Københavns Lufthavne A/S
Interim report (Q1 and Q3)

Interim report of Copenhagen Airports A/S (CPH) for the period 1 January – 30 September 2018

Stock Exchange Announcement 2018
Copenhagen, 6 November 2018

INTERIM REPORT OF COPENHAGEN AIRPORTS A/S (CPH) FOR THE PERIOD                1 JANUARY – 30 SEPTEMBER 2018

The Board of Directors has today approved the interim report for the period 1 January – 30 September 2018.

Summary of the first nine months of 2018

A total of 23.3 million people travelled through Copenhagen Airport in the first nine months of 2018, up 3.7% on the same period last year. The long-haul, intercontinental routes recorded double-digit growth rates. Transfer traffic increased by 1.3%. Revenue increased 0.6% due to the increase in passenger numbers and higher revenue from parking and the shopping centre. CPH retains the outlook for the profit before tax excluding one-off items.

More tourists coming to Denmark and increased joy of travelling among Danes have helped to deliver good results at Copenhagen Airport for the first nine months of 2018. An average of 85,724 passengers passed through the Copenhagen terminals every single day, which is over 3,000 more than the average in 2017.

The growth in passenger numbers can mainly be attributed to international traffic. In recent years, the airport has succeeded in attracting a number of new long-haul direct routes, for example to the USA, India and China. New routes often mean more passengers. This has been very clear this year, with 10.9% more passengers on long-haul routes in the first nine months. This level of growth is significant, and it is precisely this traffic that is helping to support the airport’s position as a traffic hub – particularly for routes to North America and China – and increase transfer traffic. The number of US tourists and business travellers coming to Copenhagen has doubled in just a few years, topping a million for the first time in 2017. An equivalent development is expected for the Chinese market. In 2017, the airlines’ total seat capacity between Copenhagen and China was 175,000.   In 2019, this will increase by 84% to 323,000 available seats.

European traffic grew by 3.0%, while domestic traffic was unchanged with growth of 0.1%. Total passenger numbers were up 3.7%, but there was not a corresponding increase in the number of flight operations, which rose by just 2.2%. One of the reasons for this is that the airlines have increased occupancy on many flights, meaning more seats are filled.

In April as part of CPH’s commitment to delivering the National Aviation Strategy, CPH reduced the charges the airlines pay to use the airport. Charges in general fell by 10% on average, while the feeder routes flying passengers to and from smaller, regional airports saw a reduction of 35%. The reduction in charges has had a negative impact of DKK 148.0 million since 1 April 2018. This has been partly offset by good growth in passenger numbers, and CPH has also improved profitability by making operations more efficient. On a full-year basis, the reduction in charges will have an impact of approximately DKK 300 million.

Fast-paced expansion

Copenhagen Airport previously announced that it would significantly increase its investment level in 2018 and expected to spend up to DKK 2 billion on expanding and improving the airport’s facilities. This year has already seen the inauguration of a new, expanded central security checkpoint, and a walkway direct from the metro station to security and SAS Fast Track, as well as a 4,000 m² airside expansion between Piers A and B. Building work on the brand-new Pier E, which will cover an area of more than 30,000 m², is also well under way. The first phase of construction of Pier E is expected to be ready to be in use in 2019, while the second phase will follow in 2020.

Passengers passing through the airport this year cannot fail to have noticed all the building work in progress. CPH is doing everything possible to minimise inconvenience during the period, but the expansion is essential to create more space for more aircraft, passengers and facilitate joy of travel. CPH’s expansion plan is an ambitious one, and DKK 1.5 billion has been invested so far this year. The investments and specifically the expansion of the central security checkpoint have resulted among other things in reduced waiting times at security. Construction of the walkway has also created more space in Terminal 3, as passengers can walk directly to reach security and Terminal 2. Construction of the new hotel, which started early in 2018, is expected to be completed at the end of 2020.
Continued growth in the non-aeronautical business
Revenue in the non-aeronautical segment, including the shopping centre, hotel and parking, rose as a result of higher passenger numbers. Revenue from parking was up 12.7%, mainly driven by an increase in local departing passengers, while revenue from the shopping centre increased by 3.0%, mainly due to an increase within restaurants and cafés.

Highlights of results

• Passenger numbers at Copenhagen Airport increased by 3.7% in the first nine months of 2018. The number of local departing passengers grew by 4.1%, and the number of transfer and transit passengers increased by 1.3%.
   
