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    FRA   DE0005773303

FRAPORT AG

(FRA)
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Fraport : Interim Report Q2/6M 2021

08/03/2021 | 06:12am EST

Fraport Interim Report Q2/6M 2021

August 3, 2021

Group Interim Management Report

Impact of the Coronavirus Pandemic on the Fraport Group

The Fraport Group's operating performance continued to be noticeably affected by the impact of the Coronavirus Pandemic in the first half of 2021. Consequently, passenger and movement figures in Frankfurt remained clearly below the level of 2020 (-46.6% and -23.8%, respectively). Compared with the traffic development in the first six months of 2019, this was a significant decline of -80.7 % and -64.1 %, respectively. In contrast, cargo traffic in Frankfurt continued its growth trend despite the lack of additional loading capacity in passenger aircraft and not only increased clearly compared to the same period of the previous year (+27.6%), but even exceeded the volume from the first half of 2019 by 9.0%. With easing travel and contact restrictions beginning in the second quarter of 2021, all Group airports benefited from a positive traffic development compared to the same period of the previous year.

Fraport AG was granted compensation totaling €159.8 million by the Federal Republic of Germany and the State of Hesse for the uncovered holding costs incurred for keeping Frankfurt Airport open during the first lockdown in the period from March 4 to June 30, 2020. The amount of the compensation had a positive impact on Group EBITDA in full in the second quarter of 2021. The cash inflow planned for the second half of 2021 will have a positive impact on the liquidity situation and net financial debt.

The Greek parliament has also ratified compensation for Fraport Greece for the operating losses incurred last year in connection with the Coronavirus Pandemic. Depending on passenger development, the compensation is made through the waiver of fixed concession payments and a deferment of the variable concession fee, which is also to be paid. Due to the waiver of the fixed concession payments for the years 2019, 2020, and 2021, there was a positive effect on other operating income totaling €69.7 million in the first half of 2021.

As a result of the ongoing Coronavirus Pandemic, further discussions are being held at individual Group companies on additional compensation for 2021.

Even with the increasing traffic volumes at the Frankfurt site and the return of service in both landside and airside operating areas, operating expenses were reduced by around 18% in the first half of 2021 compared to the previous year based on the continuation of short-time work, headcount reduction, the initial measures from the collective restructuring agreement, and strict cost manage- ment. Compared to the corresponding period in 2019, this represents a reduction of around 34%. At the fully consolidated international Group companies, savings in operating expenses in the amount of approximately 17% were achieved in the reporting period. Compared to the first half of 2019, this corresponds to a decrease of 47%.

In order to reduce costs at the Frankfurt site in the long term and continue to align Fraport with the changing market environment, the strategic program "Zukunft FRA - Relaunch 50" initiated in 2020 was continued in the first half of 2021. In the first quarter, significant progress was made in implementing the planned headcount reduction in Frankfurt. This continued in the second quar- ter, and as at June 30, 2021, the Fraport Group at the Frankfurt site had in total 4,276 fewer employees compared to December 31, 2019.

In an effort to further expand the Group's liquidity and create additional financial flexibility, further financing measures were completed in the first half of 2021. In addition to a corporate bond issued in the first quarter with two tranches and a total volume of €1.15 billion, financing was secured in particular by taking on further long-term financial liabilities in the form of promissory note loans and bilateral credit agreements. In the second quarter, additional financing of around €500 million was secured in this manner. In total, the Fraport Group raised around €2.4 billion in debt financing measures in the first six months, taking into account both long-term and short-term financing instruments and secured credit lines.

Fraport Interim Report Q2/6M 2021

2

Information about Reporting

An overview of the calculation of key financial indicators and a description of specialist terms are presented on page 257 of the 2020 Annual Report.

