Q3 2025 Fraport AG Earnings Call - Q&A
At the same time, a very successful nine months period, one of the key highlights certainly what's the regulatory approval of a major construction site terminals Sui in Frankfurt I'm on slide number three.
Speaker #4: But we still have to wait on the final quarter. Whether especially the CAPEX is so far under control, that we are coming close to break even on free cash flow.
Speaker #4: Slightly negative. And that we have a positive outlook for 2026, of course. From today's point of view, I'm quite optimistic that this will work.
So completely approved.
We are officially at least the way to start.
It fits me in their entire property with plant the Frankfurt Airport is now ready for future growth.
Speaker #4: But let's please wait for the final quarter. And then the official decisions and the decision on this will be taken latest by the supervisory board in March.
I will come back on the remaining steps until the opening of that terminal in a minute.
Let's focus on the other key areas of the past period first.
Stefan Schulte: Following the winter season, we very much look forward to a new chapter for Frankfurt Airport, the reopening of Terminal 3. As we discussed before, Terminal 3 will open after the Easter holidays next year. In the meantime, we set a date for the first inner rail flight of our Terminal 3. 23 April will be the first operational day. Until this day, we still have further tasks to do. The toilet test to test the infrastructure started already with our own employees. In January, the test once will commence with people from outside of the Fraport group. By the time of the opening, several thousands of people will have tested the new terminal processes. Simultaneously, commercial operators will work on the completion of the new shop concepts and launches. The security checks are set up, as well as all installations by the police, customs, and all airlines.
Speaker #4: Payout ratio will be for sure less than 40 to 60 percent in the first year or the first two years. But long-term, mid-term, long-term, we want to get back to 40 to 60 percent.
In combination with the progress in Frankfurt, We also completed and opened the first phase of the new Lima terminate in June and added new terminal capacities in Ontario in April.
Besides the Capex projects. We are also pleased with the last summer season.
Speaker #3: Thank you. Can I just ask on CAPEX just a precision? You said Terminal 2 goes until 29/30. So should we expect a level of 700 million euros of CAPEX between 27 and 2030, more or less, on average?
Frankfurt Airport showed a solid dose of around 3%, while our passengers and airline customers at the same time to see better operational quality compared to the previous year.
Speaker #2: It can be so I would, from a today's perspective, the 700 are more the maximum could be even a little bit less than 700.
Youre willing to summer season key International group airports also achieved record levels in Q3 and on a year to year basis.
Speaker #2: Before we ramp up with Terminal 2.
As a result of the operational growth.
Speaker #3: Okay.
Speaker #3: Thanks. The next question
That's an all time high EBITDA in the third quarter and received record inflows. Consequently free cash flow was the highest ever achieved by our company in the third quarter.
Speaker #1: comes from the line of Carlos Caburrasi. From Cabler Cheveux, please go
Despite continued outflows for tumors reenter newly my terminal and the amount of around $150 million.
Speaker #5: Hi, everyone. And thank you for taking my questions. Yes, two on my side. First, on free cash flow, and following up on what Stefan has just commented, you've always mentioned close to break even in 2025, but can you maybe provide a range for your full-year expectation?
Stefan Schulte: In addition to the terminal infrastructure, we also made significant progress in terms of climate protection. Since 22 October, sorry, since 22 October, our photovoltaic plant next to the takeoff runway west has been operational in Frankfurt. 37,000 vertical solar panels generate substantial green electricity, especially in the mornings and afternoons. The new plant is an ideal addition to the photovoltaic system installed on airport rooftops, which reach their peak output at midday. From mid-2026 onwards, another substantial amount of green electricity will be supplied from our wind park power purchase agreement with ENBW in the North Sea. This means that 100% of the electricity demand in Frankfurt will be covered by renewable resources from mid-next year onwards, 10% local photovoltaics, and 90% wind energy.
Having said this we are well on track to deliver on all our financial targets set for fiscal year 2025.
Taking now and look on at our key financial highlights for the third quarter on slide number four.
While headline revenues of $1 35 billion, new were flat on the previous year's level.
Our revenues, excluding 412, FX moved up strongly by 8% compared to Q3 last year.
Reasons for the positive revenue development was the before mentioned traffic goes as well as increases in airport charges and other prices.
From a segment perspective, our international Division showed revenue growth of around 6% was a sweet Frankfurt segments were up even swung our by about 10%.
Moving on the EBITDA increase was clearly higher compared to revenues at more than 20%.
Stefan Schulte: In absolute terms, this will be more than 300 GWh per hour from wind energy, and close to 30 GWh per hour from solar energy. Moving on to the development outside of Frankfurt on slide number nine, the slide shows you the progress of the second terminal construction phase in Lima. As you can see, the second phase, or phase 1B, is well advanced. The long swing pier, which can be used for domestic and international services, is already fully completed. The other extensions of the terminal infrastructure are close to completion. With the second phase, we will increase the terminal capacities from 30 million passengers to 40 million passengers over the next few weeks. Also, the refurbishment of the old runway is well underway and will be done by the end of this year. Lima is well underway.
EBITDA therefore achieved.
All time high figure of 519 million new.
By young the underlying strong business development. We also recorded a positive one off effect of velocity 50 million in New York due to cash specs in connection with the supplementary pension plan.
Here additional payments to close and expect that funding gap or calculated warmly.
Which led to a reimbursement of contributions and support.
Right.
Adjusted for this onetime effect EBITDA Nonetheless.
It's up strongly by our 12% to $540 million bottom line.
