel-efficient and low-noise aircraft into service, which will replace older models. The major part of the operating result for the year will be generated by the passenger and cargo airlines of the Lufthansa Group in 2013.”
The broad strategic formation of the Lufthansa Group had a positive effect on the result. All the service segments increased their operating result compared with the previous year. Lufthansa Technik, LSG SkyChefs and Lufthansa Systems generated higher year-on-year profit contributions of 318m euros (+23.7 per cent), 97m euros (+14.1 per cent) and 21m euros (+10.5 per cent), respectively.
“In the current year, our main focus will be on ensuring the successful implementation of individual projects and measures. 2013 will be a particularly challenging year for the companies and their employees,” emphasised Christoph Franz. According to him, restructuring and project costs will have a negative impact on earnings in the current year. At the same time, the oil price is expected to remain high and the underlying economic conditions for air traffic challenging. Global economic performance is fraught with great uncertainty and the crisis in Europe has not yet been overcome, he continued. Nevertheless, the Lufthansa Group expects to achieve an operating profit in 2013 which is higher than that of the previous year. “SCORE gained considerable momentum during the past year. Early successes are already visible and can be measured. Our goal remains the same: with an operating profit of at least EUR 2.3bn which we intend to achieve with SCORE, we will actively promote and shape the process of change in the European airline industry,” underlined Franz.
2012 in figures
Revenue for the Lufthansa Group in the financial year 2012 came to 30.1bn euros – an increase of 4.9 per cent on the previous year. Traffic revenue improved by 4.3 per cent to 24.8bn euros. Overall, the Group’s operating income went up to 3.0bn euros in the reporting period, an increase of 5.9 per cent.
Operating expenses rose by 4.3 per cent in the previous year to 31.7bn euros. One of the main reasons was the 1.1bn euros rise in fuel costs, which came to 7.4bn euros in total. This represents an increase of 17.8 per cent. Included in this amount is a positive contribution of 128m euros from fuel hedging. Government-imposed fees and charges rose by 3.3 per cent on the previous year, despite a lower number of flights operated.
The Lufthansa Group generated an operating result of 524m euros in 2012, down by 296m euros compared with the previous year. The net profit for the period was EUR 990m, an increase of more than 1bn euros. Earnings per share improved to 2.16 euros. The disposal of shares in Amadeus IT Holding, S.A. made a very positive contribution to the net profit for the period, with book gains of 623m euros. In addition to this, the previous year’s result was affected by a 285m euros loss from British Midland Ltd., which has since been sold.
Lufthansa invested 2.4bn euros in the reporting period. Of this sum, 2bn euros went on modernising the fleet. Cash flow from operating activities came to 2.8bn euros and free cash flow (cash flow from operating activities less net capital expenditure) to 1.4bn euros. For the year 2012, the Group has net debt of 2.0bn euros. Its equity ratio is 29.2 per cent.
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