Interim report of Copenhagen Airports A/S (CPH) for the period 1 January – 30 June 2018
Stock Exchange Announcement 2018
Copenhagen, 9 August 2018
The Board of Directors has today approved the interim report for the period 1 January – 30 June 2018.
As in previous years, the Company has adopted an interim dividend based on the interim profit. The dividend amounts to DKK 427.2 million or DKK 54.43 per share.
Summary of the first half of 2018
A total of 14.5 million people travelled through Copenhagen Airport in the first six months of 2018, up 3.1% on the same period of last year and setting a new record. The long-haul, intercontinental routes were the main factor in the increase, with passenger numbers up 9.2%, primarily down to new routes.
CPH’s strategy of expanding the number of long-haul routes is bearing fruit. In the first few months of the year, Cathay Pacific opened a direct route to Hong Kong, Air China to Beijing, and both Norwegian and Royal Jordanian started flying to the Jordanian capital, Amman. There was also capacity expansion on a number of routes, with more already announced in the winter programme. CPH now has more than 40 direct routes to destinations outside Europe, helping to secure the strong growth in the important area of intercontinental traffic and a core part of CPH’s strategy. The summer programme, with 10 completely new destinations, has also played a part in the record number of passengers travelling through the airport. New direct flights not only give Danish business and leisure travellers more opportunities to head out into the world, but also play a key role in attracting tourists and investors to Denmark. When CPH opens a new route, passenger numbers generally rise, as this makes it easier for tourists in particular to come to Denmark.
The number of local departing passengers was up 3.8%, while transfer and transit passengers were down 0.4%. The 3.1% increase in total passenger numbers contributed to the 0.5% increase in revenue, while profit before tax, excluding one-off items, was DKK 710.7 million, down 6.2% on the same period in 2017. This was because of the reduction in charges from 1 April 2018, higher depreciation charges and higher staff costs.
New walkway to metro opened
June saw the opening of Denmark’s longest indoor walkway, connecting the metro station to the security checkpoint and SAS Fast Track. The walkway exemplifies the philosophy underlying the airport’s expansion plans, which is to create an airport that is both welcoming and efficient. This is a question both of ensuring that flights depart safely and on time, and – significantly – of making the passengers’ journey through the airport fast and pleasant. Half of the passengers today travels with just hand luggage, and the vast majority have checked in before reaching the airport, either online or using the mobile from home. They do not need to go to the check-in counters on the ground floor, and the walkway now enables them to proceed directly to the security service. This makes their progress through the airport easier and faster, but also means there are fewer people in Terminal 3, which is already an extremely busy area of the airport. Thanks to the new walkway, CPH is both improving the travel experience and making even better use of the airport capacity, and CPH has once again this year been named Europe’s most efficient airport by the respected international research association Air Transport Research Society (ATRS).
In addition to the walkway, the airport has inaugurated the first phase of the 4,000 m2 airside expansion, which will accommodate new walking and seating areas as well as new shops and places to eat.
In 2017, Copenhagen Airport invested approximately DKK 1.5 billion in expansions and improvements, but this year investments are expected to increase to DKK 1.8-2.1 billion. Capital investments in the first half of the year totalled DKK 1,033.2 million, which is 58.1% higher than in the same period last year. One of the biggest construction projects is the new Pier E and an associated new building for passport control. CPH expects to inaugurate the first phase including new stands and gates next year.
Continued growth in the non-aeronautical business
The non-aeronautical part of the business, including the shopping centre and parking, grew because of the increase in passenger numbers. Revenue in the shopping centre is up 2.0%, mainly due to an increase within restaurants and cafés, while parking contributed 10.6%.
Six out of ten passengers shop or have something to eat before boarding their flight. This demands that a broad and attractive range of offerings from CPH, which is why new food outlets have been opened both before and after the security checkpoint. Many of the new units are familiar Danish brands with international ambitions, for example Mikkeller, Wood Wood, Cock’s and Cows and Oh! By Kopenhagen Fur.
Based on the half-year results, a decision has been taken to distribute an interim dividend totalling DKK 427.2 million, equivalent to DKK 54.43 per share. CPH will review the full-year dividend in line with normal practice.
Highlights of results
- Passenger numbers at Copenhagen Airport increased by 3.1% in the first six months of 2018. The number of local departing passengers grew by 3.8% and the number of transfer and transit passengers decreased by 0.4%.
- Revenue grew by 0.5% to DKK 2,156.9 million (2017: DKK 2,146.6 million), primarily driven by the increase in parking revenue, although this was partly offset by the reduction in airport charges from 1 April 2018.
- EBITDA, excluding one-off items, decreased by 0.9% to DKK 1,235.1 million (2017: DKK 1,246.0 million). Reported EBITDA fell by 1.5% to DKK 1,217.0 million (2017: DKK 1,236.1 million).
- EBIT, excluding one-off items, decreased by 5.6% to DKK 805.0 million (2017: DKK 852.8 million). Reported EBIT fell by 6.6% to DKK 786.9 million (2017: DKK 842.9 million). EBIT was affected by the abovementioned reduction in airport charges and a 9.4% increase in depreciation charges because of the large investments in growth.
- Net financing costs were in line with last year.
- Profit before tax, excluding one-off items, decreased by 6.2% to DKK 710.7 million (2017: DKK 758.0 million). Reported profit before tax decreased by 7.4% to DKK 692.6 million (2017: DKK 748.1 million).
- Capital expenditure was DKK 1,033.2 million in the first six months of 2018 (2017: DKK 653.5 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 and various investments in growth.
- A total dividend of DKK 427.2 million will be distributed on 14 August 2018 via VP Securities Services based on the holdings registered in VP accounts at the end of the business day on 13 August 2018. Consequently, shares purchased for settlement on or before 13 August 2018 will carry a dividend, whereas shares sold for settlement on or before 13 August 2018 will lose the right to a dividend. This means that transactions up to and including 9 August 2018 will be settled cum dividend, and transactions from and including 10 August 2018 will be settled ex dividend when traded at normal two-day settlement.
Outlook for 2018
The outlook for traffic growth, profit before tax and capital expenditure is unchanged from the announcement of 1 March 2018.
| ||REALISED 2017||OUTLOOK FOR 2018|
|Revenue growth||0.4||%||decrease of 1-2%|
|Revenue growth excluding one-off items and the hotel operation||3.5||%||decrease of 0.5-1.5%|
| || || |
|Profit before tax excluding one-off items, DKK million||1,661.8|| ||1,350-1,450|
|Profit before tax, DKK million||1,635.6|| || |
|Total investments, DKK million||1,477.1|| ||1,800 -2,100|
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, while this growth will be more than 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 are being reduced and, secondly, a special hub incentive scheme has been introduced, lowering charges for frequent feeder flights between regional airports and CPH by 35%. Overall, CPH's charges are expected to decrease by an average of 10% in light of the reductions implemented in April 2018.
Growth in revenue excluding one-off items and the hotel operation is expected to be negative in the range of 0.5-1.5% due to the reduction in charges.
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.
CPH expects to significantly increase its investments again in 2018, to an estimated DKK 1.8-2.1 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
2770 Kastrup, Denmark
Tel.: +45 3231 3231
Fax: +45 3231 3132
CVR no. 14 70 72 04