INVESTOR RELATIONS Earnings Release

Transcription

1 INVESTOR RELATIONS Earnings Release 1

2 Disclaimer This document contains parent results for 2017 based on K-IFRS. These statements involve risks and uncertainties, and actual results may differ. This document contains forward-looking statements that is, statements related to future events, not past ones. In this context, forward-looking statements often address our expected future business and financial performance. These uncertainties may cause our actual results to be materially different from those expressed in this document. 2

3 Performance Review 3 31 Fleet Seats 11.4M PAX 10.5M 13 CAGR 24% CAGR 21% CAGR 23% aircraft YoY Total Revenue 996B % YoY Ancillary Revenue 79B % YoY Operating Profit 102B CAGR 23% % YoY CAGR 56% % YoY CAGR 61% % YoY 3

4 Revenue and Operating Profit Overview Operating profit KRW 100B, Operating margin 10% Revenue (KRW in billions) Profit (KRW in billions) Annual (KRW in billions) Q16 1Q17 2Q17 3Q17 4Q17 1Q17 2Q17 3Q17 4Q PAX Ancillary OP Net Profit Revenue OP Net Profit [4Q17] Revenue KRW 261.5B (YoY+37.2%), Operating Profit KRW 17.7B (YoY+316%) : Peak season fare policy during holiday, additional fleet, new routes, ancillary revenue growth (YoY+10.8%) led to overall revenue growth : Amid rising jet fuel price, operating profit improved by top line growth and stable cost management [FY2017] Total revenue KRW 996.3B (YoY+33.3%), Operating Profit KRW 101.6B (YoY+73.1%) : Operating 31 aircrafts, seat supply increased 17% and ancillary revenue surged by 35% : CASK improved even under fuel price hike in 2H18, thanks to high block hour (4Q 13.4 hours / FY 13.5 hours) 4

5 PAX Revenue Stable route portfolio increased PAX revenue PAX Rev Breakdown (KRW in billions) Domestic vs. Int l 80.4% 73.5% 70.6% 75.0% 76.3% 29.4% 26.5% 25.1% 23.7% 19.6% 2017 Route addition Month Route(frequency) MAR Gwangju-Jeju(daily) Incheon-Kaohsiung(4/week) JULY Incheon-Nha Trang(5/week) SEPT Incheon-Vladivostok(5/week) OCT Incheon-Vientiane(daily) NOV Incheon-Matsuyama(3/week) 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 DEC Incheon-Ho Chi Minh(daily) Dom Japan China SE Asia Oceania Russia Non-sch Domestic International [4Q17] PAX Revenue KRW 240B (YoY+39.4%) : International routes recorded KRW 183.2B(YoY+44.7%) and revenue contribution improved 2.8%pt YoY, thanks to the route expansion in SE Asia and 2 nd tier cities in Japan : Significant yield growth in both domestic (YoY+14%) and international (YoY +17%) routes [FY2017] Total PAX Revenue KRW 917.4B (YoY+33.0%) : Short-haul international route revenue reached KRW 365.6B (YoY+48.1%) based on reinforced route portfolio in Japan, China, Taiwan and etc. 5

6 Ancillary Revenue High L/F led baggage, Aircafe, and onboard sales revenue growth Quarterly Annual Main Ancillary (KRW in billions) 10.2% 9.1% 7.6% 8.2% 6.8% % % (KRW in billions) 7.8% 7.8% (KRW in billions) Q16 1Q17 2Q17 3Q17 4Q Excess Ancillary Aircafe Onboard Commission base Ratio Ticket base Ancillary Rev Operating Profit Ratio by revenue baggage service duty free [4Q17] Ancillary Revenue KRW 21.5B (YoY+10.8%) : Robust growth in ticket base ancillary revenue : Excess baggage KRW 3.8B (YoY+17.1%), ancillary service 2.4B (YoY+8.2%), Aircafe 1.4B (YoY+49.3%) [FY2017] Total ancillary revenue KRW 78.9B (YoY+35.9%), ancillary operating profit(yoy+35.5%) : Excess baggage 13.9B, ancillary service 11.3B, Aircafe 5.5B, onboard duty free 3.1B : Sales promotions(jan & JUL) supported Excess baggage revenue and high L/F led Aircafe and onboard sales growth 6

7 2-3. 4Q17 Earnings Review Strategic fleet and cost management lead to stable profit, regardless of fuel hike 4Q17 Earnings 4Q16 3Q17 4Q17 YoY Revenue % COGS % Gross Profit % SG&A % Operating Profit KRW in billions % Other P&L % Financial P&L % Pre-tax profit % Income tax % Net profit % 4Q17 Jet fuel price $70.7 (vs $57.5, YoY 23% ) Average KRW/USD 1,107 (vs 1,156, YoY 4% ) YoY Revenue 37.1% increase (ASK 20.4% ) PAX Revenue KRW 240B (YoY 19.9% ) - Number of flights 16,042 (YoY 17.1% ) Ancillary Revenue KRW 21.5B (YoY 10.8% ) - accounts for 8.2% of total revenue Operation - Block hour 13.4 hours/day Employee Incentive - 4Q incentive provision KRW 6.7B - Total annual incentive KRW 13.7B Financial P&L - Revaluation loss from CRS on foreign currency denominated borrowings (USD 53M): KRW 1.8B - Oil derivatives(hedge) loss: KRW 1.2B 7

