Flughafen Wien AG
VSE:FLU
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Earnings Call Analysis
Q2-2024 Analysis
Flughafen Wien AG
Vienna Airport reported a robust financial performance for the first half of 2024. Revenue increased by 14% to EUR 488 million, while EBITDA rose by 15% to EUR 205 million due to the surge in passenger volume and traffic【4:0†source】. Net profit for the period reached EUR 108.4 million, representing a 31% increase compared to last year, underpinned by positive financial results and reduced expenses following the repayment of an EIB loan【4:0†source】.
The company provided an optimistic outlook for the full year, expecting revenue to exceed EUR 1 billion, EBITDA to surpass EUR 400 million, and group net profit to be well above EUR 220 million. Capital expenditures are projected to be around EUR 200 million【4:1†source】. This positive forecast is driven by continuous improvements in traffic and financial performance.
Vienna Airport's traffic figures showed promising growth. In Vienna, passenger numbers grew by approximately 8% over last year, while Malta outperformed with a 25% increase compared to 2019 levels【4:1†source】【4:2†source】. The company reported record monthly traffic in July, with the potential for full-year passenger numbers to surpass 31 million, contingent on stable geopolitical conditions【4:2†source】.
Efficiency improvements contributed to the positive results, as expenses for consumables and purchased services declined by 7%, partly due to lower energy prices and increased electricity production from in-house photovoltaic plants【4:0†source】【4:3†source】. Personnel expenses rose due to higher collective agreements and an increased workforce to manage rising traffic, resulting in a 13% increase【4:0†source】. Other operating expenses, including maintenance costs and third-party services, saw a rise of 29.5%【4:0†source】.
The cargo segment exhibited significant growth, with a 17% increase in the first half of the year, and a 25% surge in July compared to last year, fueled mainly by Chinese e-commerce【4:8†source】. Western Europe, including Southern Europe, displayed robust strength, while the Middle East lagged due to geopolitical tensions. The Far East showed an 11% growth rate, though not as rapid as anticipated【4:6†source】.
Vienna Airport is pursuing strategic initiatives such as expanding its capacity in response to the passenger influx, particularly in Malta【4:9†source】. Noteworthy projects include a new office building, hotel, terminal expansion, and apron expansion to accommodate more aircraft. Sustainable investments are also in focus, with the airport being CO2 neutral since last year and plans to develop a storage plant for photovoltaic electricity【4:4†source】. However, challenges loom with the requirement to integrate sustainable aviation fuels by 2025 and ensuring compliance with European Union regulations【4:3†source】.
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Welcome, and good afternoon, ladies and gentlemen. Welcome to our conference call to half year 2024 numbers of Vienna Airport. Thanks you for interest in our company. With me traditionally joint CEO and CFO, Günther Ofner and in a second, also joint CEO and COO, Julian Jager will join. I started already the recording of the conference call. A replay will be available very soon after this session on our homepage.
And I hand over to Mr. Ofner, followed then by the remarks of Mr. Jager, in the traffic topics, and we are going to hold the traditional Q&A then after our presentation. Mr. Ofner, please continue.
Yes. Good afternoon, and a warm welcome. We have today published our earnings for the first 6 months of 2024. And it's my pleasure to give you the details, especially in regard of the financial results. So revenue went up by 14% to EUR 488 million. And EBITDA went up from EUR 177 million in the first 6 months of last year to EUR 205 million this year, a plus of 15%. Interesting and also sustainable. We see a positive financial results of EUR 8.5 million as we have repaid our EIB loan last year.
We have no additional interest payments and therefore, we'll see at least in the coming years, a positive financial result. If you look at our net cash position, it's roughly EUR 350 million -- and the average interest rate actually is somewhere above 4%. So this provides for good positive results here.
So putting all together, we saw net profit for the period of EUR 108.4 million. And after controlling interest, 97%, so a plus of 31% compared with last year. The reasons are more or less all over the board. So it's higher the traffic and passenger volume, it's also growth in all other areas of our company. And it's supported as pointed out by a positive financial result. So for the full year, we see a steady and slight, but steady improvement of our expectations.
If we look at the expenses, you see that expenses for consumables and purchased services are 7% lower than last year. This is reflecting lower energy prices and also an effect of our own production of electricity. Personnel expenses clearly are up 13%, which is partly due higher collective agreements, but also of the growing number of employees. So it's roughly a plus of 7% compared to last year. And this triggered by additional traffic and all the operational challenges.
Other operating expenses went up 29.5%. Here, you see rising maintenance costs and also a search in other operating expenses, higher incentives and also increase in third-party services. What is very fine is that our EBITDA margin is slightly higher than it was last year with 42% and EBIT margin is substantially better, 26% compared to 28.4%. Depreciation and amortization is more or less the same as last year, very slightly increasing number of EUR 66 million. All that sums up in our cash flow development, EUR 178.3 million. It's a little bit less than last year, especially due to the fact that some incentives have been paid out earlier than in the previous period.