Key Figures

€ million

6M 2021

6M 2020

Change

Change in %

Revenue

910.6

- 99.7

- 10.9

810.9

Revenue adjusted for IFRIC 12

722.8

793.5

- 70.7

- 8.9

EBITDA

335.3

22.6

+312.7

> +100

EBIT

116.1

- 210.2

+326.3

-

EBT

19.9

- 308.9

+328.8

-

Group result

15.4

- 231.4

+246.8

-

Earnings per share (basic) (€)

0.22

- 2.29

+2.51

-

Operating cash flow

- 194.6

- 96.6

- 98.0

-

Free cash flow

- 754.6

- 652.8

- 101.8

-

Number of employees as of June 30

18,255

21,231

- 2,976

- 14.0

Average number of employees

18,748

21,879

- 3,131

- 14.3

€ million

June 30, 2021

Dec. 31, 2020

Change

Change in %

Shareholders' equity

3,794.3

3,758.7

+35.6

+0.9

Shareholders' equity ratio (%)

23.1

25.7

- 2.6

-

Liquidity

3,466.6

2,213.7

+1,252.9

+56.6

Net financial debt

6,326.2

5,533.5

+792.7

+14.3

Gearing ratio (%)

173.0

152.9

+20.1 PP

-

Total assets

15,834.1

14,081.2

+1,752.9

+12.4

€ million

Q2 2021

Q2 2020

Change

Change in %

Revenue

249.5

+176.4

+70.7

425.9

Revenue adjusted for IFRIC 12

378.1

200.3

+177.8

+88.8

EBITDA

295.1

- 106.5

+401.6

-

EBIT

186.3

- 222.5

+408.8

-

EBT

135.9

- 261.3

+397.2

-

Group result

92.9

- 195.7

+288.6

-

Earnings per share (basic) (€)

0.92

- 1.97

+2.89

-

Operating cash flow

19.7

- 188.7

+208.4

-

Free cash flow

- 259.6

- 457.1

+ 197.5

-

Average number of employees

18,147

21,433

- 3,286

- 15.3

Fraport Interim Report Q2/6M 2021

3

Situation of the Group

Changes during the Reporting Period

At its meeting on June 21, 2021, the Supervisory Board of Fraport AG approved the extension of the contract with Executive Director Controlling and Finance Prof. Dr. Matthias Zieschang for an additional three years and ten months until January 31, 2026 with effect from April 1, 2022.

Apart from the adjustments described in the "Impact of the coronavirus pandemic on the Fraport Group" chapter on page 1 seqq., there have been no other significant changes to the situation of the Fraport Group during the reporting period as presented in the Group Management Report 2020, with respect to business model, structure, competitive position, strategy, and control (see Group Management Report 2020, "Economic Report" chapter, starting on page 74).

Economic Report

General Statement by the Executive Board

The Coronavirus Pandemic had a noticeable negative impact on the first half of 2021. Passenger development in Frankfurt as well as at the Group's international airports, however, showed an upward trend as a result of the easing of the global travel and contact restrictions in the second quarter of 2021. Overall, there was still a noticeable decline in traffic at Frankfurt Airport in the first half of 2021 of 46.6% to 6.5 million passengers.

At €810.9 million, revenue in the first six months of 2021 was below the previous year's value by €99.7 million. Adjusted for contract revenue from construction and expansion services based on the application of IFRIC 12, revenue amounted to €722.8 mil- lion.

Other operating income was positively impacted by the compensation of €159.8 million granted by the German Federal Government and the State of Hesse for the costs incurred in the first lockdown in 2020 in the period from March 4 to June 30, 2020 and the agreement reached by Fraport Greece to offset the effects of the Coronavirus Pandemic of €69.7 million.

Operating expenses (cost of materials and personnel expenses as well as other operating expenses) were reduced by 17.4%, in particular due to a decline in variable concession charges based on traffic volumes, lower expenses for external staff and the reduction in the number of employees as well as the continuation of short-time work. Adjusted for IFRIC 12, operating expenses decreased by 16.3%.

Correspondingly, Group EBITDA was €312.7 million above the previous year's level at €335.3 million (6M 2020: €22.6 million).

EBIT amounted to €116.1 million (6M 2020: -€210.2 million) and the Group result amounted to €15.4 million (6M 2020:

-€231.4 million).

The negative operating cash flow due to a clear decline in revenue as well as severance payments from the "Zukunft FRA - Relaunch 50" program across the Group coupled with the current capital expenditure measures primarily at the Frankfurt site resulted in a significantly negative free cash flow of -€754.6 million. This corresponded to an increase in net financial debt of €792.7 million to €6,326.2 million.

