Interim report of Copenhagen Airports A/S (CPH) for the nine months to 30 September 2011

The Supervisory Board today approved the interim report for the period 1 January – 30 September 2011.  

31.10.2011

SUMMARY FOR THE FIRST NINE MONTHS OF 2011

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Copenhagen Airports A/S (CPH) reported 2.6% passenger growth in Q3, with increases in revenue and profit before tax. The growth was mainly due to a higher number of passengers and increased revenues from both the shopping centre and parking. CPH retains its full-year forecast of continuing growth in the total number of passengers.

Copenhagen Airport’s passenger numbers for the first three quarters of 2011 rose 6.6% compared to the same period last year, and revenue rose 2.1% to DKK 2,512.0 million. Profit before tax increased by 0.7% to DKK 797.7 million.

Reported EBITDA amounted to DKK 1,338.7 million, slightly above the 2010 level. Adjusted for the divestment of a number of Mexican airports (ITA), the termination of a long-term rental contract with SAS Cargo and the effect of the ash cloud in 2010, the underlying EBITDA growth was 7.2%.

In Q3, Gulf Air opened a service to Bahrain, and Emirates opened its service to Dubai. This continued growth in intercontinental routes continues to strengthen Copenhagen Airport’s position as a Northern European hub.

Traffic revenue rose by 9.1%, mainly as a result of the increased number of passengers.

Improved performance in shopping and parking
The commercial was positively impacted by a 13.5% increase in concession revenue from the shopping centre and a 9.9% increase in parking revenue. However, this was more than offset by the termination of the long-term rental contract with SAS Cargo in 2010. The overall revenue from the commercial segment declined by 4.4%.

In Q3, new Ilse Jakobsen and Marimekko shops opened as well as two Illums Bolighus Christmas shops, helping to ensure that the Copenhagen Airport shopping centre continues to roll out the new strategy of greater price differentiation started in 2010, which led CPH to welcome a number of strong national and international brands in a different price category.

Capacity investment
CPH is committed to invest in airport capacity and has therefore made a number of investments year to date. Major investments include a new check-in area in Terminal 2, optimisation and replacement of equipment in the luggage area, cruise check-in in Hangar 145, upgrade of goods delivery (east gate), development of Cargo City, renovation of installations and drainage system, development of stores in shopping area and IT systems.

Change of ownership
MAp Airports International Limited (MAp) and Ontario Teachers’ Pension Plan Board (OTPP) have now concluded a binding agreement for the sale of MAp’s non-controlling interest in CPH. In that connection, MAp announced that MAp no longer holds any direct or indirect ownership interests in CPH. OTPP announced that OTPP now holds a non-controlling indirect 30% ownership interest in CPH.

HIGHLIGHTS OF RESULTS

  • Passenger numbers at Copenhagen Airport increased by 6.6% during the first nine months of 2011. The number of locally departing passengers increased by 10.1%, and transfer traffic decreased by 4.1%. When excluding the impact of the ash cloud in 2010, underlying passenger growth was 4.3%

  • Underlying revenue growth was 7.0% when excluding one-off items. Reported revenue increased by 2.1% to DKK 2,512.0 million (2010: DKK 2,459.5 million) primarily due to the effect of the ash cloud in 2010 and an increase in passenger numbers. This was  partly offset by the divestment of ITA and the termination of a long-term rental contract with SAS Cargo  

  • When excluding one-off items, underlying EBITDA grew by 7.2%. Reported EBITDA increased by 0.1% to DKK 1,338.7 million (2010: DKK 1,336.8 million). 

  • Underlying EBIT grew by 14.2%, when excluding one-off items. Reported EBIT decreased by 2.6% to DKK 954.6 million (2010: DKK 980.0 million). 

  • Net financial expenses decreased by DKK 58.1 million primarily caused by an extraordinary amortisation of loan costs in connection with repayment and cancellation of bank facilities in June 2010 and market value adjustments in 2010 of which the main part relates to a loss in connection with termination of interest rate swaps

  • Profit before tax increased to DKK 797.7 million (2010: DKK 792.1 million). Profit before tax amounted to DKK 819.0 million when excluding one-off items (2010: DKK 839.0 million) and was impacted by the divestment of ITA in 2010 and the termination of a long-term rental contract with SAS Cargo in 2010 partly offset by an increase in passenger numbers and the ash cloud in 2010

  • Capital expenditure amounted to DKK 484.1 million in the first nine months of 2011 (2010: DKK 519.0 million)

  • In March 2011, CPH cancelled undrawn bank facilities equivalent to DKK 924.9 million maturing in March 2012. Concurrently, CPH established four five-year committed bilateral bank facilities totalling DKK 2.0 billion. The new facilities have resulted in significantly improved terms for CPH and address all short- to medium-term refinancing risk. Moreover, the new facilities ensure that CPH will be able to meet its commitments under the charges agreement to invest DKK 2,625 million in the period from 1 October 2009 to 31 March 2015, whilst providing sufficient financial resources to fund additional investments

OUTLOOK 2011 
Based on the expected traffic programme for 2011, the total number of passengers is expected to continue to increase. Operating costs are expected to be higher, primarily due to the forecast growth in passenger numbers, cost inflation and depreciation as a result of the continued higher level of investments with focus on continued growth. Overall, profit before tax is expected to be on a level with 2010 when excluding one-off items.

Under the charges agreement, CPH is committed to investing an average of DKK 500 million annually supplemented by commercial investments for the benefit of airlines and passengers.