Q2 2025 Fraport AG Earnings Call
Quarter, we stick to our new publication format.
So I am happy to guide you through our presentation. This Tuesday morning already and later today at two PM. German time, we will have our conference call as usual to answer all your questions.
On my first slide four today I would like to start with the traffic performance at our group airports in the first half of 2025.
The blue bars display the January to June period, compared with 2019.
And the white box shows the comparison to the previous year.
Looking at the airports to one by one and starting with Frankfurt on the left we see that after a slightly negative start in Q1 <unk>.
For the second quarter was catching up with plus of three 1%.
In total this led to a passenger increase in Frankfurt of one 4% in the first half of 2025.
Looking ahead, we are confident to see further growth over the summer season with additional capacities on short haul routes, especially from the new condo feeder network in Frankfurt.
Also for the upcoming winter season, we continue to be optimistic.
Based on the further ramp up of continental frequencies.
Therefore, we stick to our guidance of peasant truck growth in Frankfurt in 2025.
But to remain below 64 million passengers.
Looking at the development of our international portfolio.
You will see that <unk> continues to perform strongly in Q2 after.
After a strong start to the year already.
Capacity additions in combination with a new terminal opening supported this development.
Which led to an increase of seven 1% over the first six months of the year.
Following the record year 2020 for Fraport, Greece continues to grow in 'twenty five.
And showed a passenger increase of one 9%.
This increase was primarily driven by a strong Easter holiday season.
With April passenger numbers being up 5%.
And on the other side was able to compensate passenger loss of minus <unk>, 7% in.
In the first quarter.
And is now on the previous year's level.
Here the peak summer season is still ahead of us.
When looking at the strong development in Brazil of plus 24%. This mainly reflects a strong recovery in Porto Alegre of plus 42%.
Here as you are aware.
Part was closed from May to October last year.
Due to our heavy flooding.
Besides that Fortaleza also grew strongly by 7.5%.
Louisiana, and the <unk> twin star airports in Bulgaria.
Also showed a solid performance in the first six months.
With a plus of around 6% and 14%.
<unk>.
Looking at the recovery rates in comparison to the pre COVID-19 levels.
Picture is largely unchanged.
Greece, Lima and entire year.
Leading with a recovery to up to 119%.
While Frankfurt and that remaining internationally airports are still lagging behind.
All in all the first half of the year was running well and in line with expectations.
With passenger growth of three 8% for the group as a whole.
And the plus of even five 4% excluding <unk>.
Our Frankfurt.
So switching gears from the traffic development to our update on our major expansion programs and starting with the construction of the new terminal in <unk> on slide number four.
I am very happy to say that all major construction works have been completed.
The new terminal has been officially opened on June 1st.
All in all the transitioning of the airlines from the old terminal to the new terminal dwell.
And we received positive feedback from the clear majority of our customers.
Regarding the financial development and expectations ahead, you have in the meantime set a date for our deep dive on Lima as you can see on the slide.
But let me already today to share some first insights for the month of operations.
We see very positive progress on the retail side.
Thanks to the new terminal infrastructure and the new shops.
The retail revenues increased by around 25% on a per passenger basis.
As a passenger us very well to take up the new offering.
This is a fantastic result, and we are proud to see such positive effects right from the start of operations.
On the other side with the inauguration of the new terminal, our DNA as well as the interest expenses increased.
<unk> impacted the financial results.
As previously expected, we will now see higher DNA of up to 30 million Euro from Lima, This year and additional interest expenses in more or less the same amount.
For the upcoming year. So 2026, we will then reflect the higher D&A and interest cost from EMA.
So in the first five months of the year.
So higher D&A of about $50 million on an annual basis as well as higher interest costs.
On slide number five I would like to continue.
With the current status of our biggest construction site the construction of terminal three.
In Frankfurt.
David we are coming closer to the finishing line.
The latest big milestone, we achieved was the approval of <unk> in these two weeks ahead of schedule.
This was a really positive sign also regarding the entire project timeline.
PHA has the length of 600 meters and 14 aircraft parking positions on three levels.
It can serve up to $6 million in Nanjing and peasant trust. So it's a small airport on its own.
After the commissioning of terminal three airlines like Emirates, British Airways, and Japan Airlines will operate the appeal.
The remaining big steps to come from a construction point of view.
The regulatory approval of the people mover, which we expect this month and the approval of the main hall, which will follow next quarter.
Here with some tailwind we can already announced the completion of the major construction with our Q3 results.
Simultaneous lead the operational tests to so called Ora.
Now starting to make sure.
That everything will run smoothly from day one.
And finally on slide number six I would like to conclude the constructions section with the terminal expansion at anti IL.
As published with our Q1 results.
The new infrastructure has been inaugurated on the 12th of April of this year.