The free cash flow went up from 45% to EUR 104 million. And CapEx, as announced, is gearing up so from EUR 28 million to EUR 83 million. Net liquidity slightly below last year, and that is due to the fact that we paid with EUR 118 million, the highest dividend ever in the history of the company. This is also slightly affecting the equity position, but we will fill up it again in the second half of 2024, so equity ratio is slightly below last year. But finally, we should end up above the figures of '23.
Besides these financials, some remarks to our investments. So the biggest investment right now ongoing is our South expansion building, but we are also concentrating on increasing our ability to produce electricity on our own from photovoltaics. So we added another plant and we will now be able to produce roughly 46 million-kilowatt hours per year. And this is accompanied by the fact that we have done a lot for improving our energy efficiency, so we are a CO2 neutral operating airport since last year. And we will follow this path also in the coming years. But in any case, will be necessary is due to the fact that also Austria now has an overflow of PV electricity that we will most likely next year or '26, invest in a storage plant because this is the only way to fully utilize our PV production for our own needs, what is the most economical way to use it.
A very important issue also, especially for the airlines is that the beginning from 2025 sustainable aviation fuels have to be added to the kerosine, and we think it will be possible to do it for the first step. But to meet the goals that are necessary starting from 2030.
There is a big lag on investment in producing production facilities. And I'm pretty sure that under the current regulatory framework of the European Union this regulation will not work. So there are a lot of changes necessary to provide for the -- an incentivized framework that investors are really ready to invest in big production facilities to provide the amount that is necessary at reasonable cost and this is a big challenge for the airlines, but for the aviation industry as a whole.
And I think a lot of discussion will be necessary especially on the European level to create a level playing field for all participants and to incentivize investing in production facilities. But if we then follow up with our financial guidance, our revenue for the full year will be above EUR 1 billion EBITDA, above EUR 400 million group net profit clearly above EUR 220 million. And CapEx at EUR 200 million or around EUR 200 million. So in accordance with traffic improvements, we will see also a slightly better financial results finally.
So that's from my side for now, and I hand over to -- sorry, -- if you look at our share price, you see that we reached an all-time high at EUR 54 right now, which equals a market capitalization of EUR 4.5 billion. So for the first time, we surpassed Fraport with our market cap. That's from my side, and I hand over to Julian.
Yes. Thank you, Günther. Good afternoon, ladies and gentlemen, I would like to start with the traffic development. I think you're aware of our H1 figures. In Vienna, we were 1.9% below 2019. Malta a stunning 25% above 2019, a growth of 18% above last year. In Vienna, we grew roughly by 8% over last year, in Kosice, our smallest subsidiary with a plus of 9.5% versus last year and 23% over 2019. So overall, the group is above 2019. July was very strong as well, and in particular, it was strong in Vienna, with plus 5.7% and plus 5.1% versus 2019, In Malta again standing 19% versus '19 and Kosice at 36% versus '19. So overall, a very strong development.
And given this development, we are now sure that we will surpass the EUR 30 million. I can tell you that in August, the situation was pretty similar than in July. So every day, more than 100,000 passengers in July was an absolute record of monthly traffic overall. August is very strong as well. So we are quite optimistic, and I would like to come to talk about our guidance now instead of later.
If you ask me today, what's my best guess for the full year results, I feel quite comfortable that our passenger numbers could surpass 31 million passengers. The big question mark, and this is highlighted here in our chart later on as well is obviously the Middle East. So given that the geopolitical tensions don't grow, I would be optimistic to surpass the 31 million, given the -- the difficult situation overall, we felt more comfortable to improve our guidance just slightly to above 30 million.
If everything goes as it looks today, I would be comfortable and optimistic that we will surpass the 31 million passengers. But we will see that at a later stage. Going a bit into detail in Vienna. I think positive is still that the flight movements are below 2019. If you look at July, plus 5% passenger growth, minus 9% flight movements. What is very important as well is the strong cargo development, plus 17% versus 2023 in H1, plus 25% in July versus last year and 10% above 2019. This is mainly e-commerce to a certain extent as well or mainly Chinese e-commerce. Just to give you an idea, Budapest doubled their cargo figures this year, and this is due to the interpretation of Hungarian customs and the flexibility, so we are profiting from this effect as well.
And it's really good to see that cargo is already quite significantly above 2019. Seat load factor is on record level in July as well, even above last year's very, very strong figures at 4.6 percentage points above 2019. So overall, a very strong development. If we look at the regions, Western Europe, which includes Southern Europe, very strong. I think the weakest markets are still Germany and Zurich. Very strong markets, Italy, Spain, Turkey, Greece, Eastern Europe is growing as well, plus 6.5% versus last year. But obviously, due to the geopolitical situation, not as fast growing as Western Europe.
