Fraport Interim Report 3rd Quarter 2004: Positive Trend Continues - 2004 Sales and Earnings Forecast Revised Upward / Situation in Air Transport Industry / Requires Cost Reductions
Frankfurt/Main, Germany (ots) - Fraport AG Frankfurt Airport Services Worldwide achieved an 8.7 percent increase in sales to EUR1,487.4 million in the first
nine months of fiscal 2004. The Group's EBITDA (earnings before
interest, tax, depreciation and amortization) of EUR409 million
exceeded the previous year's figure by 10.5 percent
Some 58.9 million passengers used the Fraport Group's airports
during the first nine months of 2004, 10.5 percent more than in the
corresponding period last year. Frankfurt Airport (FRA) served 38.8
million passengers, an increase of 6.4 percent. Furthermore, FRA
limited landing capacities could be better utilized: Maximum takeoff
weights (MTOWs) - an indicator of the size of aircraft used - rose by
6.7 percent. At the same time, the seat load factor (i.e., aircraft
capacity utilization) increased 2.1 percentage points. Antalya
Airport (AYT) in the Turkish Mediterranean benefited from a revival
in tourism traffic to this region. Passenger figures at AYT soared
by 31.4 percent to 9.8 million. Frankfurt-Hahn Airport (HHN), which
focuses on the low-cost segment, continued its success story by
growing 17.4 percent to 2.1 million passengers.
Cargo tonnage (airfreight and airmail) handled at Frankfurt Airport
reached the record level of 1,334,509 metric tons, exceeding the
first nine months of 2003 by 11.1 percent.
In addition to higher proceeds from traffic charges, Fraport also
achieved a noticeable increase in revenue from security services,
because an EU directive required further tightening of security
procedures at European airports at the beginning of 2004.
Furthermore, Fraport's ICTS Europe subsidiary, which specializes in
aviation security services, was able to expand its business to new
customers and new locations.
As a result, ICTS' staff requirements increased. In the first nine
months of 2004, the company's work force was 10.2 percent larger than
in the same period of 2003. This manpower increase and increases in
pay rates were responsible for the Group-wide increase of 5.5 percent
in personnel costs to EUR726 million. The Fraport Group's total
number of employees averaged 23,935, an increase of 2.6 percent over
the previous year.
Non-personnel costs grew 9.7 percent to EUR384.3 million, mainly
because of increased maintenance and repair costs - in particular,
the terminal modernization and Runway North renovation projects at
Due to stringent cost management, total personnel and non-personnel
costs increased by only 6.9 percent and thus did not rise as fast as
sales (up 8.7 percent). This productivity improvement is reflected in
a 10.5 percent increase in EBITDA to EUR409 million.
With EUR16 million, the financial result fell EUR18.7 million short
of the previous year's level. Income from investments was markedly
higher in 2003, because it still contained EUR8.5 million in dividend
payments from Antalya for fiscal 2002. Since 2003, such dividend
payments have been made "in phase," meaning dividends have been
collected at the end of the fiscal year for which they are due.
Furthermore, financial results for the January-to-September 2004
period were depressed by a negative balance of foreign currency
The Fraport Group was able to improve profits in the first three
quarters of 2004 by 10.5 percent to EUR117.2 million, compared to
the same period last year. Earnings per share according to IFRS
(International Financial Reporting Standards) grew from EUR1.18 Euro
In view of the positive development of the operating business in the
first nine months, Fraport is revising its forecast for sales and
earnings in fiscal 2004 upward. Fraport expects sales revenues to
grow by at least 7.5 percent and EBITDA by slightly more than 10
percent. Correspondingly, Group profits are expected to rise
over-proportionately, provided there will be no negative influences
during the last few weeks of the year. Fraport AG's executive board
plans to increase the payout ratio.
Fraport's executive board chairman Dr. Wilhelm Bender explained that,
the good results not withstanding, Fraport AG will face heavy
challenges over the next few years because of growing costs pressures
in the air transport industry. Examples of such challenges include
the prices for ground handling services and so-called concession fees
at Frankfurt Airport, Bender said. Fraport's ground-handling
contract with Lufthansa will be expiring at the end of 2005.
Therefore, it should be in the interest of both contract partners to
find a competitive solution to continue this longstanding and
successful cooperation at Frankfurt Airport in 2006 and beyond.
Bender pointed out that the company's successful WM 2005 value
enhancement program, which will be continued, provides an excellent
foundation for the months and years ahead. Nevertheless, further
cost reductions will be necessary. "Fraport is economically sound,"
Bender said. "Based on this sound position, we are already prepared
today to meet the expected challenges of tomorrow - for the benefit
of our customers, our shareholders and for sustained job security."