Hope result of 350 million you also marked an all time high despite the higher interest expenses and a slightly more negative result for Montana.
Our traffic performance in the third quarter as shown on slide number five.
For the airport showed a solid growth rate of just under 3%.
Stefan Schulte: Antalya Airport, as you know from previous discussions, is also completed. The new capacities have been taken up well by the market. Following the settlement of the dispute with the former duty-free operator, we are also seeing further progress from the retail activities in Antalya. Further growth we also expect from the addition of Kalamata, our airport number 15 in Greece. Here, the team is working closely with the Greek authorities on the concession commencement, which will probably happen during the first quarter of 2026. Coming now to my last slide of the presentation, our group outlook on slide number 10. The outlook shows that we are well on track for the full year. While we narrowed the guidance in terms of Frankfurt passengers to about 63 million, we continue to expect moderate growth in EBITDA in the single-digit percentage range.
In addition to the positive passenger development in the third quarter.
Also pleased to see even an even better terrific performance in October.
At a lower rate of just under 6% all traffic region. So Northern America Africa, Asia, and Europe expect for Latin America, we call it a passenger growth.
Frankfurt Airport. Therefore, now stands at a year to date passenger growth of two 3%. So we are on track to achieve our full year targets.
Outside of Frankfurt goes continued in all of our airports since the third quarter corporate greed recorded a similar you also had to Frankfurt and reached another passenger record.
Particular, the airport of Tesoro, Nicky showed strong momentum of more than 8%.
While also the airports of Copel in Kenya showed goes good close of more than 5% each.
We may have bought recorded a somewhat more moderate modest growth rate at one 2% in Q3. The airport in Lima was negatively impacted by the refurbishment of the old one.
Stefan Schulte: Due to the one-time effect which we recorded in the past quarter, it is now increasingly likely that we will end up rather in the high single-digit percentage area. On an underlying base, however, this shall be more in the mid-single-digit percentage area. As we guided before, our group result will develop at a more subdued pace. The main reasons are the absence of the positive one-off effect from the sale of St. Petersburg last year, and rising interest costs. For the free cash flow, we continue to expect the free cash flow to be close to break even this year. The near-to-break-even free cash flow is expected to have a slightly positive impact on the net financial debt-to-EBITDA ratio, thanks to a growing EBITDA.
And which started in September and <unk> carried out in Cusco, which had a negative impact on the tourist inflows to macro picture.
Brazil on the other side was positively impacted by the reopening of Porto Alegre Airport and doubled as passengers number compared to the last year solar to recover to more than 90% of 2019.
A very positive goal set of 12% and recorded and will be or not be in numerous slides were added during the summer season, and we expect a continuation of this favorable trend for the upcoming winter season.
Our <unk> gateway, but <unk> also saw passenger growth of combined 6%.
Recover rate of 68% or two airports, however, still lag so 2019 levels due to missing passengers from eastern Europe, as a result of civil and new cleaning.
Stefan Schulte: Regarding the dividend, there is no official decision taken, but as we have communicated this oftentimes before, we see a very high likelihood to resume dividend payments as early as this year to be distributed next year. Latest next year, in connection with our full-year result, in March, we will provide you the final outcome of these discussions. Having said this, I would like to hand over to Matthias now for more details on our financial development. Yeah, thank you, Stefan, and a warm welcome also from my side. On my first slide today, slide number 12, I would like to guide you through the cash flow development in the third quarter and our indebtedness at the end of September 2025.
After a weak start of the year anti air but came back into the growth mode at plus 2% <unk>, 5% more passengers compared to 2019, a solid result of our single biggest biggest airport outside of Frankfurt.
In total the group.
Therefore ended at about 6% more passengers since the third quarter compared to last year and are now fully recovered.
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Looking ahead.
We just released a terrific outlook on the Frankford winter season, I'm on slide number six.
For the current winter season, we expect aircraft movements to grow by around 3% in seat capacities Likewise to go at roughly 6%.
Girls will be mainly driven by capacity additions of condo and easyjet. The two carriers clearly increased services and start New awards last summer.
Stefan Schulte: Starting on the left side of the bar chart, you see a strong operating cash flow increasing by 27% year on year, which was driven by a good operational performance, working capital changes, and by the one-off effect in connection with the supplementary pension plan that Stefan has already talked about. However, even if adjusted for this one-off item, the operational cash flow increased by some EUR 90 million, or around 17%. Focusing on the main CAPEX programs in the group, you see a clear trend in Lima where the new terminal has been opened and the investments are coming down quickly, only reaching EUR 38 million in the third quarter. As a comparison, last year in Q3, we still spent some EUR 114 million.
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It's back on growth with the deliveries of the new will be seven to eight 7%.
Following the winter season, we very much look forward to a new chapter for Frankfurt Airport, the reopening of terminal suite.
As we discussed before Timmins III.
Open after the Easter holidays next year and.
In the meantime.
We set a date for the first flight of our terminals to sleep.
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To this day, we still have further task to do the trial towards test to test the infrastructure started already with our own employees and generally the test one.
Stefan Schulte: At the same time, as we heard from Stefan before, we were able to complete construction on our Terminal 3 in Frankfurt, where CapEx in the last quarter amounted to some EUR 119 million. Also, this is still an elevated number. We already reduced CapEx for T3 by almost EUR 60 million if compared to last year's Q3. This shows the reduction in investments also in Frankfurt, as we are now coming to the end of the CapEx program. While the remaining investments were only slightly higher than last year, brick-and-mortar CapEx decreased significantly by 29%. Additionally, dividends from equity consolidated companies, mainly from Antalya, in the amount of EUR 30 million were supportive. Like this, we generated a record quarterly free cash flow of EUR 373 million. This reduced our net financial debt to less than EUR 8.2 billion.
