2Q 2013 Result - Finnair/media/Files/F/... · Market Environment remains challenging • Passenger...
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2Q 2013 Result
Finnair 2Q 2013 Result, 14 Augustl 2013
Profitable growth in Q2, productivity improvements still required
• Our target is profitable growth, despite challenges
• 140 million euros of savings achieved ahead of schedule
• New routes Xian & Hanoi have delivered according to plan
• Productivity improvements still required to achieve profitability and growth targets
• The completion of previously announced, additional savings program of 60 million euros is vital for our future
• Profitable growth could enable creation of new jobs
Finnair 2Q 2013 Result, 14 Augustl 20132
Market Environment remains challenging
• Passenger markets robust, capacity growing less than traffic– Growth in international passenger travel continues to be driven by
Asia-Pacific region, Europe picking up
• Air Freight Volumes showed signs of sife in June
• Growth in the BRICS economies, including China, is slowing– Growth in passenger traffic driven by leisure travel
• Oil prices remain high
Finnair 2Q 2013 Result, 14 Augustl 20133
Finnair 2Q 2013 Result, 14 Augustl 20134
Strategy execution yielding results
Growth continued in Q2
• Turnover grew by 2.6% – Q2 Turnover 609.7 M€– Operational EBIT 6.1 M€ (16.2 M€)– Euro-denominated revenue impacted by the weakening of Yen– EBT improved by the sell of Norwegian shares and was 21.2 M€
(-24.0 M€)
• Strong load factors in Q2– Unit revenue per available seat kilometre (RASK) -3.1%, at constant
currency -1.7% – passenger load factor (PLF) 78.2% (+0.7%-p) – yield per revenue passenger kilometre (RPK yield, -4.5%) down
• Sound financial position– Equity ratio 32.7%– Gearing 13.3%– Adjusted gearing 70.4%– 425 M€ short-term cash and cash equivalents as per 30 June 2013
Finnair 2Q 2013 Result, 14 Augustl 20135
Turnover growing steadily
Quarterly turnover, € million
6 Finnair 2Q 2013 Result, 14 Augustl 2013
Quarterly Operational EBIT, € million
-60
-40
-20
0
20
40
60
2009 2010 2011 2012 2013
Q1 Q2 Q3 Q4
0
100
200
300
400
500
600
700
2009 2010 2011 2012 2013
Q1 Q2 Q3 Q4
*Operational result (EBIT), excluding non-recurring items, capital gains and changes in the fair value of derivatives and in the value of foreign currency denominated fleet maintenance reserves
Load factors at a healthy level
North America
ASK 5,5 %
RPK 1,4 %
PLF -3,4 %-p
Traffic revenue* 2,3 %
Leisure traffic
ASK -1,5 %
RPK 0,0 %
PLF 1,3 %-p
Traffic revenue* -6,8 %
Europe
ASK 10,4 %
RPK 9,7 %
PLF -0,5 %-p
Traffic revenue* 4,0 %
Total Traffic
ASK 5,6 %
RPK 6,5 %
PLF 0,7 %-p
Traffic revenue* 1,7 %
Asia
ASK 3,9 %
RPK 6,6 %
PLF 1,9 %-p
Traffic revenue* -1,1 %
Domestic
ASK 4,3 %
RPK 2,6 %
PLF -1,1 %-p
Traffic revenue* 15,3 %
Cargo
ATK -2,2 %
RTK 0,2 %
OLF 1,9 %-p
Traffic revenue -5,4 %
Asian share 50% of the total capacity
* passenger revenue
7Finnair 2Q 2013 Result, 14 Augustl 2013
Passenger revenue split
42%
39%
8%
7% 4%
Asia
Europe
Domestic
Charter
North Atlantic
*Passenger revenue
€140 million of targeted savings achieved, 6 months ahead of schedule
25%
24%
14%
10%
9%
8%
8% 3%
Target €140 million
maintenance staffother leasesales cateringground handling fuel
Finnair 2Q 2013 Result, 14 Augustl 20138
230%
80%
131%
129%
195%
128%
68%
50%
100%
15%
7%
2%
3%
11%
0%
9%
0% 100% 200%
fuel
groundhandling
catering
sales
lease
other
staff
maintenance
TOTAL
Achieved savings to target
achieved implemented to target
Supplementary 60 Million euro savings program target includes all functions
9
17m€18m€
8m€17m€
Collective labour agreements are the best way to create sustainable future together with the personnel• Wage structures• Working hoursSavings target includes all functions
= Pilots = Cabin crew
= IAU personnel groups = Other functions and personnel
Outlook for 2013 – change in turnover guidance
New guidance:
• The uncertain economic outlook in Europe, weakened consumer demand and slower growth in Asia increase the uncertainty of the future development of air traffic. Fuel costs are expected to remain high in 2013 as well, and the demand for air traffic is estimated to grow moderately.
