CPH: Good summer ensures good Q3 performance

Copenhagen Airports A/S (CPH) set a new passenger record in the third quarter, representing a 5.5% year-on-year increase. The full year growth for the first nine months contributed to a 2% increase in passenger numbers, a 3.5% growth in revenue and a 4.7% improvement in profit before tax. Based on the strong summer performance, CPH expects to end the year at the high end of, or possibly above, the guidance announced on 11 August 2015. CPH consequently upgrades its full-year guidance. 

In Q3 2015, Copenhagen Airport had more than 7.7 million passengers, representing a 5.5% year-on-year increase and a record for the quarter. In the nine months to 30 September 2015, 20.1 million passengers travelled through Copenhagen Airport, representing a 2.0% year-on-year increase.

For the first time ever, Copenhagen Airport had more than 20 million passengers after the first nine months of the year. The growth in passenger numbers lifted revenue by 3.5%, while pre-tax profit was up by 4.7% to DKK 1,083.8 million.

“We have seen strong passenger growth during the summer. As a result, more foreign tourists than ever before flew to Copenhagen this summer, benefiting the economic growth of Denmark,” said Thomas Woldbye, CEO of Copenhagen Airports A/S.

More long-haul routes
The full-year effect of intercontinental routes that were opened last year and additional frequencies added on already existing intercontinental routes this year resulted in a 2.6% increase in international passengers in the first nine months of the year, while intercontinental traffic grew by 1.8%.

“Both SAS and Norwegian have announced new long-haul routes to be opened in the near future, helping us to almost double the number of intercontinental routes out of Copenhagen in six to seven years, strengthening the connections from Denmark and southern Sweden to key international markets,” said Thomas Woldbye.

The proportion of transfer passengers stabilised in Q3 with a recovery in the number of passengers SAS transfers through Copenhagen Airport. Still, the number of transfer passengers was down by 8.0% in the nine months to 30 September.

Domestic traffic to Rønne and Karup increased in the first three quarters, but lower capacity to other airports, including on Denmark’s largest domestic destination, Aalborg, resulted in an overall decline of 5.1%.

Non-aeronautical growth
The rise in passenger numbers also generated growth for the non-aeronautical segment, including the shopping centre, parking and the hotel operation.

Revenue from the shopping centre rose by 7.0%, which was mainly due to a strong focus on the right shop and brand mix and an increase in spend per passenger. Parking revenue was up by 2.9%, and revenue from the hotel operation grew by 4.4%.

“It is important that we can continue to make our non-aeronautical offering more attractive. First of all, because it boosts passenger satisfaction, and secondly because our non-aeronautical earnings help ensure that we can maintain our high level of capital investment, especially in the aeronautical part of our business,” said Woldbye.

High level of capital investment continued
The level of capital expenditure in the nine months to 30 September was above the level of the same period last year.

Capital expenditure of DKK 783.3 million (2014: DKK 543.3 million) has been used to complete the renovation and expansion of both passenger and office areas in Terminal 2, the extension of Pier C to handle more and even larger aircraft, a general renovation and expansion of one of the airport’s three runways to accommodate the A380 and expansion of the critical security restricted area (CSRA) to improve efficiency for both airlines and handling companies and their staff.

As a consequence of the continuing growth, CPH has decided to expand the central security checkpoint from 18 to 20 lanes in order to maintain the current high service level and short waiting times.

International recognition
At the world’s leading aviation conference, World Routes, in Durban, South Africa, airlines from all over the world rated Copenhagen Airport the world’s best in the category “airports between 20 and 50 million passengers” for the second time in three years.

This prestigious award was given in recognition of many years of focused and trustful collaboration between CPH and the airlines about opening routes into and out of Denmark – for the benefit of economic development in both Denmark and southern Sweden.

Based on the strong summer performance, CPH expects to end the year at the high end of, or possibly above, the guidance of 11 August 2015. CPH is therefore upgrading its full-year guidance for pre-tax profit relative to the guidance announced on 11 August 2015.

Forecast of profit before tax
Based on the expected traffic programme for 2015, an increase in the total number of passengers is expected, as well as total revenue.

Operating costs are expected to be higher than in 2014, primarily due to the expected rise in passenger numbers, stricter requirements to security, and wage indexation, but this will be partly offset by a continuing focus on operating cost efficiencies.

Overall, depreciation charges and financial costs are expected to be at a lower level than in 2014, primarily as a result of long-term refinancing raised on satisfactory market terms and the timing of depreciation on new investments.

The guidance for profit before tax in 2015 is upgraded and is now expected to be in the range of DKK 1,375.0 million to DKK 1,450.0 million, excluding one-off items (the previous guidance was for pre-tax profit of between DKK 1,300.0 and DKK 1,400.0 million). Operating profit before depreciation is projected to be higher in 2015 than in 2014, excluding one-off items.

Forecast of capital investment
CPH expects to continue to invest for growth. As in recent years, CPH expects to continue the high level of investment in 2015.

Planned capital expenditure includes investment in the expansion of the CSRA, extension of Pier C, renovation of Terminal 2, runway renovation and expansion to accommodate the A380, increase of the number of lanes at the central security checkpoint, and taxi management. CPH will also be investing in non-aeronautical projects for the benefit of airlines and passengers.