The test once we will commence with people from outside of Sofa Court.
Time, I'll say opening several thousands of people would have tested a new terminal processes.
Continuously commercial operators will work.
On the completion of the new shop concepts and launches.
Security checks are set up as well as all installations by the police customs and all of the items.
In addition to the terminal infrastructure. We also made significant progress in terms of climate protection.
Since October.
The 22nd salary since October 22nd our photovoltaic plant next to take off one way west has been operational in Frankfurt.
37000 vertical solar panels generate substantial green electricity, especially in the mornings and afternoons.
The new plant is an ideal addition to the photovoltaic system installed on Apple <unk> tops, which reached their peak output at mid day.
Stefan Schulte: Correspondingly, we reached a leverage ratio of 5.8x net debt to last 12 months EBITDA, and also our gearing ratio improved by 14 percentage points to 159%. On my next slide, number 13, I would like to give you further details on our indebtedness situation. As mentioned before, our net debt today stands at less than EUR 8.2 billion, which is a net of our EUR 12.1 billion gross debt and a cash balance of more than EUR 3.9 billion. If we add any residual unused project finance and committed credit lines, we even end up at a cash reserve of close to EUR 4.6 billion. At 3.3%, the average cost of debt remained unchanged to the second quarter despite regular refinancing activities and drawdowns from the Lima project financing. As you can see from the chart, around EUR 200 million are still reaching maturity this year in Frankfurt.
For mid 2026 onwards, another substantial amount of green electricity will be supplied from our wind power power purchase agreement.
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This means that 100% of electricity demand and frame for it will be covered by renewable sources from next year onwards, so 10% local photovoltaics and 90% wind energy and.
and second to use the other proceeds to, to bring down the
um,
Indeed, of the group.
Regarding the earnings call and thanks for your questions. Um,
In absolute terms this will be more than 300 gigawatts per hour from wind energy and close to 30 Gigawatts power from solar energy.
Ontario is now in a difficult phase between Antalya's old concession and Antalya's new concession.
Moving on to the development outside of Frankfurt on slide number nine.
Um, with some of the negotiations and uh, we see dhmi over there.
Slide shows you the progress of the second terminal construction phase in Lima.
um, so in principle, yes, this year was a little bit
As you can see the second phase of phase one b is well advanced.
The long swing peer, which can be used for domestic and international services is already fully completed.
Disappointing regarding traffic growth. But I know that, uh, a lot of activities started in Turkey, in Ontario, and we have seen already a very, very good October.
The other extensions of the terminal infrastructure are close to.
To completion.
It's just one month, but with the girls in October, there was a very positive 9% increase.
The second phase, we will increase the terminal capacities from 30 million passengers to 40 million passengers over the next few weeks.
Stefan Schulte: In the meantime, since the end of September to date, the refinancing of the majority of this has already been agreed on. Now, coming from the group to our segment reporting, starting with the Q3 numbers in aviation on slide number 14. After a good first half of the year, the positive trend in revenue generation continued in our operationally and financially most important third quarter, driven by pricing and volume effects at Frankfurt Airport. Therefore, total revenues increased by some 11% or EUR 38 million, while aviation charges went up 9%, which corresponds to EUR 25 million. The residual increase in revenues came from security charges, which grew strongly by more than 20% due to the new reimbursement system based on cost coverage on a full-year basis and not on a monthly basis like in the past years.
It's, uh, November-December. It's not as important any longer because the traffic numbers are still okay, but they are coming down. The high season is over.
Also the refurbishment of the old one way is well underway and will be done by end of this year. So Lima is well underway.
Ontario Airport as you know from previous discussions. This also completed two new capacities have been taking up whereby the market. Following the settlement of the dispute with the former due to free operator, we are also seeing forgo further progress from the retail activities in Ontario.
Further goes we also expect from the addition of color matter. Our airport number 15 increase here. The team is working closely with legal authorities on the concession commencement, which would probably have been having Julian so first quarter of 2026.
Um, so we will, we have to see what's what's really the final number is, uh, on a beta. But, but roughly something about 40, 50 million could be on on habitat 11, uh, for this year 2025, um, and then it should go up but the real step out will be from 2027 onwards. Uh, not earlier because it's the in between time between the 2 concessions. Their dividend payments. We are not expecting for the next years. Um, as far as I'm informed but native materials. We have better numbers than I know. This is correct, that's correct. Okay, correct.
Uh, Carlos to be precise, that was referring to the new Antalya confession.
Coming now to my last slide of the presentation, our group outlook on slide number 10.
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And we are well on track for the full year.
While we narrowed the guidance in term of Greenfields passengers to about $63 million.
Stefan Schulte: As we mentioned before, we received an unscheduled one-time refund in relation to our supplementary pension plan, which reduced the staff cost in all of our four reporting segments. This refund was based on a new assessment by an insurance actuary, which meant that we overpaid the pension plan in the past couple of years. Having said this, around EUR 14 million positively impacted the staff cost in aviation. Therefore, personnel expenses decreased by EUR 9 million in the third quarter. If adjusted for the one-off item, expenses increased by some 7%. As a result of the good operational growth and the one-off item, EBITDA increased to EUR 162 million, or 25%, and EBIT amounted to EUR 125 million, an increase of 37%. Adjusted for the one-off in staff cost, underlying growth rates still stood at 14% and 22%, respectively.