• Revenue grew by 0.6% to DKK 3,397.7 million (2017: DKK 3,378.2 million), primarily driven by the increase in the number of passengers and an increase in parking revenue, although this was partly offset by the reduction in airport charges from 1 April 2018, which have had a negative impact on revenue of DKK 148.0 million.
   
• EBITDA, excluding one-off items, decreased by 2.8% to DKK 1,983.1 million (2017: DKK 2,041.2 million). Reported EBITDA fell by 3.3% to DKK 1,959.9 million (2017: DKK 2,026.2 million).
   
• EBIT, excluding one-off items, decreased by 9.2% to DKK 1,323.0 million (2017: DKK 1,457.0 million).  Reported EBIT fell by 9.9% to DKK 1,299.8 million (2017: DKK 1,442.0 million). EBIT was affected by the above-mentioned reduction in airport charges and a 13.0% increase in depreciation charges because of the large investments in expanding the airport.
   
• Net financing costs decreased by DKK 11.4 million compared to 2017.
   
• Profit before tax, excluding one-off items, decreased by 9.3% to DKK 1,193.7 million (2017: DKK 1,316.3 million). Reported profit before tax decreased by 10.0% to DKK 1,170.5 million (2017: DKK 1,301.3 million).
   
• Capital expenditure was DKK 1,500.6 million in the first nine months of 2018 (2017: DKK 1,029.1 million). The period has been affected by expansion of capacity at the central security checkpoint, improvement of wide-body facilities, expansion of Terminal 2 airside, establishment of Pier E, expansion of Terminal 3 landside, expansion of cooling capacity and various investments in growth.

Outlook for 2018

Based on the growth in the number of passengers, CPH expects to end the year above the outlook of 9 August 2018 and therefore adjusts its full-year outlook for revenue growth to a range of -0.5% to 0.5% relative to the previous outlook with a negative range of 1-2%. CPH retains the outlook for the profit before tax excluding one-off items. In addition, CPH has adapted the range of investments to DKK 2.0-2.1 billion.

Outlook for revenue growth
Based on the expected traffic programme for 2018, an increase in the total number of passengers is expected. The development in passenger numbers is a dynamic factor that is subject to both positive and negative influence from general economic developments, decisions by airlines relating to routes and capacity, and isolated events in the aviation industry. The increase in passenger numbers is expected to have a favourable impact on revenue, although this growth will be partly offset by the reduction in airport charges announced at the end of 2017. Charges have been reduced from April 2018 through two specific initiatives. Firstly, the charges that all airlines pay to use the airport have been reduced and, secondly, a special hub incentive scheme has been introduced, lowering charges for frequent feeder flights between regional airports and CPH by 35%. Both are part of delivering the National Aviation Strategy. Overall, CPH's charges reduced by an average of 10% from April 2018.

Growth in revenue excluding one-off items and the hotel operation is expected to be positive in the range of 0-1% due to the increased growth in the number of international passengers.

Outlook for profit before tax
Operating costs are expected to be higher than in 2017, primarily due to the expected rise in passenger numbers, stricter regulatory requirements and cost inflation, although this will partly be offset by a continuing focus on operating cost efficiencies. Overall, depreciation charges and financing costs are expected to be higher than in 2017, primarily as a result of a significantly increased investment level.

Excluding one-off items, profit before tax in 2018 is expected to be in the range of DKK 1,350-1,450 million.  Excluding one-off items, EBITDA is expected to be lower in 2018 than in 2017 due to the reduction in charges.

Outlook for capital investments
CPH expects to continue to invest in growth for the benefit of passengers and airlines, and is continuing with Expanding CPH, its plan to expand and develop the airport as passenger numbers increase.

Also in 2018, CPH has significantly increased its investments, to an estimated DKK 2.0-2.1 billion, to accommodate Expanding CPH. Planned investments include expansion of the central security checkpoint, improvement of wide-body facilities, the new walkway in Terminal 3, a new passport control facility and expansion of Terminal 2 airside (the area after the central security checkpoint). CPH will also be investing in non-aeronautical projects for the benefit of airlines and passengers.

P.O. Box 74
Lufthavnsboulevarden 6
2770 Kastrup, Denmark

Contact:
Thomas Woldbye
CEO

Tel.:  +45 3231 3231
Fax:  +45 3231 3132
E-mail: cphweb@cph.dk
www.cph.dk

CVR no. 14 70 72 04

Attachment

• Q3 2018 Announcement to the Copenhagen Stock Exchange