After almost a quarter operationally, we can draw a first positive conclusion.
The patient passenger processes are running smoothly and we see a good commercial performance from the new trouble for us.
On the financial side and Tiger Airport is however, confronted with headwinds this year.
Comparable to the development of our Q1 results. The net result in Q2 continued to suffer.
From an exchange rate driven deferred tax effect.
Due to the depreciation of the Turkish Lira, we had to re evaluate our tax credits.
This is why we recorded losses in our results from associated companies.
Especially the noncash item purely based on currency effects.
The total effect from the FX losses amounted to around 96 million Euro in April one 2025.
On a 100% basis.
About 46 million euro negative effect for our <unk> sure.
Out of this amount around 59 million euro.
About 29 million Euro our share affected second quarter results.
Moreover, we incurred a so called day one loss on the hedging of our project finance in the second quarter.
The total effect here was about 21 million euros, so around 10 million euro for our share.
Yeah.
To conclude the financial performance of entire the dispute with a former duty free operator.
Which we already mentioned with our Q1 results continued in the second quarter.
<unk> impacted the financial performance.
Of the operating results.
In an amount of about $3 million euro for our share.
All the before mentioned effects added up to a negative impact of around 63 million Euro on our group financial results in each one.
Looking forward the dispute with the duty free operator has now been settled.
Therefore.
Starting with Q3, we expect no further negative one offs.
And our confidence to realize further retail potential.
Anti <unk>.
Airport.
Coming now to our first financial slides and starting with a very positive spotlight on our free cash flow development in Q2.
As you can see on this slide in the last quarter.
You reported positive free cash flow of 29 million Euro.
This was the first time since 2018.
Second quarter of a year showed positive free cash flow numbers.
We achieved this result with a double effect.
Firstly, our operational cash flow showed a very strong development.
Drilling by 58% or nearly $120 million.
Secondly, deep broad down brick and mortar Capex, which peaked last year to a multiyear low of 265 million.
Those two effects made the turnaround possible also we still invested in total.
More than 160 million euro into the construction of Frankfurt terminal three and the new terminal.
E Mail.
This shows you is the future potential we have in an off peak quarter once all construction programs.
<unk> completed.
Looking now ahead in <unk>, we expect a clearly positive free cash flow generation.
Based on our strong third quarter operationally and financially.
This is why we remain positive with our full year targets.
And the year close to the breakeven point with a free cash flow.
Looking at the other main res sides of the past quarter on slide number eight.
While revenues of $1 1 billion Euro we're down by around 2%.
Revenues, excluding for FERC to have effects were up by 8% over Q2 2024.
Reasons for a positive revenue development, where the before mentioned traffic growth as well as increases in airport charges and other prices.
Also the EBITDA went up nicely by around 8% to 384 million.
The increase incurred despite higher staff costs.
The positive compensation effect for the flooding of Porto <unk> airport in the last year.
While our D&A was about flat EBIT grew by almost 29 million euro or 13.
Percent.
Main driver within the financial result was a more negative for aside from entirely airport as I already mentioned on slide number six.
Therefore, the financial results stood at minus 80 million Euro.
About $48 million Euro below Q2 2024.
Correspondingly our group rate side was down by 16% to 125 million Euro.
On my next slide I would like to provide you with a known background information on the moving parts regarding our free cash flow generation as well as our net debt in Q2 2025.
Here I would now like to focus more on the major capex programs in detail.
Why Lima, Capex was coming down from $112 million in Q2, 2024 to only 35 million Euro this year.
Also T. Three capex was reduced by some 30 million euro compared to the previous year.
Both effects supported the reduction of brick and mortar capex.
Dividends in the amount of 28 million euro mainly from anti <unk>.
Additionally, supported the free cash flow generation.
At a positive free cash flow of 29 million Euro.
Net financial debt decreased even steeper by some 100 million to $8 5 billion.
The reason for a steeper reduction is due to currency effects on our project finance in U S dollar respectively in Brazilian real.
In Peru, and Brazil, which are reflected in the bar called <unk> on the right hand side of the chart.
Our leverage ratio therefore stands now at $6 six coming down from $6 eight in Q1.
And our gearing ratio improved slightly to 177%.
Let me now move on from our indebtedness to our repayment profile on slide number 10.
Looking at the Blue Bar, you can see that we have reduced our liquidity position somewhat somewhat and are now just short of $3 5 billion Euro.
While close to 401 billion when accounting for a residual unused project finance and committed credit lines.
Gross debt on the other side decreased by some $170 million to around $12 billion at the end of Q2.
Despite regular refinancing activities and drawdowns from the project financing.
Our average cost of debt remained flattish at around three 3%.
Just slightly up by <unk>, one percentage point compared to Q2 last year.