Okay, okay, thank you, have 2. Uh, the numbers I mentioned on the entire 1 numbers. Do you have some? I don't know at the moment. So yeah. Um, dividends uh, we guide for this year, high double digits. And uh, we also expect more of the same next year.
No. Okay.
We continue to expect moderate growth in EBITDA in the single digit.
Up to 100 million. Yeah, sorry.
But not to consolidate number.
Percentage range.
Okay, thank you.
Due to the.
One time effect, which are recorded in the past quarter. It is now increasingly likely that we will end up was in the high single digit percentage area.
The next question comes from the line of tobs. From from bursting, please go ahead.
Hello.
On an underlying base. However, this share be more in the mid single digit percentage area.
I have just 1 question on ground handling, and the Abra margin was 16% in Q3 adjusted. This is around 9%.
As we guided before our group result will develop at a more subdued pace. So.
Um, when I compare this to the 13.0% in Q3 2019, there is still sort of significant room for improvement.
The main reasons the absence of some positive one off effect from the sale of some bit of book last year and rising interest costs.
and now considering the reversal of the higher market share which should go down to 90%, as you said earlier, uh, when you see the annual Abida margin for ground handling settling,
For the free cash flow, we continue to expect the free cash flow to be close to breakeven this year.
Um, is this around the 2019 level of 8.5%? When would you expect to actually get there? Thank you.
The near to breakeven free cash flow is expected to have a slightly positive impact on the net financial debt to EBITDA ratio, thanks to growing EBITDA.
Regarding the dividend.
Stefan Schulte: Now, jumping from aviation to non-aviation on my next slide, our retail and real estate segment. In the third quarter, we incurred a revenue increase of 3.4% or EUR 5 million. Out of that, the retail business contributed about half of the growth, which corresponds to an increase of 4.2% over last year's third quarter. The positive development is based on the volume growth in Frankfurt on the one side, and the increasing spend per passenger from EUR 3.02 to EUR 3.06 on the other side. This development was primarily driven by higher advertising revenues in the quarter, which grew from EUR 0.58 to EUR 0.74 on a per-passenger basis, an increase of 28%. Details about the retail split can be found on my next slide. Also, parking showed a strong revenue increase again over the summer season, growing by more than 5%.
There is no official decision taking part.
As we have communicated is often times before we see a very high likelihood to resume dividend payments as early as this year to be distributed next year.
What is 8.5%? I don't know at the moment, it will be a little bit less, I think, but we expect a big increase on the ability aside in 2027 and 2028 due to contract negotiations, with our main customers. Um, our main customer. This contract negotiation started already. I think we will update you over the term of the next 6, 9, 12 months. Um because uh the situation of the actual contract and
Last latest next year in connection with our full year result, so in March we will provide you the final outcome of these discussions.
Will not be in early easy solution. So they are tough negotiations.
Okay, thank you.
Having said this I would like to enter over to materials now for more details on our financial developments.
The next question comes from the line of Dario Mayer from BNP Paribas. Please go ahead.
Yeah. Thank you Stefan and the warm welcome also from my side on my first slide today Slide number 12, I would like to guide you through the cash flow development in the third quarter in our indebtedness at the end of September 25.
Hi, good afternoon. Um, just one question pulling up for what early? It was asking about the CapEx.
Just to make sure I understand. So, uh, the maintenance capex is, uh, $500 million.
Uh, but then you mentioned the $700 million.
Starting on the left side of the Bar chart, you see a strong operating cash flow increasing by 27% year on year, which was driven by a good operational performance and working capital changes and by the one off effect in connection with the supplementary pension plan that Stefan has already talked to.
Uh, kind of long-term.
Um, so yeah, I just want to clearly understand what is 700 million. How long for whether it's a brick and mortar capex, or also include fixed, concession payments. And so on, just to be very clear. Thanks.
Stefan Schulte: The one-off item from the supplementary pension plan reduced staff cost in retail and real estate by some EUR 4 million, which led to decreasing personnel expenses. Adjusted for the effect, staff cost increased by around 7%. In addition to that, other OPEX benefited from a reimbursement of utilities, which is why also this line item decreased compared to the previous year's quarter. Based on those effects, EBITDA and EBIT ended up strongly at EUR 113 million and EUR 89 million, respectively. Moving on to our ground handling segment on slide number 17 and starting with a positive message here. As you can see on the slide, we changed our guidance for the ground handling segment and now expect to reach a positive EBITDA in 2025 after a good Q2 and an even stronger Q3. Now, looking at the main drivers of this development.
Walt.
However, even if adjusted for this one off item the operational cash flow increased by some $90 million.
Just when we talk about capex, we are focusing on brick and mortar capex. Concessions are would be concession, payments would be on top of it.
All around 17%.
Focusing on the main capex programs and the group you see a clear trend in Lima, we have the new terminal has been opened and the investments are coming down quickly only reaching 38 million euro in the third quarter.
As a comparison last year in Q3, we still spend some $114 million.
At the same time as you heard from Stefan before we were able to complete construction on our terminal three in Frankfurt, where capex in the last quarter amounted to some 119 million euro.
Also this is still an elevated number we already reduced capex 43 by almost 60 million euro if compared to last year's Q3.
This shows the reduction in investments also in Frankfurt SCR now coming to the end of the Capex program.