Middle East is decreasing quite significantly versus last year. That's obviously Tel Aviv, Amman, mainly Tehran. Far East is growing plus 11%. But to be honest, not to the extent I would wish to see it growing. China is slower recovering than we expected. And North America is on a healthy 5% growth rate versus last year. There are no major changes in the airline mix. Lufthansa Group 50%, low-cost carrier at 30%. So I think this is quite a steady development and a healthy development, I would say, Austrian growing 6% above 2023, Ryanair 8%, Wizz Air 1.4%. Wizz Air obviously handicapped a bit with the situation regarding the engines. But looking forward, I'm quite optimistic that Wizz Air will grow their presence in Vienna, '25, '26.
We are in good discussions regarding a base for XLR, so we hope that decision will be taken this year and then it depends when they will get the XLR. And it was even said publicly on the media that the intention is to fly mainly probably towards India from Vienna. Overall, the other airlines are doing well as well. So overall, a quite positive picture.
What is positive for us that ANA resumed there are 3 weekly flights from Tokyo Haneda on the 2nd of August. Hainan resumed their flights from Shenzhen Unfortunately, China Eastern didn't get the approval to fly Shanghai from the Austrian authorities. Air Arabia will return in winter Skyexpress, we started in winter to Athens. So overall, yes, I think a healthy outlook. As I said, if everything goes normal, even with winter, which is not as strong, obviously, as the summer schedule, we should definitely surpass the 30 million, if everything goes normal, and we continue on the current path we should surpass the 31 million passengers. Risk, as I said, is mainly the Middle East conflict.
Talking a bit about the segment results. Our biggest segment is airport. Here, we saw a very healthy revenue increase. Obviously, what was very supportive for the whole company was the change in the law during the pandemic that we allowed until 2026 to grow our airport charges with inflation. This will end in 2026. So with 1st of January next year, it will be the last time that we increased by inflation. We expect an increase of more than 3% or some probably something between 3% and 4%. What I have to be transparent about this well, when the formula [ trips ] in again in 2026, we will have to reduce probably about the same percentage then we will increase in 2025. So overall, '25, '26, we should see a flat development, but '25, will definitely be allowed to increase our charges by inflation.
Overall, revenue plus 17%, EBITDA plus 18%; EBIT plus 31%. So a very positive development. Looking to the handling and security services positive development as well, but I expect a significantly stronger second half of the year. So we should increase our results in this segment until the end of the year, I would roughly say by 50%. So we had an EBIT last year of EUR 15 million, and it should be roughly EUR 9 million this year. But obviously, this relative small numbers, there's a high uncertainty here in this segment or a higher uncertainty than in the other segments because little numbers can make quite a difference.
Overall, you can see here the improvement in cargo handling, plus 22%. This reflects the traffic development, security services plus 16%. We had significantly less Deicing. This obviously hurts us in the handling segment. Overall, a positive EBIT of EUR 2.3 million and for the full year, we expect a further improvement.
Retail & Properties increases throughout 50% of this segment is Center Management & Hospitality, 18% is rentals, parking is 32%. All of them increased plus 9%, plus 10%, plus 13%. EBITDA went up 10%, EBIT 12%, so obviously, I think, a healthy development we opened just a couple of weeks ago, the expanded duty free offering in Terminal 2. So this should improve our sales in the second half of this year. There were some smaller F&B units as well, which opened in recent weeks. So I expect the [indiscernible] here or even [indiscernible] here in second half of the year, I think rentals and parking are doing very well as well. And overall, we've got a very stable and strong EBITDA margin of 49% in this segment.
Yes, Malta is obviously more and more the star segment, external revenue plus 20%, EBIT plus 25%. Extraordinarily strong growth. And I think from a strategic perspective, the most important development this year was the long-term solution for the old Air Malta, which turns into KM Malta Airlines. We've got a very strong Ryanair there, 50% market share, very substantial and further appetite for growth. But the solution for KM Malta, which was reached in an agreement with -- between the government of Malta and European Commission is, I think, on the long run, a very important development for Malta.
Overall, I think the main challenge there will be to handle this huge influx of passengers, therefore, you will see more spending on CapEx this year up to EUR 28 million additional office building in new hotel, terminal expansion, PV and an expansion of Apron to cater for more aircraft stands. So those are the main projects to promote in the future. Yes, that's it from our end.
Thanks a lot for your interest, and we're looking forward for your questions and the discussion.
Thanks a lot. Let's move to the Q&A session, already registering first rank here. Carlos, please shoot.
Just 2 quick ones from my side. The first one is related to traffic. In the presentation, you mentioned and I quote an emerging recovery of business travel, so I was wondering if you could tell us what it stands now compared to 2019? What is the current split between leisure and corporate travel in Vienna? And what do you expect here for the future.