• Finnair estimates its 2013 turnover to be approximately at the 2012 level due to the pressure that the weak yen puts on the Japan generated unit revenues. Unit costs excluding fuel (CASK excl. fuel) are expected to decrease compared to 2012. Finnair estimates that its operational result will show a profit in 2013.
Finnair 2Q 2013 Result, 14 Augustl 201310
Finnair 2Q 2013 Result, 14 Augustl 201311
Financials
Q2 Key figures
Key Figures Apr-Jun 2013
Apr-Jun2012
Change %
Jan-Jun 2013
Jan-Jun 2012
Change %
Turnover and result
Turnover EUR million 609,7 594,4 2,6 1 202,9 1 186,2 1,4
Operational result, EBIT EUR million 6,1 16,2 -62,4 -11,6 -7,3 -58,5
Operational result, % turnover % 1,0 2,7 -1,7 %-p -1,0 -0,6 -0,3 %-p
Operating result, EBIT EUR million -11,8 -16,6 28,9 -25,6 -35,3 27,6
EBITDAR EUR million 51,5 65,7 -21,7 79,6 92,1 -13,5
Result before taxes EUR million 21,2 -24,0 188,4 2,5 -48,7 105,2
Net result EUR million 17,0 -18,7 190,9 1,2 -37,9 103,3
Balance sheet and cash flow
Capital expenditure, CAPEX EUR million 27,0 10,3 162,1
Net cash flow from operating activities EUR million 78,6 92,3 -14,9
Share
Share price at end of quarter EUR 2,70 1,75 54,3 2,70 1,75 54,3Earnings per share, from the result of the period* EUR 0,13 -0,15 189,7 0,01 -0,30 102,7
Earnings per share EUR 0,11 -0,16 167,1 -0,04 -0,33 88,7
12 Finnair 2Q 2013 Result, 14 Augustl 2013* Before Hybrid Bond interest
Operational EBIT build-up in Q2 2013
Finnair 2Q 2013 Result, 14 Augustl 201313
Mill. Eur
16,26,1
-0,3
10,0
-0,7
-11,7
-0,3-3,1
-13,6
17,1
11,9-10,2
-9,2
0,0
10,0
20,0
30,0
40,0
50,0
60,0
Airline business: RASK & CASK development Q2 2013
-3,1 %
-0,7 %
-2,4 %
3,4 %
-6,7 %
-9,7 %
-3,6 %
6,0 %
-10,6 %
3,8 %
6,4 %
-20% -15% -10% -5% 0% 5% 10% 15% 20%
RASK, unit revenue
CASK, unit cost
CASK, excl. Fuel
Fuel cost
Personnel
Depreciation & leasing
Traffic charges
Maintenance
Ground handling
Catering
Other costs
Change, y-o-y, %
14 Finnair 2Q 2013 Result, 14 Augustl 2013
• Unit cost excluding fuel (CASK, excl. fuel) down by 2.4%• Unit revenue (RASK) at constant currency -1.7%
Aviation services operational result has been transferred from other expenses to maintenance, catering and ground handling expenses starting from Q1 2013. 2012 comparison figures were changed respectively.