So first of all, we have now a ramp down again 1.1 this year about 900 next year and 700 in the following year, this includes still payments for terminal 3. So we are from a technical perspective, the construction is ready. But nevertheless, there are residual Works which have to be done and then you have always a lot of, uh, discussions between the construction companies on 1 side. Regarding the final builds. This takes time in some cases as a settlement immediately after uh, the finalization of the work. Sometimes it take 12, even 18 months and you always have some residual Works which have to be realized. And in in let me say. In in, in the case of such a huge project, you have between there's always a delay between the last payment on 1 side and the last construction Works in a range of 12 up to 18 months. And this means
Looking forward again. The terminal is is is is through
While the remaining investments were only slightly higher than last year brick and mortar capex decreased significantly by 29%.
Stefan Schulte: As mentioned with our Q2 publication, there are several factors influencing the positive revenue development. Besides growing traffic volumes and higher prices, we continue to record a higher market share due to the continued slow ramp-up of Swissport. On the other side, of course, the ground handling benefited significantly from the reimbursement of the pension fund. Staff cost amounted to EUR 128 million and therefore stayed on the previous year's level despite an increase in FTE numbers and wage increases. If adjusted for the EUR 16 million one-off effect, personnel expenses increased by some 14% over last year's third quarter. As that compared to last year, our financials are still influenced by higher FTE numbers. However, if we compare Q3 with the second quarter 2025, you see that our staff number decreased further.
But there are still payments in 26 can be up to 200 million.
Additionally, dividends from equity consolidated companies, mainly from anti young India.
In the amount of 30 million Euro will support them.
Like this you generated a record quarterly free cash flow of 373 million Euro.
This reduced our net financial debt to less than $8 2 billion Euro.
Correspondingly, we reach a leverage ratio of five eight times net debt to last 12 months EBITDA.
This is always part of our total consideration of Maximum 4.2 4.3 billion which we already set, including reserves Etc and there will be no overrun of this number. So, looking forward, if there would be a 200 million further capex in next year, this is part of the 4.2 4.3 total budget for T3. And um also looking into 27 and these 700 million there are still in our financial plan, some final payments uh delayed payments for terminal 3. So with other words
And also our gearing ratio improved by 14 percentage points to 159%.
On my next slide number 13, I would like to give you further details on our indebtedness situation.
the the discrepancy between 700 and 500 million are on top elements. The 500 million is from a today's perspective, the maximum of maintenance capex for all group assets in our portfolio, including Frankfort, including all our assets.
As mentioned before our net debt today stands at less than $8 2 billion Euro which is the net of our $12 1 billion gross debt and a cash balance of more than $3 9 billion Euro.
The next question comes from the line of Andrew. Lobenberg from Barclays. Please go ahead.
Oh, hi there.
Stefan Schulte: In the meantime, over the last two quarters, we reduced our ground handling personnel by more than 100 people. At the same time, we are becoming less dependent on third-party providers by decreasing the amount of external personnel, which is reflected in other OPEX that remained on previous year's level despite inflation. All in all, this led to a positive EBITDA of EUR 37 million in Q3. If adjusted for the personnel one-off, we generated an underlying EBITDA of some EUR 21 million, so we more than doubled the result of Q3 2024. Now, coming to the last slide of today's presentation, slide number 18, concluding with our international activities and services segment.
If we add any residual unused project finance and committed credit lines, we even end up.
Um, can you tell us a little bit about Terminal 3 in the airlines? There was some talk.
And a cash reserve of close to $4 6 billion Euro.
Uh, I think at the last quarter's presentation that Condor and Turkish might move.
At three 3% the average cost of debt remained unchanged to the second quarter, despite regular refinancing activities and draw downs on the EMR project financing.
But I, I think when the uh, opening date was announced for T3, they were not included. So um, do you think you're going to get those over to T3 or not? Or, or when will we know?
As you can see from the chart around 200 million Euro are still reaching maturity this year in Frankfurt.
And a second question would be around Lima.
In the meantime, so since end of September to date, the refinancing of the majority of this has already been agreed on.
Now coming from the group to our segment reporting starting with the Q3 numbers in aviation on slide number.
And I think at the time of the deep dive, you told us that there were plans to introduce a connecting passenger fee that should be supportive to the airport. Charges notwithstanding the existing regulatory structure of RPI minus 3, I think from memory, RPI, I think.
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Building up quite a big campaign against that connection fee.
After a good first half of the year the positive trend in revenue generation continued in our operationally and financially most important third quarter.
So, um, how confident are you? Um, that it can come to pass.
Stefan Schulte: Looking at the top-line effects, you see that the revenues overall decreased due to the fact that the IFRIC 12-related revenues came down by more than EUR 100 million again in Q3 due to the completion of the terminal in Lima. More relevant, of course, is to consider the underlying revenues, which performed nicely with an increase by around EUR 30 million, or 6%, bearing in mind the headwinds from exchange rate developments, especially in Lima, Brazil, and the US. On the cost side, the segment's performance was influenced by the Frankfurt services, which benefited from the premium refund and decreased the staff cost to EUR 83 million from EUR 90 million last year. Adjusting for the EUR 15 million one-off effect, personnel expenses increased by around 9% overall.
Driven by pricing and volume effects at Frankfurt Airport.
Therefore, total revenues increased by some 11% or 38 million.
And then also, if if we look at the, I think the retail Revenue, uh, in this last quarter, didn't seem to move a great deal in Lima, is this, this a timing matter or have we just not got enough space open yet in in, uh, in the new terminal. Thanks.
While aviation charges to wind up 9%, which corresponds to 25 million.
