Interim report of Copenhagen Airports A/S (CPH) for the period 1 January to 31 March 2014
INTERIM REPORT FOR THE PERIOD 1 JANUARY TO 31 MARCH 2014
Stock Exchange Announcement 2014
Copenhagen, 8 May 2014
The Board of Directors today approved the interim report for the period 1 January – 31 March 2014.
Summary for the first three months of 2014
Copenhagen Airports A/S (CPH) had a good start to 2014 with a 4.3% increase in passenger numbers to 5.3 million. The growing number of passengers led to an increase in revenue by 5.7% to DKK 831.9 million and an increase in profit before tax of 5.1% to DKK 212.9 million. CPH retains its guidance for the full year.
The increase in passenger numbers was mainly due to the full-year effect of the many new routes opened in 2013.
In particular low-cost carriers Norwegian and easyJet especially achieved strong growth rates in the first months of the year. Moreover, Norwegian's three new intercontinental routes and the full-year effect of the SAS route to San Francisco continued to generate growth in the strategically important intercontinental routes. Those routes help strengthen CPH's position as a hub.
CPH is continuing its high level of capital investment in strengthening and expanding Copenhagen Airport. In recent years, CPH's capital investment has been in the order of DKK 1 billion annually. Due to the continuing growth in the number of intercontinental routes, expansion will now be started on Pier C, the pier used for intercontinental and non-Schengen traffic. Moreover, CPH continues to analyse how additional expansion can be implemented efficiently in the coming years.
As a result of the increase in passenger numbers, revenue from the non-aeronautical segment also increased, which includes revenue from the shopping centre, the hotel and parking. The duty- and tax-free stores were refurbished in the first quarter of last year, and the full-year effect of the project and the growing passenger numbers had a positive impact on revenue from the shopping centre. Revenue from the hotel operation increased by 3.9%, and parking revenue was up by 4.3%.
Several international awards
Copenhagen Airport received several international awards in the first quarter. For the second consecutive year, the security service at Copenhagen Airport was rated the world's best. The award was presented in late March based on the worldwide Skytrax survey of airline passenger satisfaction in which 12.8 million passengers rated 410 airports worldwide.
In addition Copenhagen Airport again won the Skytrax title as "Best Airport in Northern Europe", and in early April, Copenhagen Airport won the European championship in route development at the annual "Routes Europe" route development conference, in close competition with a number of Europe's leading airports. The jury consisted of representatives of a number of airlines.
Last but not least, Copenhagen Airport is among the world's best on social media. This was recently established when Copenhagen Airport won two digital and social media Moodies Awards: the prestigious "best Facebook page" award, coming in second in the category "Best use of social and digital media".
The awards were given in recognition of CPH's high level of service, the airport's efficiency and CPH's high level of investment in connection with its World Class Hub strategy.
Highlights of results
Passenger numbers at Copenhagen Airport increased by 4.3% during the first three months of 2014. The number of locally departing passengers increased by 3.3%, and the number of transfer passengers increased by 4.4%
Revenue increased by 5.7% to DKK 831.9 million (2013: DKK 787.1 million) primarily driven by the increase in locally departing passengers, an increase in the number of operations and the index adjustment of passenger-related charges effective from 1 April 2013
When excluding one-off items, EBITDA grew by 10.8% to DKK 427.9 million. Reported EBITDA increased by 10.4% to DKK 424.9 million (2013: DKK 385.0 million)
When excluding one-off items, EBIT increased by 6.5% to DKK 269.6 million (2013: DKK 253.2 million). Reported EBIT increased by 5.8% to DKK 266.6 million (2013: DKK 252.0 million)
Net financing costs increased by DKK 4.3 million compared to 2013
Profit before tax increased by 5.9% to DKK 215.9 million, when excluding one-off items (2013: DKK 203.8 million). Profit before tax increased to DKK 212.9 million (2013: DKK 202.6 million)
Capital expenditure amounted to DKK 82.2 million in the first three months of 2014 (2013: DKK 214.6 million). The decrease was due to timing differences in the start-up of projects, including the preparation of the Pier C extension
Outlook for 2014
Forecast of profit before tax
With the anticipated traffic programme for 2014, we expect to see an increase in the total number of passengers. A positive full-year effect in 2014 is expected from the many new routes opened in 2013. Traffic in 2014 could, however, be adversely affected by continuing financial uncertainty in the Eurozone and by any closure of routes due to airline cutbacks.
The increase in passenger numbers is expected to have a favourable impact on revenue. Operating costs are expected to be higher than in 2013, primarily due to the expected rise in passenger numbers and cost inflation, but this will partly be offset by a continuing focus on operating cost efficiencies. Depreciation charges and financial costs are expected to be higher in 2014 than in 2013 as a result of the continuing high investment level. Overall, profit before tax for 2014 is expected to be in the range of DKK 1,100.0 million to DKK 1,200.0 million, when excluding one-off items. Operating profit before depreciation is projected to be higher in 2014 than in 2013, when excluding one-off items.
Forecast of capital investments
Under the charges agreement, CPH must invest an average of DKK 500 million annually but, as in previous years, CPH expects to invest at a level significantly higher in 2014 than what CPH is committed to under the charges agreement. However, the investment level depends on the continuing increase in total passenger numbers. CPH will also be investing in non-aeronautical projects for the benefit of airlines and passengers.
The forecast of 2014 regarding passenger growth, profit before tax and investments is retained.