€140 million of targeted savings achieved, 6 months ahead of schedule
25%
24%
14%
10%
9%
8%
8% 3%
Target €140 million
maintenance staffother leasesales cateringground handling fuel
Finnair 2Q 2013 Result, 14 Augustl 201315
230%
80%
131%
129%
195%
128%
68%
50%
100%
15%
7%
2%
3%
11%
0%
9%
0% 100% 200%
fuel
groundhandling
catering
sales
lease
other
staff
maintenance
TOTAL
Achieved savings to target
achieved implemented to target
Significant cumulative unit cost* decrease achieved
Finnair 2Q 2013 Result, 14 Augustl 201316
-7,6 %-11,3 %
-12,7 %
-14,0 %
-12,0 %
-10,0 %
-8,0 %
-6,0 %
-4,0 %
-2,0 %
0,0 %
2011 2012 2013H1
*Excl. fuel, adjusted for 2010 ash and industrial action
Operational costs grew less than capacity
Operational costs
620,2 615,8
584,6 608
602
621,9
0
500
1000
1500
2000
2500
3000
2012 2013Q1 Q2 Q3 Q4
2,428.7
Mill. Eur
167,6 169,4157,9 171,5179,6165,2
0
500
1000
2012 2013Q1 Q2 Q3 Q4
670.3
+8.6%
Mill. Eur+4.0%
* Hedging taken into account
The share of fuel costs 28.2%
17 Finnair 2Q 2013 Result, 14 Augustl 2013
Fuel and personnel biggest cost items in Operational costs Q2 2013, total of 608 Mill. Eur
Finnair 2Q 2013 Result, 14 Augustl 201318
Change, y-o-y, %
-17,6 %
-3,6 %
1,4 %
-3,4 %
38,3 %
42,9 %
0,4 %
16,5 %
-8,8 %
-10,6 %
8,6 %
4,0 %
-40% -20% 0% 20% 40%
Aircraft leasing
Sales and marketing
Tour operations
Depreciation
Other rental payments
Maintenance
Traffic charges
Ground handling and catering
Other costs
Staff
Fuel
Total28,2 %
16,5 %
10,7 %
9,7 %
8,7 %
6,4 %
6,1 %
5,1 %3,2 %
2,9 % 2,3 %
Fuel Staff costs
Ground handling and catering Traffic charges
Other costs Maintenance
Other rental payments Depreciation
Sales and marketing Tour operations
Aircraft leasing
Strong financial position supports business development and future investments
0
20
40
60
80
100
120
2009 2010 2011 2012 2013 Q2
Strong balance sheet
Equity ratio Gearing Adjusted gearing
%
Finnair 2Q 2013 Result, 14 Augustl 201319
-150
0
150
300
450
600
750
2009 2010 2011 2012 2013 Q2
Good cash position over years despite significant investments
Net cash flow from operations
Investment, gross
Short term cash and cash equivalents
M€
Finnair is the first European carrier to receive next generation Airbus 350 XWB’s
Competitive advantage:• Up to 18% more capacity: from 270 seats to 310-320 seats• Estimated seat cost -30% compared to Airbus 340• Improved revenue position with superior product• 11 orders and 8 options
20 Finnair 2Q 2013 Result, 14 Augustl 2013
Fuel, spot-price development
21 Finnair 2Q 2013 Result, 14 Augustl 2013
22 Finnair 2Q 2013 Result, 14 Augustl 2013
*2012 Incl. Hedging profit of 18 Mill. EUR
**2013 Incl. Hedging loss of 4 Mill. EUR
Hedges are wearing off:Hedging loss of 4 M€ in Q2
Rolling hedging policy
Hedging positions, 30 August 2013Hedge ratio H2 2013: 75%
23 Finnair 2Q 2013 Result, 14 Augustl 2013
• Finnair hedges jet fuel positions 24 months ahead within the limits defined in the hedging policy
• Finnair is 75% hedged for the second half and 60% for first half of 2014
• The company protects itself against the risks of currency, interest rate and jet fuel positions by using different derivative instruments, such as forward contracts, swaps and options
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
hedge ratioupperlower
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Thank you
Finnair 2Q 2013 tulos, 14.8.2013