The residual increase in revenues came from security charterers, which grew strongly by more than 20% due to the new reimbursement system based on cost coverage on a full year basis.
I start with the question on Terminal 3. Um, you're absolutely right. We will start on 23rd of April and then over 4, waves up to the summer holidays. We'll move all airlines out of Terminal 2 in the first step, uh, 2 Terminal 3. So that's excluding condo. It's excluding, um,
Not on a monthly basis like in the past years.
As we mentioned before we received an unscheduled onetime refund in relation to our supplementary pension plan.
Which reduced staff cost in all of our four reporting segments.
This refund was based on a new assessment ban insurance actuary.
This meant that the overpaid the pension plan in the past couple of years.
Stefan Schulte: As a result, the segment's EBITDA increased by some 15% to EUR 281 million, or by 9% if adjusted for the cost-saving one-off item. The increase in D&A to EUR 72 million was especially driven by the terminal opening in Lima and led to an EBIT of EUR 209 million. This translates into an increase of 9%, or 2% if adjusted for positive one-offs. With this, I would like to conclude today's presentation and thank you for your attention. We look forward to the Q&A session this afternoon. Have a nice day, and goodbye for now.
Having said this around 14 million positively impacted staff cost in aviation.
Turkish Airlines or excluding any other Airline out of Terminal 1 there. After the 1 or the other Airline was mentioned, maybe condo, um, could move to Germany 3, but that's the early at the moment. Um, discussions are ongoing, we will see, um, but I can't confirm it today. Um, if at all it would be formed 2007 onwards, it would make a lot of sense for condo also fast, but still discussions are ongoing.
Therefore personnel expenses decreased by 9 million euro in the third quarter.
Regarding Lima. Um, yes, you are right um, that we
If adjusted for the one off item expenses increased by some 7%.
As a result of the good operational growth and the one off item EBITDA increased to 162 million euro or 25%.
Have the right by the concession contract for connecting passenger fee. Um, there is a big debate about that, um, started by the ellanse, um, and we're in discussions with the concession ghenter, um, which way it could be introduced, um, or if there another way, uh, to be introduced.
And EBIT amounted to 125 million Euro an increase of 37%.
Adjusted for the one off in staff cost underlying growth rates still stood at 14% and 22% respectively.
Whether it's, uh, starting an OC year, we have to see. Um, it's open. Maximum discussions are ongoing, and we will keep you updated as soon as we know which way it's going ahead.
Now jumping from aviation to non aviation on my next slide our retail and real estate segment.
It's this, uh, connecting passenger fee, or whether it's three calculations into the normal fees. We have to see which way the solution at the end is, but we are in discussions there with the government of the concession. So, with the state,
In the third quarter, we incurred a revenue increase of three 4% of 5 million Euro.
Out of that the retail business contributed about half of the growth, which corresponds to an increase of four 2%.
Over last year's third quarter.
In retail, in my opinion, it is just the normal work to get the passenger streams and the shops optimized. All of that will take some time; that's normal with a new terminal. We need to adapt to one or the other topic, but we are quite optimistic there and also in discussions with...
The positive development is based on the volume growth in Frankfurt on the one side and the increasing spend per passenger from three euro and <unk> to <unk> and <unk> on the other side.
Uh, what's the due to free operator? And so on? Um, it will that we should see further also over the next years.
And you have to see when you're looking at the FDA contribution from Lima, we have three.
This development was primarily driven by higher advertising revenues in the quarter, which grew from 58 to <unk> 74 cents.
On a per passenger basis, an increase of 28%.
Drivers or 3 levers on 1 side. It's in the moment. The number of passengers, which is temporarily reduced by the refurbishment of the old Runway. So these leads to a temporary limitation of movements.
Details about the retail split can be found on my next slide.
Also parking showed a strong revenue increase again over the summer season growing by more than 5%.
That's the reason why we have now a small reduction of passenger numbers. This will go straight into strong positive numbers with the beginning of next year. So, second, of course, we have this U.S. dollar impact.
The one off item from the supplementary pension plan reduce staff cost in retail and real estate by some 4 million Euro.
Uh, because the most valuable passengers are the Americans flying into Lima to stay in Peru or...
Which led to decreasing personnel expenses.
Adjusted for the effect staff costs increased by around 7%.
In addition to that.
Using my airport as a stop over um location for other destinations and uh looking just on the retail numbers, they are very good but again, spoiled by a little bit temporarily reduced passenger numbers on 1 side.
Other opex benefited from.
Reimbursement of utilities, which is why also this line item decreased compared to the previous year's quarter.
And um, the US dollar negative impact on the upper side.
And higher OPC due to the opening of the terminal, of course?
Compared to the old terminal.
Based on those effects EBITDA and EBIT ended up strongly at $113 $89 million respectively.
Moving on to our ground handling segment on slide number 17, and starting with a positive message here.
The next question comes from the line of Graham Hunt from Jefferies. Please go ahead.
As you can see on the slide we changed our guidance for the ground handling segment and now expect to reach positive EBITDA in 'twenty five.
After a good Q2, and an even stronger Q3.
But now looking at the main drivers of this development.
As management with our Q2 publication there are several factors influencing the positive revenue development.
Besides growing traffic volumes and higher prices, we continue to record.
Higher market share.
Due to the continued slow ramp up of this part.
On the other side of costs the ground handling benefited significantly.
From the reimbursement of pension funds.
EPS payout was the only, um, approach you would take, uh, to shareholder distributions or if if you would consider, um, a different policy just given non-cash charges of stepping up significantly from next next year. Uh, just wanted to understand your thinking there around. Still tying that to earnings. Thank you.