Coming.
Two our segment reporting starting with the Q2 numbers in aviation on slide number 11.
The positive financial development in the last quarter was driven by two effects.
This increases on the one side.
And traffic growth on the other sides.
Therefore revenues went up 9%.
While aviation tranches, even increased by 10%.
In total and absolute numbers revenues increased by some 30 million euro.
Due to a higher staff cost as well as non staff cost for service providers.
We translated about 36% of the additional revenues into EBITDA.
Leading to a slight increase in the segment margin.
Adjustments and useful lifetimes of assets led to a decrease in DNA.
<unk> and <unk>.
EBIT increase of 15 million euro or 22%.
Moving on to our retail and real estate segment on slide number 12.
Quarterly revenues increased by about 5% to $140 million.
Around half of the increase was derived from our retail business.
Which grew by some 6% or 3 million euro.
S passenger numbers only grew by around 3%.
This implies an increase in our spend per passenger.
More than 2%.
In absolute terms the spend per Pax increase from three euro and 10 cents to three euro in 17, so by 7% per passenger.
This development was primarily driven by higher advertising revenues and good F&B.
<unk> in the quarter.
We are happy about this positive development.
Especially because the traffic growth comes from continental routes.
Which usually show his spending behavior below the average.
Other important revenue streams, namely real estate and parking grew in line with our expectations.
Driven by indexation of rental contracts.
<unk> adjustments and volume effects.
This segments EBITDA and EBIT performed nicely above Q2, 2024, despite higher costs of ages and maintenance compared to last year.
Moving on to our ground handling segment on slide number 14.
Let me start with a very positive message first we are happy to see a positive ground tending EBITDA again in the second quarter of 13 million Euro.
Reason for the positive EBITDA development was a strong surge in revenue was driven by three effects.
Firstly growing traffic volumes.
Secondly, higher prices.
And thirdly, a growing market share.
Our new competitor Swissport still has no sufficient staff.
To handle the contract volumes from our former competitors.
<unk>.
Segment Opex on the other side saw a few moving parts.
Staff costs increased by 32 million euro among others due to higher staff numbers and wage increases.
Let me point out here that staff numbers sequentially. So between Q1 and Q2 of this year indeed have not increased.
And we are right now plateauing with our head count at the current traffic levels.
Still when compared to the previous year, we are seeing an increase in staff numbers.
In addition to before management development.
Supplementary pension costs led to an extra one off burden of some 11 million Euro this year.
We haven't paid last year.
When taking a look at other Opex you are seeing a positive development. So a material decrease in cost.
Please be aware that this decrease is primarily driven by a reversal of a provision which we recognized for a potential settlement of claims in Q4 2022.
The revaluation of this provision led to a positive effect of around 17 million euros, so reducing cost.
In total this led to the before mentioned positive EBITDA of around 30 million Euro for Q2.
On slide number 15, I would like to conclude our segment reporting with our international activities.
As with the Q1 numbers you see in our revenue reporting that if rig 12 related revenues materially decreased by more than 100 million Euro.
We chose that the construction in Lima is coming to an end.
Adjusting for this effect and looking at the underlying revenues.
The segment recorded a solid growth of 5% despite negative currency effects in there.
The U S EMEA and Brazil.
The negative FX effects, however were compensated by traffic growth and price increases.
Within other income Youll see that Q2 2024.
It was positively impacted by a 9 million euro or one off item.
A compensation payment in Papua liquor, which also improved the EBITDA in 2024.
So if adjusted for this underlying EBITDA was some four 5% higher compared with the previous year, despite higher staff costs due to wages and higher staff numbers.
Higher DNA, especially due to the terminal opening in Lima led to an adjusted EBIT on the previous year level.
On Slide 16, my last slide for today's presentation, I would like to reiterate our financial forecast for this year.
You reconfirm, our guidance and leave it unchanged compared to our full year and Q1 publication.
This means that we expect passenger growth in Frankfurt, but to remain below 64 million passengers.
Moreover, we expect a moderate increase in our group EBITDA or more precisely and increase in the single digit percentage area.
We expect the net result would be flat to down this year, mainly due to extra gains in the context of the disposal of our shares in St. Petersburg last year.
Yes, we continue to monitor the noncash situation in Ontario.
Regarding our leverage target, we continue to expect the net debt to EBITDA ratio to slightly improve due to the positive EBITDA development and stable net debt.
For the time being officially no dividend payment for 2000 for the 2025 financial year is planned to be distributed in 2006.
However, as Stefan Schulz already mentioned with our full year results there will be some discussions around that point as a supervisor report later this year or early next year.
Depending on the financial performance, whether we are going to pay dividends for the year 2025.
Having said this I'd like to thank you for your attention have a nice day speak to you later goodbye for now.