INTERIM REPORT OF COPENHAGEN AIRPORTS A/S (CPH) FOR THE PERIOD 1 JANUARY – 30 SEPTEMBER 2017
The Board of Directors has today approved the interim report for the period 1 January – 30 September 2017.
Summary for the first nine months of 2017
22.5 million people travelled through Copenhagen Airport in the first nine months of the year. In the third quarter alone, there were 8.5 million passengers, which is the highest quarterly figure in the airport’s history. Passenger growth in the first nine months of the year was 1.6%.
The development seen at the start of the year continued over the summer. More Danes and people from southern Sweden went abroad on holiday, and many people, particularly from southern Europe and the USA, decided to spend more days’ holiday here in Denmark than in previous years. Both factors have contributed to sustained growth compared to last summer. CPH has worked hard in recent years to attract new long-haul routes, and this year has recorded 6% more passengers specifically on these routes. Most recently, Air India opened a direct route to Delhi in September, and Cathay Pacific and SAS have announced that they will start flights to Hong Kong and Beirut respectively from the spring 2018.
The growth in passenger numbers meant an increase in revenue. Since 1 April 2017, the hotel operation has been recognised on a net basis due to the new operator agreement with Nordic Choice. Adjusted for the effect of this, underlying revenue increased by 4.1%. Profit before tax was DKK 1,301.3 million, equivalent to growth of 2.6%.
On this basis, Copenhagen Airports A/S is maintaining its 2017 outlook for profit before tax, excluding one-off items, in the range of DKK 1,600-1,700 million.
Growth in the non-aeronautical business
Increasing passenger numbers led to growth in the non-aeronautical part of the business, including the shopping centre and parking. Revenue in the shopping centre was up 8.1%, which is mainly due to increased revenue from restaurant and cafés, while parking contributed 2.6%.
It is important for CPH to offer the right selection of food outlets to match passengers’ requirements. Therefore CPH continues to improve the range on an ongoing basis and will be opening a number of new outlets landside in the next few months, including Scandinavia’s first Pret A Manger, as well as even more opportunities to buy healthy, organic food.
High investment level continues
CPH’s investment level in the first nine months of 2017 has been higher than in the same period of 2016. DKK 1,029.1 million has already been invested this year in expanding Terminal 2 landside, the central security checkpoint, developing the terminal area between Piers A and B, and establishing the new Pier E. There have also been investments to expand passport control in Pier C further to new EU rules requiring 100% passport checks on journeys to and from Schengen countries.
Earlier in the year, CPH decided to further increase the investment level, with expected investments of approx. DKK 1.3 billion in expanding and improving the airport for the future. The extensive building projects launched by CPH are running to schedule, and CPH will open the new security checkpoint at the end of the year and the airside extension to the terminal area next year, creating even more space and new facilities for passengers.
National aviation strategy
The new regulation to the NAS (National Aviation Strategy) has just been announced and CPH will be commenting in its contens in separate communication.
Highlights of results
- Passenger numbers at Copenhagen Airport increased by 1.6% in the first nine months of 2017. The number of local departing passengers grew by 3.9% and the number of transfer passengers decreased by 6.7%.
- Revenue grew by 1.2% to DKK 3,378.2 million (2016: DKK 3,337.4 million), primarily driven by the increase in departing international passengers. Underlying revenue growth, excluding the effect of the new hotel agreement, was 4.1%.
- Thanks to sustained focus on cost efficiency and despite increased regulatory requirements, operating costs per passenger fell by 0.9%, excluding one-off items and the effect of the new hotel agreement.
- EBITDA, excluding one-off items, increased by 5.7% to DKK 2,041.2 million (2016: DKK 1,930.5 million). Reported EBITDA rose by 5.5% to DKK 2,026.2 million (2016: DKK 1,920.5 million).
- EBIT, excluding one-off items, increased by 3.1% to DKK 1,457.0 million (2016: DKK 1,412.6 million). Reported EBIT rose by 2.8% to DKK 1,442.0 million (2016: DKK 1,402.6 million). EBIT was affected by a 12.8% increase in depreciation charges because of the large investments in growth.
- Net financing costs increased by DKK 6.8 million year on year, which is partly due to a higher investment level, but were partly offset by improved loan terms.
- Profit before tax, excluding one-off items, increased by 2.9% to DKK 1,316.3 million (2016: DKK 1,278.7 million). Reported profit before tax increased by 2.6% to DKK 1,301.3 million (2016: DKK 1,268.7 million).
- Capital expenditure was DKK 1,029.1 million in the first nine months of 2017 (2016: DKK 664.7 million). The first nine months have 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 and various investments in growth.
Outlook for 2017
The outlook for traffic growth, profit before tax and capital expenditure is unchanged from the announcement of 8 August 2017.
Outlook for profit before tax
Based on the expected traffic programme for 2017, 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.
The change in the hotel operation from Hilton to Nordic Choice (Clarion) means that the Group's revenue is expected to be in line with 2016 and operating costs are expected to fall, as CPH has recognised the operation as revenue-based income since 1 April 2017. Excluding the hotel operation, revenue and operating costs are still expected to increase.
Excluding the hotel operation, operating costs are still expected to be higher than in 2016, primarily due to the expected rise in passenger numbers, stricter security requirements and cost inflation, although this will be partly offset by a continuing focus on operating cost efficiencies. Overall, depreciation charges and financing costs are expected to be higher than in 2016, primarily because of a continuing high level of investment.
Profit before tax in 2017 is expected to be in the range of DKK 1,600-1,700 million, excluding one-off items. EBITDA is expected to be higher in 2017 than in 2016, excluding one-off items.
Outlook for capital investments
CPH expects to continue to invest in growth for the benefit of passengers and airlines, and is therefore continuing with Expanding CPH, its plan to expand and develop the airport as passenger numbers increase. CPH expects to maintain a high capital investment level in 2017, estimated to amount to approx. DKK 1.3 billion, to accommodate the high passenger growth. Planned investments include expansion of the central security checkpoint, improvement of wide-body facilities, a new walkway in Terminal 3 and expansion of Terminal 2 airside. CPH will also be investing in non-aeronautical projects for the benefit of airlines and passengers.
P.O. Box 74
2770 Kastrup, Denmark
Lars Jønstrup Dollerup
Tel.: +45 3231 3231
Fax: +45 3231 3132
CVR no. 14 70 72 04