Overall, the Executive Board continues to describe the operational and, in turn, financial development in the reporting period as negative, due to the ongoing effects of the coronavirus pandemic.

Fraport Interim Report Q2/6M 2021

4

Macroeconomic, Legal, and Industry-specific Conditions

Development of the macroeconomic conditions

The Coronavirus Pandemic continued to have a significant impact on the development of the global economy. Overall, the global economy recovered from the slump of the previous year, but there were considerable differences amongst individual countries, which resulted from different periods of renewed virus outbreaks, the varying degrees of infection protection measures used, and the progress of vaccination measures in the various countries. Global trade also rebounded clearly due to rising demand but was affected by bottlenecks in product supplies and strained supply chains. While China had already reached or exceeded pre-crisis levels since the third quarter of 2020, the US economy only succeeded in doing so in the second quarter of 2021. New waves of infections weighed on economic development, albeit to a lesser extent than in the previous year, as more effective containment measures were imposed. The recovery of the global economy led to increased demand for oil and, in conjunction with reduced production volumes, to a clear rise in oil prices.

Despite signs of a recovery, the euro area remained below pre-crisis levels. Due to the lockdown measures, GDP fell by -1.1% in the first quarter of 2021 compared to the same quarter in the previous year. The steps to reopen and ease the protective measures are indications that the economy could rebound in the second quarter of the year.

Economic development in Germany declined in the wake of the third wave of the pandemic in the first quarter but showed signs of recovery in the second quarter. However, the robust industrial economy was dampened in individual areas by the bottlenecks in product supplies. The services sector experienced a sort of restart in the second quarter due to the further easing of restrictions. Private consumption, which had slowed at the beginning of the year, increasingly recovered, and the labor market has also recently shown positive signals. The inflation rate has risen clearly since the beginning of 2021, in particular due to the increase in import and raw material prices and the introduction of CO2 pricing. The inflation rate was 2.5% in May and 2.3% in June.

Source: ifo Economic Forecast Summer 2021 (July 2021), Federal Ministry of Economic Affairs and Energy, Schlaglichter der Wirtschaftspolitik (June 2021), Deka June 2021, DB Research June 2021, Federal Statistical Office, GDP 1st Quarter 2021 (May 2021), tentative inflation rate May and June (June 2021).

Development of the legal environment

During the reporting period, there were no changes to the legal environment that had a substantial influence on the business development of the Fraport Group.

Development of industry-specific conditions

According to the preliminary figures from Airports Council International (ACI), global passenger traffic decreased by 68.3% in the period from January to May 2021. Compared to the previous year, air freight volume increased by 22.3% in comparison to the previous year, mainly due to the global demand for medical equipment. European airports posted a decrease in passenger numbers of 70.9%. In terms of air freight, the European airports developed at an average rate of 22.4 %. Passenger numbers at German airports dropped by 72.5% up to and including May 2020. Cargo tonnage (air freight and air mail) developed positively by 21.7%.

Passenger and cargo development by region

Changes compared to the previous year in %

Passengers January to May 2021

Air freight January to May 2021

Germany

- 72.5

21.7

Europe

- 70.9

22.4

North America

- 52.7

24.1

Latin America

- 37.2

19.8

Middle East

- 55.2

16.2

Asia-Pacific

- 88.0

24.0

Africa

- 42.8

8.9

World

- 68.3

22.3

Source: ACI Passenger Flash and Freight Flash (ACI, July 27, 2021), ADV for Germany, with cargo instead of air freight (in and out), (June 30, 2021).

Fraport Interim Report Q2/6M 2021

5

Business Development

Development at the Frankfurt site

Passenger numbers at Frankfurt Airport reached just under 6.5 million in the first half of 2021. While global travel and contact restrictions first came into force in March of the previous year, they had a full impact on passenger traffic from the beginning of the year, causing a decline of 46.6%. In the second quarter, in particular, a significant positive trend was recorded with around four million passengers compared to the same quarter of the previous year. In domestic traffic, the focus remained on the primary connections to Berlin, Hamburg, and Munich. The continued tightening of companies' travel policies dampened demand for business travel. European traffic, mainly holiday travel to southern and southeastern Europe, benefited from the opening of the markets at the beginning of the summer season. Intercontinental traffic continued to decline significantly compared to the same period in the previous year, despite the concentration of the few intercontinental services in the German market on Frankfurt.