And my second question is on the capital structure. Just because infra funds like IFM tend to own a stake for a 10-year period and then sell it. However, IFM has acquired more shares throughout the year. So what's your view here? Do you think that at least a partial divestment could be expected?
I will start with the first question. I mean we don't have hard figures on the split of leisure and business traffic because we're just on surveys, but we don't know for sure. Our estimates and what our service says that we have roughly a 70-30 split. So we have got 70% leisure and 30% business. Overall, business is still below 2019, and this is something we see very strongly on the German and on the Switzerland routes. So I think what we see is that we have a higher fluctuation of passengers throughout the year that we have weak Tuesdays, weak Thursdays, weak Wednesdays, mainly in the shoulder season, and we see an extremely strong summer.
I mean in summer now, there's no major difference anymore between a Tuesday and the Friday. The difference is probably 10%. And during -- in the shoulder season, it might be 20%, 25%. So business traffic is recovering long haul. It's not really recovering towards Asia, definitely not towards China. And what the airlines and Austrian Airlines says that they assume that business traffic for them is still 20% below 2019. But it's more than made up by the additional leisure traffic, and that's what you see in our results.
Yes, I can only refer to the developments in the last 2 years. So IFM has increased its shareholding. It was 39.9%. It went up to 43.3% and is now at roughly 44%. And we have no new information about the intentions of IFM to stay or to change shareholdings. I mean what in any case, would be appreciated by us is that the free float would increase because this is maybe one of the disadvantages of our shares right now, that the free float is unfortunately limited to 6%.
Yes. Henry, please go ahead.
First of all, congrats for passing Fraport in terms of market cap. But I have 2 questions from my side. The first one is on the sustainable aviation fuel regulation. It requires 20,000 tonnes per year in Austria. How much of total tonnes would that be in your rough estimate? And is there any operational risk behind if the target is not met? That was my first question.
And the second question is you talked about congested airspace, especially in summer. Could this also be a bottleneck for further growth? I mean a lot of airlines are expanding the reach to Vienna and want to go to Vienna, but maybe [indiscernible] control -- also controller saying, no, we cannot handle any more planes coming in and out of Vienna in the future. So yes, this is sort of the bottleneck for further growth for you?
Starting with the SAF issue. So for us, it's no operational risk. If the goals are not met, there is a penalty for the airlines. But I think the first step should be met because it can be more or less provided with biological sources like used oil and things like that. For the next steps, there is substantial production necessary in areas outside Europe. And here, I think is the problem with EU regulation. And let's hope that new commission and the new parliament will find a more pragmatic way how to deal with that challenge.
Regarding your second question, I think this is a misunderstanding. We don't have a particular problem in Vienna regarding air space. It's a European problem. And the most problematic and navigation service providers, Hungary right now, it's a real problem, but it's Germany, it's France, so I don't see anything which would in particular, hamper growth perspective for Vienna, but I think it's overall a problem for European airspace. And there needs to be an improvement.
So far, I wouldn't see that this is reducing the growth perspective. I think it's mainly a quality issue. I mean we see now regularly, and this is due to the weather situation as well. Last year, we were pretty lucky that there were not too many thunderstorms around the airport in Vienna and in the airspace around Vienna. This year, we see many thunderstorms. So there are many days where the last wave is coming in 1 hour late, 2 hours late. And that obviously reduces the quality because the on-time performance is significantly weaker than it was last year. But I would not say that this is an issue in terms of growth in the future.
Vladimira, the floor is yours now.
Congratulations to excellent set of figures. I would have 2 questions. First one would be related to the incentives. You mentioned higher traffic-related incentive payments. So how much were these payments in '24, first half versus first half last year? And any estimate may be for the full year '24? And next question would be related to the Third Runway. Do you have any update for us? How is the current situation? What are the next estimated steps and time frame.
I mean, I have to be more specific. We are mainly talking about marketing the incentives are deducted directly from revenue. On the cost side, we have various marketing agreements with different airlines. And though there, we see some increases. To be honest, I can't give you off the exact figure now, but this is something we will give you later and Mr. [indiscernible] will get back to you on this one.
And to your second question, there's no specific update. I mean, right now, we have -- we are still in court regarding the decision of the administrative court in Austria that we have to finalize the runway 3 years earlier than initially thought. We are very optimistic that we will win this court case. And we -- so we think that we would have to finish the runway in 2033 according to current legislation, but we will take a decision in '25, early '26, if we're actually going to build it. And this has not changed so far.
Are there any further questions? That does not seem to be the case today. Vladimira I will come back to you in a minute. And then I thank everybody joining this call, again, for the interest in our company for the Q&A. Have a good rest of the day. See you at the latest mid-November. Goodbye.
Thank you.
Bye, everyone.