8 3. Operation Overview (million seat-km) 3,500 ASK RPK 2,500 1,500 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Number of flights 9,356 10,961 11,506 11,614 11,878 12,396 13,984 13,694 13,842 14,915 15,787 16,042 Total seat capacity (in thousands) 1,757 2,059 2,162 2,179 2,234 2,337 2,634 2,577 2,611 2,810 2,977 3,025 Total PAX (in thousands) 1,554 1,710 1,926 1,931 1,951 2,035 2,365 2,312 2,398 2,541 2,762 2,773 # of flights 5,502 6,039 6,603 6,305 6,159 6,419 7,060 6,533 5,815 6,595 6,688 6,705 ASK( 000Km) 492, , , , , , , , , , , ,608 Domestic RPK( 000Km) 448, , , , , , , , , , , ,908 Load Factor 90.7% 90.0% 93.2% 91.6% 89.0% 94.1% 92.4% 92.3% 94.6% 95.7% 95.8% 95.2% Yield(US cent) # of flights 3,854 4,922 4,903 5,309 5,719 5,977 6,924 7,161 8,027 8,320 9,099 9,337 ASK( 000Km) 1,712,559 1,929,651 1,940,986 2,045,664 2,157,965 2,250,650 2,679,029 2,818,830 3,304,531 3,195,551 3,496,518 3,513,168 International RPK( 000Km) 1,453,655 1,493,671 1,634,095 1,772,667 1,835,441 1,843,104 2,304,416 2,460,004 2,934,888 2,744,035 3,136,268 3,098,891 Load Factor 85.2% 74.5% 83.6% 85.2% 85.6% 79.5% 87.0% 87.4% 89.8% 86.2% 90.6% 89.1% Yield(US cent)

9 Management Goals and Earnings Forecast Management Goals Maximizing revenue by improving customer royalty Seats 15~20% 2018 Business Plan PAX 15~20% 2 Preemptive investment to secure sustainable operation and growth. 11.4M 10.5M 3 Sophisticating IT system and cost saving process 4 Successfully settle down new businesses and scrutinize new Biz-Model 39 Fleets 55 Scheduled Routes 5 Reinforcing organizational culture to develop efficient structure and overcome 8 additional aircraft 9 new routes 9

10 Fleet and Route Schedule/Planning Reinforcing network through fleet expansion in Q 2Q 3Q 4Q Fleet Diversifying demand in the Japanese market Incheon-Kagoshima Incheon-2 nd tier cities Incheon-2 nd tier cities Enhancing aircraft utilization Incheon-Nha Trang Incheon-Ho Chi Minh Incheon-SE Asia Incheon-SE Asia Incheon-SE Asia Utilize airports in non-metropolitan area Busan/Jeju based routes Non-metropolitan airport based international routes Non-metropolitan airport based international routes Non-metropolitan airport based international routes Adding frequency to peak season profitable routes Adding temporary China routes Incheon-based international routes Incheon and Busan-basedroutes Adding frequency to Incheon-based Japanese routes Adding frequency to Incheon-basedNorthern Mariana/SE Asiaroutes 10

11 APPENDIX 1. Financial Statement Summary Summary Statement of Financial Position (Parent) (KRW in millions) YoY Summary Income Statement (Parent) (KRW in millions) YoY Current Assets Non-current Assets 355, , , % 122, , , % Revenue 608, , , % COGS 486, , , % Total Assets 477, , , % Current Liabilities Non-current Liabilities Total Liabilities 200, , , % 45,916 67, , % 245, , , % Capital Stock 129, , , % Gross profit 121, , , % SG&A 70,580 86, , % Operating profit 51,409 58, , % Other P&L 4, , % Capital Surplus Capital Adjustment Retained Earnings Shareholder Equity 87,977 89,414 89, % ,890-13,607 51, , % 231, , , % Financial P&L -2,541 9, % Pre-tax profit 52,999 69, , % Income tax 5,842 15,802 23, % Net profit 4, ,209 77, % 11

12 APPENDIX 2. Ownership Structure & Dividends Shareholding Structure As of December 31, 2017 Payout Ratio Dividend Yield: 1.7% (1.9% in 2016) Payout Ratio: 20.4% (24.6% in 2016) 25.81% 22.0% 24.7% 20.4% % 59.93% % AK Group Jeju Province NPS Others Dividend (KRW) Payout ratio 12

13 APPENDIX 3. Route Map 46 routes in 11 countries 6 domestic & 40 international routes Country Korea 6 Japan 8 China 8 Destination Jeju, Gimpo, Busan, Cheongju, Daegu, Gwangju Narita, Osaka, Nagoya, Fukuoka, Okinawa, Sapporo, Matsuyama, Kagoshima Beijing, Qingdao, Weihai, Sanya, Shijiazhuang, Jiamusi, Hong Kong, Macau Taiwan 2 Taipei, Kaohsiung Philippines 2 Manila, Cebu Vietnam 4 Hanoi, Danang, Nha Trang, Ho Chi Minh Thailand 1 Bangkok Malaysia 1 Kota Kinabalu USA 2 Guam, Saipan Laos 1 Vientiane Russia 1 Vladivostok 13

14 Thank you. 14