Cargo traffic in Frankfurt, on the other hand, continued its growth trend despite the lack of loading capacity in passenger aircraft. At around 1.14 million metric tons, cargo volume was 27.6% over the previous year's figure.

In the reporting period, aircraft movements fell by 23.8% to 90,467 takeoffs and landings. The growth in air freight compared to the first half of 2020 could not compensate for the decline in the number of passenger flights compared to the same period of the previous year. The maximum take-off weights were around seven million metric tons, 16.5% below the previous year's level.

Development outside the Frankfurt site

Ljubljana Airport had around 70,000 passengers (-64.5%) in the first half of 2021. A slight recovery trend can be observed, in particular since May 2021. The continued tense situation regarding infection levels along with the announced national lockdown, implemented travel restrictions, and the corresponding strict quarantine regulations led to a reduced flight offer in the first half of 2021.

The Brazilian airports Fortaleza and Porto Alegre welcomed 3.1 million passengers (-16.6%) in the first six months of 2021. Domestic passenger traffic, which was also quite dominant before the Coronavirus Pandemic, posted a smaller decline (-12.1% in Fortaleza and -11.6% in Porto Alegre), initially recording positive development at both locations at the beginning of the year during the local summer season. However, due to the sharp rise in the number of infections, demand fell clearly in the subsequent period, reaching a low in April 2021, which marked the start of a recovery.

Just over 3.7 million passengers used Lima Airport in the first six months of 2021, 26.2% less than in the same period of the previous year; this still includes the busy period up to mid-March 2020, which was not affected by the Coronavirus Pandemic. The strong recovery trend in domestic passenger traffic in Peru, which temporarily slowed due to a renewed wave of infections and local restrictions, continued in May and June this year. The recovery in international passenger traffic, on the other hand, was more strongly influenced by the ongoing very unstable travel and quarantine regulations.

The 14 Greek regional airports operated by Fraport Greece welcomed around 2.4 million passengers in the first six months of the year, corresponding to an increase of 37.7% compared to the same period the previous year. With around 1.0 million passen- gers, domestic traffic was 11.7% below the level of 2020, while international traffic doubled and reached a total of 1.4 million passengers. All 14 of Fraport's airports are showing signs of a traffic recovery, mainly due to the gradual lifting of temporary restrictions since mid-May 2021.

At the airports in Varna and Burgas in Bulgaria, passenger numbers decreased by 14.6% to just under 290,000 passengers in the first six months of 2021. The gradual lifting of international travel restrictions and the start of charter traffic had a positive impact on international traffic (+23.1%), which could only be resumed at a low level in June in the comparative period of 2020. Domestic traffic declined slightly (-1.6%), mainly due to Bulgaria's lockdown in the first quarter and related travel restrictions that did not yet exist in the same period up to mid-March 2020.

Passenger numbers in the first six months of 2021 at Antalya Airport were around 4.2 million (+69.3%). The number of international passengers increased to around 2.6 million. Turkish domestic passengers increased by +12.3% to around 1.6 million. The most important international passenger groups were from Ukraine, Russia, and Germany. In contrast to the first half of 2020, there

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Disclaimer

Fraport AG published this content on 03 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 August 2021 09:55:02 UTC.


© Publicnow 2021
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Sales 2021 2 084 M 2 354 M 2 354 M
Net income 2021 -10,4 M -11,8 M -11,8 M
Net Debt 2021 6 538 M 7 385 M 7 385 M
P/E ratio 2021 -1 504x
Yield 2021 -
Capitalization 5 294 M 5 970 M 5 980 M
EV / Sales 2021 5,68x
EV / Sales 2022 4,24x
Nbr of Employees 18 249
Free-Float 39,7%
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Last Close Price 57,30 €
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Managers and Directors
Stefan Schulte Chairman-Management Board
Matthias Zieschang Executive Director-Finance & Controlling
Michael Boddenberg Chairman-Supervisory Board
Anke Giesen Executive Director-Operations
Elke Breuer VP-Corporate Compliance & Values Management