Staff costs amounted to $128 million and therefore stayed on the previous year's level. Despite an increase in FTE numbers and wage increases.
T3. Um, is always mentioned. The the Opex,
Is it higher than T2 because it's a huge terminal?
If adjusted for the 16 million euro or one off effect person.
Some more than twice as capacity compared to terminal.
so, the
Personnel expenses increased by some 14%.
Over last year's third quarter.
Opex increase is a double-digit million amount.
Assets compared to last year.
Our financials are still influenced by higher FTE numbers.
However.
If we compare Q3 was the second quarter 25, you will see.
Uh, per Anam, compared to the status quo on 1 side. But on the other side, of course, and the the Headroom for, for growth, when, when the passengers are kicking in. So to say in these enhanced capacity,
See that our staff number decreased further.
In the meantime over the last two quarters, we reduced our ground handling personnel by more than 100 people.
Dividends... oh, I forgot your question. Correct. We first focus on the first dividend payment and restart the dividend payments. Then we will see how the business is developing.
At the same time, we are.
Becoming less dependent on third party provide us by decreasing the amount of external person needle.
Which is reflected in other opex that remain remained on previous year's level despite inflation.
All in all this led to a positive EBITDA of $37 million in Q3.
Will be in the first year, for sure, focusing on EPS. So on on, uh, the results and Expos, um, on dividend payments because we also have and want to bring down somewhere at the depth. Um, and there are no plans from today's perspective for the next 2, 3, 4 years, uh, to make any shareholder repayments or something else, but it will be focused on dividend payments at least for the next 2 3, 4 years.
Thank you.
If adjusted for the personnel one off we generated an underlying EBITDA of some 21 million. So we more than doubled the result of Q3 2024.
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Now.
The next question comes from the line of Ashish Keaton from Citigroup. Please go ahead.
Coming to the last slide of today's presentation slide number 18, concluding with our international activities and services segment.
Looking at the top line effects Youll see that the revenues overall decreased due to the effect that the <unk>.
Hello everyone. Thanks for taking my question. Uh, I just wanted to understand if you can provide any initial thoughts about traffic growth for 2026. And secondly, how do you expect the retail, uh, Revenue to grow?
Thank you.
<unk> 12 related revenues came down by more than 100 million Euro again in Q3 due to the completion of the terminal in Lima.
So more relevant of course is to consider the underlying revenues, which performed nicely.
With an increased by around 30 million euro or 6%.
Bring in mind, the headwinds from exchange rate developments, especially in Lima, Brazil, and the U S.
Signals, especially for more main customer, loved ones are. But also from condos, the 2, biggest customers here in Frankfurt. Um, that's the woods. Probably see a bigger goal, so it's in this year but uh, to be quite honest, that's too early in those discussions and we will give you the guidance and uh, beginning of next year. Um,
On the cost side, the segment's performance was influenced by the Frankfurt services.
Which benefited from the premium refunds and decrease the staff cost to 883 million from $90 million last year.
On today's point of view, I'm optimistic that we see in Frankfort, a stronger roles, but whatever it means, that's too early, I'm too long in that business. Uh, having seen too many sickness,
Adjusting for the 15 million Euro one off effect personnel expenses in creased by around 9% overall.
Regarding retailer looking forward. So we have the, the, the positive impact from from terminal 3 with this huge and and and nice retail Marketplace.
As a result, the segments EBITDA increased by some 15% to 281 million euro or by 9% if adjusted for the cost saving one off item.
Yeah.
The increase in DNA to 72 million Euro was especially driven by the terminal.
In Lima.
And as we set in the past, we expect an increase in the spend parts of these passengers moving from Terminal 2 to Terminal, 3 of about 50%. And just as a reminder, the the spend Pucks in the moment in T2 is a is above 3. Not because the retail space is great. It's it's it has to do with the, with the value of the passengers, which today we are operating in terms of the tool.
And led to an EBIT of 209 million Euro.
This translates into an increase of 9% or 2% if adjusted for positive one offs.
With this I would like to conclude today's presentation and thank you for your attention. We look forward to the Q&A session. This afternoon have a nice day and goodbye for now.
So we are talking about 10 million passengers, moving from T2 to T3. Full year effect in, um, 27. And then the expectation is that they spend 50% more than this. What they've spent, um, in the past internal tool,
Thank you.
Yeah.
The next question comes from the line of Arisha. Ramo Morti from Des Bank, please go ahead.
Yeah. Hi everyone. It's Hari from Deutsche Bank. Um congrats on a good set of print especially on the free cash flows. Uh, just 1, quick question there, if I'm trying to build, uh, what your free cash flow might look like for 2026, uh, maybe a starting point would be, you know, 200 million lower, uh, kex and then probably a 100 million more in ibida, uh, going by what you indicated when you shared the plans for, uh, 2030 targets, uh, you know, 100 million increment each year. So, uh, does this sound like a fair, uh, Bridge. Uh, from this year's FCF to next year's? Or is that anything else that we need to bear in mind?
A $100 million reduction in capex, which has a positive impact on the free cash flow on the other side. Abda will be higher in 2026 compared to 2025. But today it's too early to say what the amount of the expected FDA is. We will tell you when we come with Q4 numbers, but the main driver, of course,
Uh, the $200 million capex reduction.
Which we are going to see in next year.
