Serving some 69.5 million passengers, Frankfurt Airport (FRA) achieved a new passenger record in 2018 and growth of 7.8 percent compared to 2017.
CEO Schulte commented: “We are pleased that the airlines have significantly expanded their flight offerings at Frankfurt Airport for the second year in a row, thus improving connectivity and prosperity for businesses far beyond the Frankfurt Rhine-Main Region. Until the first pier of the new Terminal 3 opens in late 2021, we will focus on maintaining a high level of service quality at Frankfurt Airport – while dealing with the constraints affecting the entire aviation industry. In particular, enhancing the situation at the security checkpoints will be a top priority for us.”
In response to strong passenger growth, Fraport hired over 3,000 new staff members at Frankfurt Airport in 2018. Despite the constraints experienced at some central process points in the terminals during peak periods – particularly at the security checkpoints – global satisfaction of passengers with Frankfurt Airport was at 86 percent in 2018 – thus even posting a slight increase compared to the previous year (2017: 85 percent). To provide additional space for security checkpoints, Fraport is investing in an extension to Terminal 1 for installing seven extra security lanes in the summer of 2019.
Fraport’s international portfolio also posted a significant gain in passenger traffic during 2018. In Brazil, the two airports of Porto Alegre and Fortaleza reported a 7.0 percent increase to 14.9 million passengers in 2018 – Fraport Brasil’s first year of operating these airports. At the 14 Greek airports, traffic rose by almost 9 percent to 29.9 million passengers. Antalya Airport in Turkey grew by a significant 22.5 percent to 32.3 million travelers, a new historic passenger record.
Outlook: Growth expected to continue
Fraport is forecasting sustained growth at all of the Group airports in fiscal year 2019. At Frankfurt Airport, passenger volume is expected to rise between around two and roughly three percent.
Fraport expects consolidated revenue to increase slightly up to around €3.2 billion (adjusted for IFRIC 12). Group EBITDA is expected to reach a range of around €1,160 million and approximately €1,195 million, despite the non-recurring revenue from the sale of Fraport’s stake in Hanover Airport. The application of the IFRS 16 accounting standard – which changes the accounting rules for leases – will not only make a positive contribution to Group EBITDA, but will also lead to much higher depreciation and amortization in fiscal year 2019. As a result, Fraport expects Group EBIT to be in the range of about €685 million and around €725 million. The company also expects to post a Group result (net profit) of around €420 million and about €460 million. The dividend per share is expected to remain stable at the higher level of €2 for the 2019 fiscal year.
Fraport’s four business segments at a glance
Revenue in the Aviation segment increased by 5.5 percent to slightly over €1 billion. This was due partly to higher revenue from airport charges resulting from increased passenger traffic at Frankfurt Airport. At €277.8 million, segment EBITDA increased by 11.3 percent year-on-year, while segment EBIT rose 6.5 percent to €138.2 million.
Revenue from the Retail & Real Estate segment dropped 2.8 percent year-on-year to €507.2 million. A major reason for this drop was significantly fewer proceeds from the sale of land (€1.9 million in the 2018 fiscal year versus €22.9 million for the same period in 2017). In contrast, parking income (+ €8.3 million) and retail revenue (+ €0.8 million) grew. Net retail revenue per passenger fell 7.4 percent year-on-year to €3.12. Segment EBITDA increased by 3.4 percent to €390.2 million, while segment EBIT climbed 2.8 percent to €302.0 million.
Revenue in the Ground Handling segment rose by 5.0 percent year-on-year to €673.8 million. The strong growth in passenger traffic resulted, in particular, in stronger revenue from ground services and higher infrastructure charges. On the other hand, passenger growth also led to higher personnel expenses at the FraGround and FraCareS subsidiaries. Accordingly, segment EBITDA declined by €7.0 million to €44.4 million. Segment EBIT dropped considerably by 94 percent, but at €0.7 million still remained in positive territory.
At nearly €1.3 billion, the International Activities and Services segment significantly advanced by 58 percent compared to the previous year. After adjusting for the €359.5 million in revenue related to IFRIC 12, the segment’s revenue rose by 20.1 percent to €931.4 million. This revenue growth received major contributions from the Group subsidiaries in Fortaleza and Porto Alegre (+ €90.9 million), as well as Fraport Greece (+ €53.2 million). Segment EBITDA increased a noticeable 28.3 percent to €416.6 million, while segment EBIT jumped 40.7 percent to €289.6 million.
