Third Quarter 2002 Interim Report: Fraport AG Records Noticeable Increase in Revenues in the First Nine Months of 2002 - Operating Results Increase Nine Percent
Frankfurt/Main, Germany (ots) - Fraport AG Frankfurt Airport Services Wordwide today presented its interim report for the first three-quarters of fiscal 2002. Revenues of the airport company clearly increased by 13.9 percent to EUR 1,344.2 million. Earnings before interest, tax, depreciation and amortization (EBITDA) grew by 9.2 percent to EUR 401.8 million.
In the third quarter, Fraport AG was able to continue the gratifying increase in revenues seen during the first half of fiscal 2002. Fraport views this as a confirmation of its forecast for positive results for the total year. The clear increase in sales was mainly due to ICTS Europe Holdings B.V. - the European market leader for aviation-related security services - being fully consolidated for the first time this year. On an adjusted basis, i.e., without this consolidation, revenues were 4.1 percent higher than in the same period last year. The major factor was the positive development at Frankfurt. Here results were boosted by higher revenues from retailing and rental income, the increase in airport charges at the beginning of the year, and growing demand for security services.
In contrast, traffic figures still fell slightly short of the previous year's level. However, traffic picked up more strongly in the third quarter, despite the slow world economy. From January to September, Fraport recorded 53 million passengers Group-wide, only 0.5 percent less than in the same period last year.
Frankfurt Airport - the group's most important location - recorded 37 million passengers, a three percent drop from the same period last year. However, with 14 million passengers in the third quarter, activity was nearly level with the third quarter last year. Having already picked up noticeably in the second quarter, cargo activity in the first nine months of fiscal 2002 reached about 1.1 million metric tons, a slight increase of 0.3 percent. With about 344,200 takeoffs and landings, aircraft movements at Frankfurt Airport almost reached the level of the same reporting period in 2001.
Fraport's EBITDA reached EUR 401.8 million, a 9.2 percent increase on the previous year. In addition to higher revenues, this increase was attributed to only a moderate increase in cost to revenue ratio. Cost of materials rose by a negligible 1.8 percent to EUR 359.3 million and personnel expense rose 22 percent to EUR 633.9 million due to newly consolidated entities. Fraport's EBITDA-margin shrank to 29.9 percent, slightly down from last year's 31.2 percent, because of the consolidation of ICTS Europe, which has a customary smaller EBITDA-margin.
Profit from ordinary operations of EUR 197.2 million exceeded the previous year by 23.3 percent. This increase was mainly attributable to a rise in earnings and an improvement in net interest expense due to a reduction in liabilities following Fraport's initial public offering (IPO). Depressed by an over-proportional increase in tax expenses, consolidated profits fell 13 percent to EUR 83.3 million. Last year, the tax rate was positively affected by special dividends. Earnings per share, according to IAS (International Accounting Standards), dropped from EUR 1.28 to EUR 0.92.
Fraport's total commitment for the Manila Airport international passenger terminal (IPT) project has increased over the second quarter 2002 by $5.3 million in interest payments to $383.2 million. During the past few months, Fraport has held talks with the Philippine government to sound out options regarding the Manila project. In the meantime, the senate committee of the Philippine parliament seems to have largely completed its investigations regarding the legality of the concession and supplemental agreement for the operation of the terminal. As a result of this investigation a Philippine court could declare this concession agreement partly or fully void. In close coordination with the Philippine government, Fraport currently tries to find out which impact such a court decision would have on Fraport's financial commitment. The Philippine government confirmed that the legal situation resulting from such a decision would improve chances for re-transferring the project and getting appropriate compensation payments for Fraport's investments to date. The government said it would be striving for a solution that protects the interests of Fraport AG.
As part of the "WM 2005 - Creating Value for Tomorrow" productivity improvement program, the company's management and works council signed a works agreement, which represents a significant step toward the successful implementation of the program. The agreement governs the specific consequences of personnel-strategy initiatives for Fraport staff. The essence of the agreement is to secure existing jobs and to create new ones.
Fraport is currently preparing the application documents for two approval procedures. One procedure will deal with the approval for building a maintenance facility - hangar, ramp and associated access taxiways - required at Frankfurt Airport to accommodate the new low-noise, low-emission A380 widebody aircraft. The company plans to file this zoning request before the end of this year. To remain competitive in the future, an international air transport hub such as Frankfurt must be able to accommodate aircraft of this size.
The second procedure will deal with Fraport's zoning request for the urgently needed expansion of Frankfurt Airport, in keeping with market demand. The company postponed filing this request to the year 2003 to prepare optimally for the procedure. As excellent preparation will speed up successful completion of the procedure; the scheduled year for opening the new runway remains unchanged at 2006.
While remaining cautiously optimistic with its prognosis for air traffic development in the total year 2002, Fraport AG expects a further recovery in air traffic during the fourth quarter. Nevertheless, the company expects a significant increase in consolidated revenues, mainly because of the first-time full consolidation of ICTS Europe, an increase in airport charges, and a passenger-related security surcharge. Despite the absence of special effects, which had bolstered last year's results, Fraport expects the EBITDA for 2002 to reach at least EUR 500 million, thanks to already initiated measures under the "WM 2005" program.