3Q 2013 Result - Finnair/media/Files/F/Finnair-IR/... · 2016. 11. 24. · reach a profitable...
Transcript of 3Q 2013 Result - Finnair/media/Files/F/Finnair-IR/... · 2016. 11. 24. · reach a profitable...
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3Q 2013 Result
Finnair 3Q 2013 Result, 25 October 2013
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Unit costs continued to decline in Q3, topline hit by the weaker Yen
• Disappointing operational result 38.4 M€ (-23.7%) in seasonally strongest quarter despite 6.2% decline in CASK excl. fuel
• Euro denominated turnover 636.9 M€ (-2.1%) hit by the depreciation of Japanese Yen
• Full implementation of structural change and cost reduction programs absolutely essential for future
• Equally, focus on improving unit revenues by commercial strategy revision is vital
Finnair 3Q 2013 Result, 25 October 20132
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Market Environment remains challenging
• European network carriers continued to implement structural change and cost reduction programs to improve competitiveness in the prevailing tight competitive situation
• The market for traffic between HEL and Finnair’s European destinations, measured by passenger volume, grew by 4.0% whilethe market between Asian and European destinations grew by 3.8%. Finnair increased market share in both markets.
• Air Freight Volumes continued to recover, but yield environment remains weak
• Growth in the BRICS economies, including China, is slowing– Fx head wind depressing yields in the Asian traffic– Growth in passenger traffic driven by leisure travel
• Oil prices remain high
Finnair 3Q 2013 Result, 25 October 20133
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Finnair 3Q 2013 Result, 25 October 20134
Restructuring and cost savings program is yielding results
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Revenue and profit hit by weak yen, cost efficiency improved
• Turnover declined by 2.1% – Q3 Turnover 636.9 M€– Operational EBIT 38.4 M€ (50.4 M€)– Euro-denominated revenue impacted by the weakening of Yen
• Weaker yield partly offset by strong load factors – Unit revenue per available seat kilometre (RASK) -7.1%, passenger unit
revenue at constant currency -0.2% – passenger load factor (PLF) 84.4% (+3.0%-p) – yield per revenue passenger kilometre (RPK yield, -10.7%)
• Sound financial position– Equity ratio 32.9%– Gearing 9.9%– Adjusted gearing 63.0%– 557.4 M€ short-term cash and cash equivalents as per 30 September 2013
Finnair 3Q 2013 Result, 25 October 20135
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Turnover & EBIT hit by weaker yen
Quarterly turnover, € million
6 Finnair 3Q 2013 Result, 25 October 2013
Quarterly Operational EBIT, € million
-60
-40
-20
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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
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Load factors at a healthy level
North America
ASK -0,4 %
RPK 4,9 %
PLF 4,5 %-p
Traffic revenue* 1,4 %
Leisure traffic
ASK -2,1 %
RPK -2,3 %
PLF -0,2 %-p
Traffic revenue* -11,2 %
Europe
ASK 13,8 %
RPK 17,1 %
PLF 2,3 %-p
Traffic revenue* 6,1 %
Total Traffic
ASK 6,0 %
RPK 9,9 %
PLF 3,0 %-p
Traffic revenue* -1,8 %
Asia
ASK 4,2 %
RPK 9,3 %
PLF 4,1 %-p
Traffic revenue* -7,2 %
Domestic
ASK -3,2 %
RPK 1,6 %
PLF 3,1 %-p
Traffic revenue* 12,0 %
Cargo
ATK 32,6 %
RTK 17,6 %
OLF -9,2 %-p
Traffic revenue 11,9 %
Asian share 51.5% of the total capacity
* passenger revenue
7Finnair 3Q 2013 Result, 25 October 2013
Passenger revenue split
48%35%
6%6%
5%
Asia
Europe
Domestic
Charter
North Atlantic
*Passenger revenue
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Cost savings focus in labour productivity improvement
Finnair 3Q 2013 Result, 25 October 20138
136
4
Other
Pilots
Cabin
Maintenance & ground service
10
17
18
8
Phase I140 M€
7
TOTAL 150
Phase II60 M€
50
Achieved To Target
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Finnair’s subsidiaries SMT and Area are planning to merge, creating single largest Finnish business travel agency
• The aim is to create more opportunities to provide customized services to Finnish companies and organizations
• Opportunity to achieve economies of scale, as well as significant cost savings by reducing overlapping functions
Finnair Q3 2013 tulos, 25.10.20139
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Finnair lowers its guidance for 2013 due to the weakening unit revenue development
New financial guidance:
Due to the continuing negative effect of the weak yen on unit revenue in Japanese sales, and the deterioration of cargo and leisure traffic revenues, Finnair expects its turnover in 2013 to be below the 2012 level. Unit costs excluding fuel (CASK excl. fuel) are expected to decrease compared to 2012. If the strong deterioration of unit revenues continues in the last quarter of the year, it is possible that Finnair will not reach a profitable operational result in 2013.