Thank you, and maybe just 1 more, uh, on the uh, 2030 Targets on ebit dark. Uh, any color uh, from here on as to how that might evolve, uh, in terms of, you know, the the mix from volumes and price and um, retail regulated versus unregulated
No, no, no. We, we always said about 2 billion and this is stable and you mentioned volume and and fees. And exactly as you said this is always you have to to to find an equilibrium between uh the volume growth and 1 side and the fee. Escalation on the other side. This is a little bit.
Like an equilibrium in a pipeline.
Understood, thank you.
The next question comes from the line of Nicolas Mora from Morgan Stanley. Please go ahead.
Yes, good afternoon. Just a couple, um, first on the cost side. Uh,
You've got you don't really great strides on especially in aviation also to a less extent on Grand and you you see yourself being able to continue to it's a mostly outperforming compressed. The the waste cost, within Aviation into the back end of the year and 26. Is there anything?
Special, you think about implementing into next year? That would be the first question.
Second coming back on capex. Um, thinking about the 700 million you've been talking about from 27,
So, imply, this there's around 200 million kind of sticky. Internal International capex in there so that must be what half of it must be Greece. If I'm correct. Um,
and uh,
I had the last one yesterday on T2. Um,
they seems to be a little bit of a disagreement with a few clients. I mean is is the project as of today with what you know, from the Stanford gross plan is the project canned or or is this still live but but basically kind of with no clear, uh, deadline just wanted to get a clear grip on whether or not this is still on or
basically up in the air. Thank you.
I get your question correct on, uh,
Stuff of course Aviation um this is also question then we believe that the number of stuff will be roughly stable, there will not be a big development on that. Um and on the price side you should probably calculate plus 3 plus 4%, something like this.
Um, also the higher rates we have to do, for example, for ground handling, we are in that hiring process but it will also be compared to the total number of small number. So we need maybe another 50 to 80 people, um, maybe 100 people because of terminal 3. But we have an efficiency program running against this.
It's something in the in the air 50, people price increase also, 3 4 or 5%, something like this, in the lower level of stuff, uh, the price increases normally higher than the more higher paid people. That's something what I could give you is the best guidance at the normal and for, um, Aviation and ground services.
and regarding carpex, um,
again we we see and we calculate about 500 million for the whole group as a as a base, Carex amount like white noise and there's no
Exact plan that's saying in in in 3 4 years, we are taking 70% for Frankfurt and 30% for the international activities. This is more or less a budget which we have and which we are going to allocate to to our assets and uh having a good track record. What are the
topics, uh, maintenance requirements. We know that this is a sufficient.
If it's in our portfolio.
But the MS.
On that international vacation, especially Greece, may you, you've been you the local managing the including the price of the past year now.
Talking of the capex, the expansion uh, more Runway investment and so on.
Uh, is there isn't there a step up?
Into 2627 2029 or or that's just within the within the overall envelope. This is in the overall number as a part. I mean, you look back when we, when we went to refurbish and expand the existing 14 airports, we had a total consideration of I think. As far as I remember 330 million euro for all 14,
Um, airports/terminals. And you see the amounts increased to expand.
Uh, they are relatively modest and they are part of these big boxes.
Okay. And last 1, if I met on
Just some Grand link. Uh I think Stephan you mentioned that the the the conversation with with lansa was was difficult. Do you feel your
well, more confident, less confident, free months ago on on the ability to uh,
To keep the contractor repriced upwards.
Yes, of course, we are confident.
But I just try to to give you the signal and that was clear, it will be a difficult discussion, a difficult negotiation and such a difficult negotiation will take time um to shoot price increase. We need because of the inflation and the price. Uh, the stuff cost increases over the recent 5 6, 7 years. Um, so that's not um,
Not a negotiation um, with 1 glass of wine or whatever you want to call it. Uh, it will take time. And uh that's the reason I gave the indication. It will take 6 9, 12 months, um but we will keep you updated but we are optimistic. We have to get through this.
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The next question comes from the line of Martin Vital from Bank of America. Please go ahead.
Uh, good, good afternoon. Um, a couple of questions. Firstly, uh, considering uh the improved 3, cash flow, do you have any appetite to perhaps consider some new growth opportunities, um, outside of outside of Germany, I'm talking about potential acquisitions.
of new assets or or there is nothing new
On that front. Um, and and, and sorry to come back on capex and and apologies, if that was already already addressed, but could you just reconfirm that 500 million of Base maintenance that that you've been indicating does? Does it include refurbishment of Terminal 2?
Or or that would be on top. Thank you.
I'll start regarding new concessions as nothing really on the table. I know from the market that
Uh, um, airports in Egypt could come up. We would have at least a close, look at this 1, but because it's an attractive Market, but it's much too early because we haven't seen anything on detail. We don't know which way they are going ahead. But that Egypt is a very attractive Market, especially on the tourist side. So, that's absolutely clear but it's too early at the moment to say anything on that 1,
And, uh, second question, regarding topics of 500 is a realistic slash conservative number regarding all maintenance capex, requirements for all assets.
Of course, T2 comes on top, but the total consideration for T2 is allocated for a period of up to 6 7 years.
Or 8 years.
Thank you.
Ladies and gentlemen, that was the last question I will now like to turn the conference back over to Christophe nanka for any closing remarks.
So, thanks everybody for participating.
For your good questions.
If there are any further questions, please give us a call later in our app. And yeah, I wish everybody a good rest of the day. Thanks.
Ladies and gentlemen, the conference is now over. Thank you for choosing Kusco, and thank you for participating in the conference. You may now disconnect your line. Goodbye.