Excellent passenger growth produced good first half year performance
Copenhagen Airports A/S (CPH) had a good first half year of 2014 with 7.3% growth in passenger numbers. The increase lifted both revenue and profit before tax. CPH retains its full-year forecast.
Passenger numbers at Copenhagen Airport increased by 7.3% to 12,355,999. For the first time ever, the airport achieved more than 12 million passengers in the first six months of a year. The growth in passenger numbers lifted revenue by 7.4%, and profit before tax was up by 9.0% to DKK 593.3 million.
The growing passenger numbers, reflecting higher airline load factors and the full year effect of new routes started up in 2013, lifted revenue from the aeronautical segment by 10.4% in H1.
The growth in passenger numbers was particularly strong in Q2, and the growth on intercontinental routes and in transfer traffic have supported Copenhagen Airport's position as the key hub of northern Europe. It also shows that we are achieving the goals we have set in our World Class Hub strategy," said Copenhagen Airport's CEO Thomas Woldbye.
In the first six months of 2014, international traffic grew by 7.5%, long-haul traffic grew by 6.8%, transfer traffic was up by 13.5%, and domestic traffic rose by 4.9%.
Non-aeronautical growth
Revenue in the non-aeronautical part of the business was up by 3.5%, generated by a 5.6% increase in shopping centre revenue, a 3.6% increase in hotel revenue and a 6.6% increase in parking revenue.
CPH continually works to enhance the offering at the airport shopping centre, and in early June Copenhagen Airport was officially rated best in the world in terms of food and beverage, winning the "Airport Food & Beverage Offer of the Year" award and two other prestigious awards at the international FAB Awards 2014 ceremony.
High level of capital investment maintained in 2014
CPH is continuing its very high level of capital investment in strengthening and expanding Copenhagen Airport. In recent years, CPH's capital investment has been in the order of DKK 1 billion, and as a result of the steadily growing intercontinental traffic, CPH has now initiated an extension of Pier C, which is used for long-haul and non-Schengen traffic. The pier will be extended by 100 metres, adding three stands with direct access from the aircraft gates.
Refinancing
In April 2014, CPH refinanced its five-year committed bilateral facilities totalling DKK 2.0 billion. The new facilities have resulted in improved terms for CPH and address all identified short- to medium-term refinancing risks. The new facilities ensure that CPH will be able to maintain the necessary investment level. The new facilities expire on 2 April 2019.
New charges agreement
After the end of Q2, CPH has signed a new charges agreement with the airlines, which will now be submitted to the Danish Transport Agency for approval, and will come into effect on 1 April 2015. Under the agreement the price of using Copenhagen Airport will follow CPI over the next four years. The new agreement provides certainty around airline charges and ensures that the necessary level of investment in the airport can continue. The agreement also includes investment in facilities that will help the airlines reduce their overall operating costs.
The new charges agreement means that the airlines know their costs for the next four years, and that the airport will have stable earnings. This will support CPH's plans to invest in the airport, creating the framework for our long-term plan of expanding the airport as and when growth materialises and according to the "Expanding CPH" plan," said Thomas Woldbye.
After the end of Q2, Copenhagen Airport was rated "Europe's most efficient airport" for the ninth time in eleven years by the Air Transport Research Society (ATRS), a special research group that analyses and evaluates efficiency at airports worldwide.
Outlook
Forecast of profit before tax
With the anticipated traffic programme for 2014, we expect to see an increase in the total number of passengers. A positive full-year effect in 2014 is expected from the many new routes opened in 2013. The increase in passenger numbers is expected to have a favourable impact on revenue. Operating costs are expected to be higher than in 2013, primarily due to the expected rise in passenger numbers and cost inflation, but this will partly be offset by a continuing focus on operating cost efficiencies.
Depreciation charges and financial costs are expected to be higher in 2014 than in 2013 as a result of the continuing high investment level. Overall, profit before tax for 2014 is still expected to be in the range of DKK 1,100.0 million to DKK 1,200.0, million, when excluding one-off items. If the passenger growth continues to be strong, profit before tax is expected to be in the higher end of the range. Operating profit before depreciation is projected to be higher in 2014 than in 2013, when excluding one-off items.
Forecast of capital investment
Under the charges agreement, CPH must invest an average of DKK 500 million annually but as in previous years, CPH expects to invest at a level significantly higher in 2014 than what we are committed to invest under the charges agreement. CPH will also be investing in non-aeronautical projects for the benefit of airlines and passengers.
The forecast for 2014 regarding passenger growth, profit before tax and capital investment is retained.