Previous financial guidance:
Due to the negative effect of the weak yen on unit revenue in Japanese sales, Finnair expects its turnover in 2013 to be largely unchanged from 2012. 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 3Q 2013 Result, 25 October 201310
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Finnair 3Q 2013 Result, 25 October 201311
Financials
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Q3 Key figures
Key Figures Jul-Sep2013Jul-Sep 2012
Change %
Jan-Sep 2013
Jan-Sep 2012
Change %
Turnover and result
Turnover EUR million 636.9 650.3 -2.1 1,839.8 1, 836.5 0.2
Operational result, EBIT EUR million 38.4 50.4 -23.7 26.9 43.1 -37.7
Operational result, % turnover % 6.0 7.7 -1.7%-p. 1.5 2.3 -0.9%-p.
Operating result, EBIT EUR million 35.2 72.6 -51.5 9.7 37.3 -74.1
EBITDAR EUR million 82.4 99.3 -17.0 162.0 191.4 -15.3
Result before taxes EUR million 31.3 68.8 -54.5 33.9 20.1 68.6
Net result EUR million 23.5 51.9 -54.7 24.7 14.0 76.9
Balance sheet and cash flow
Capital expenditure, CAPEX EUR million 3.6 7.4 -51.2 30.6 17.7 72,9
Net cash flow from operating activities EUR million 29.7 44.5 -33.3 108.3 136.8 -20.9
Share
Share price at end of quarter EUR 3.12 2.07 50.7 3.12 2.07 50.7Earnings per share, from the result of the period* EUR 0.18 0.41 -54.9 0.19 0.11 78.5
Earnings per share EUR 0.16 0.39 -58.8 0.12 0.06 107.3
12 Finnair 3Q 2013 Result, 25 October 2013* Before Hybrid Bond interest
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Operational EBIT build-up in Q3 2013
Finnair 3Q 2013 Result, 25 October 201313
Mill. Eur
50,438,4
-2,8
12,8 -7,4
-1,80,6 -2,0-5,5
-0,7
9,6
-12,2
-2,6
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
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Airline business: RASK & CASK development Q3 2013
-7,1 %
-4,6 %
-6,2 %
-1,5 %
-7,1 %
-9,5 %
-6,6 %
-10,2 %
-11,0 %
0,5 %
1,1 %
-15% -10% -5% 0% 5%
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 3Q 2013 Result, 25 October 2013
• Unit cost excluding fuel (CASK, excl. fuel) down by 6.2%• Unit revenue (RASK) at constant currency -0.2%
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.
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Significant cumulative unit cost* decrease achieved
Finnair 3Q 2013 Result, 25 October 201315
*Excl. fuel, adjusted for 2010 ash and industrial action
-7,6 %
-11,3 %-14,4 %
-16,0 %
-14,0 %
-12,0 %
-10,0 %
-8,0 %
-6,0 %
-4,0 %
-2,0 %
0,0 %2011 2012 2013Q3
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Operational costs grew less than capacity
Operational costs
620,2 615,8
584,6 608
602 603,9
621,9
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500
1000
1500
2000
2500
3000
2012 2013Q1 Q2 Q3 Q4
2,428.7
Mill. Eur
167,6 169,4157,9 171,5179,6 185,1165,2
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500
1000
2012 2013Q1 Q2 Q3 Q4
670.3
+3.1%
Mill. Eur
+0.3%
* Hedging taken into account
Share of fuel costs was 30.7%
16 Finnair 3Q 2013 Result, 25 October 2013
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Fuel and personnel biggest cost items in Operational costs Q3 2013, total of 603.9 M€
Finnair 3Q 2013 Result, 25 October 201317
Change, y-o-y, %
-14,4 %
-11,2 %
17,1 %
-7,9 %
43,7 %
5,1 %
-1,1 %
4,2 %
-10,6 %
-10,0 %
3,1 %
0,3 %
-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
Total30,7 %
14,3 %
10,9 %
10,1 %
7,9 %
6,6 %
6,2 %
5,0 %3,3 %
2,8 % 2,3 %
Fuel Staff costs
Ground handling and catering Traffic charges
Other costs Other rental payments
Maintenance Depreciation
Tour operations Sales and marketing
Aircraft leasing
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Strong financial position supports business development and future investments
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2009 2010 2011 2012 2013 Q3
Strong balance sheet
Equity ratio Gearing Adjusted gearing
%
Finnair 3Q 2013 Result, 25 October 201318
-150
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150
300
450
600
750
2009 2010 2011 2012 Jan-Sep2013
Good cash position over years despite significant investments
Net cash flow from operations
Investment, gross
Short term cash and cash equivalents
M€
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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
19 Finnair 3Q 2013 Result, 25 October 2013
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Fuel, spot-price development
20 Finnair 3Q 2013 Result, 25 October 2013
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21 Finnair 3Q 2013 Result, 25 October 2013
Hedges are wearing off:Hedging loss of 2,6 M€ in Q3
*2012 Incl. Hedging profit of 6,9 Mill. EUR
**2013 Incl. Hedging loss of 2,6 Mill. EUR
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Rolling hedging policy
Hedging positions, 30 September 2013Hedge ratio 2013: 75%
22 Finnair 3Q 2013 Result, 25 October 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 57% 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 options0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
hedge ratio
upper
lower
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Thank you
Finnair 3Q 2013 Result, 25 October 2013