Analysts Presentation 2012 Half Year Financial Results Thomas E. Kern Chief Executive Officer Daniel Schmucki Chief Financial Officer Zurich Airport 21.08.2012
Schedule 1. Half Year Highlights 3 2. Half Year Key Data 4 3. Aviation 8 4. Non-Aviation 13 5. Financial Key Figures 18 6. Other Key Topics 22 7. Outlook 28 2 21.08.2012 2012 Half Year Financial Results
1. Half Year Highlights Agreement with Hotel Operator Hyatt for The Circle Building Permit for The Circle Standard and Poor s revises Rating: A- to A Clarification about Economic Regulation Issuing of CHF 300 Million Bond Settlement between CH/DE regarding Aircraft Noise: Draft Treaty signed Positive Half Year Result 2012 3 21.08.2012 2012 Half Year Financial Results
2. Half Year Key Data 4 21.08.2012 2012 Half Year Financial Results
Half Year Traffic Figures in millions Jan-Jun 2012 Jan-Jun 2011 Delta Local passengers 7.7 7.5 2.5% Transfer passengers 4.1 3.9 4.4% Transfer share 34.8% 34.4% Total passengers 11.8 11.5 3.1% Movements (in thousand) 133.9 138.1-3.1% whereof Line & Charter movements 114.4 116.5-1.8% Cargo (in thousand tons) 210.2 210.8-0.3% 5 21.08.2012 2012 Half Year Financial Results
Half Year Financial Results in million CHF Jan-Jun 2012 Jan-Jun 2011 Delta Aviation revenue 283.7 273.6 3.7% Non-Aviation revenue 173.3 158.3 9.5% Revenue 457.0 431.9 5.8% EBITDA 242.2 225.6 7.4% EBITDA margin 53.0% 52.2% EBIT 134.2 126.5 6.1% EBIT margin 29.4% 29.3% Net profit 80.2 73.5 9.1% Interest-bearing liabilities 837.1 724.1 15.6% Cash flow from operating activities 167.4 211.5-20.8% CAPEX 53.5 154.0-65.2% EpS (in CHF) 13.2 12.0 10.2% 6 21.08.2012 2012 Half Year Financial Results
Half Year Financial Results (without noise impact) in million CHF Jan-Jun 2012 w/o noise Jan-Jun 2011 w/o noise Delta Aviation revenue 258.7 250.6 3.2% Non-Aviation revenue 173.3 158.3 9.5% Revenue 432.1 408.9 5.7% EBITDA 219.2 204.7 7.1% EBITDA margin 50.7% 50.1% EBIT 115.1 109.1 5.5% EBIT margin 26.6% 26.7% Net profit 67.5 63.3 6.7% Interest-bearing liabilities 1'101.1 948.2 16.1% Cash flow from operating activities 149.9 191.8-21.8% CAPEX 53.5 154.0-65.2% EpS (in CHF) 11.1 10.3 7.8% 7 21.08.2012 2012 Half Year Financial Results
3. Aviation 8 21.08.2012 2012 Half Year Financial Results
Aviation Segment Revenue Breakdown Passenger and security charges reflect growth of 3.1% in passenger volume Ø Heavier aircraft weights led to over-proportionate growth of landing charges despite declined ATMs. Over-proportionate increase of noise charges due to new noise split between Flughafen Zürich AG and Canton of Zurich Significant increase of Aircraft energy supply as a result of new infrastructure Increase of other revenue due to a greater use of de-icing services in million CHF Jan-Jun 2012 Jan-Jun 2011 Delta Passenger charges 93.6 90.8 3.1% Security charges 75.8 73.7 2.9% Landing charges 42.0 40.9 2.7% Noise charges 25.0 23.1 8.4% Baggage sorting 14.0 13.6 3.0% PRM charges 5.3 5.4-2.6% Aircraft energy supply 6.3 5.3 18.3% Freight charges 3.9 4.1-4.5% Fuel charges 3.5 3.4 1.3% Parking charges 3.2 3.1 3.3% Emission charges 1.6 1.5 3.1% Others 9.7 8.8 9.8% Total 283.7 273.6 3.7% Landing charge per landing (CHF) 626.7 591.8 5.9% 9 21.08.2012 2012 Half Year Financial Results
Key Indicators Seat Load Factor 73% Seat Load factor Passengers per Movement Average Take-Off Weight 72% 71% 70% 69% 68% 67% 66% 65% 64% 63% 62% 61% Passengers per Movement Average Take-Off Weight 130 120 110 100 90 80 70 60 50 40 30 20 10 60% HY1/2002 HY1/2003 HY1/2004 HY1/2005 HY1/2006 HY1/2007 HY1/2008 HY1/2009 HY1/2010 HY1/2011 HY1/2012 Source: Zurich Airport, data warehouse, 2012-10 21.08.2012 2012 Half Year Financial Results
Economic Regulation: Next Steps Implementation of the ordinance: Flughafen Zürich AG has already started corresponding work to take on all the necessary steps as prescribed in the ordinance. Preparation As a result of the 3-step approach (negotiation, potential benchmarking and/or fall back regulation), Flughafen Zürich AG will have to start the negotiation phase in late 2012. 3-step approach As required and prescribed in the ordinance, Flughafen Zürich AG aims to implement operational airport charges on January 1, 2014. Implementation Flughafen Zürich AG intends to implement the charges systems for centralised infrastructures and access infrastructures at the same time as the operational charges system, i.e. as of January 1, 2014. Implementation 11 21.08.2012 2012 Half Year Financial Results
Update New Infrastructure Aviation Dock B & Security Check Building In operation since December 1, 2011 Daily operations meet all expectations First cost savings as a result of the new Security Check Building already visible in results Upgrade Terminal 2 (ongoing) Refurbishment in its major phase Renovation work during ongoing operations Check in 2 temporarily on mezzanine level 12 21.08.2012 2012 Half Year Financial Results
4. Non-Aviation 13 21.08.2012 2012 Half Year Financial Results
Non-Aviation Segment Revenue Breakdown Commercial revenues increased by 15.2%, primarily due to the openings of the Arrival- / Walkthrough duty free and other new concepts Significant increase of real estate income by 7.3% due to re-lettings & new tenants (Freight dispatch hall, Dock B, SCB, etc.) Increased parking by 1.6% arised from price adjustments for mainly staff parking in million CHF Jan-Jun Jan-Jun 2012 2011 Delta Retail and tax & duty free 42.3 35.5 19.1% Food & beverage 6.8 6.4 6.8% Others 14.4 13.2 8.9% Commercial 63.5 55.1 15.2% Rents and leases 47.2 44.0 7.4% Utilities 14.0 12.9 8.6% Others 3.2 3.2 0.5% Real estate 64.4 60.1 7.3% Parking 32.2 31.7 1.6% Others 13.3 11.5 15.4% Total 173.3 158.3 9.5% Ø Commercial income* per departing pax (CHF) 8.3 7.3 13.7% * Commercial income includes retail & tax/duty free and food & beverages 14 21.08.2012 2012 Half Year Financial Results
Commercial: Gross Income Shop-Operators 15 21.08.2012 2012 Half Year Financial Results
New Infrastructure Non-Aviation Airside Grieder Men La Prairie Tommy Hilfiger IWC Schaffhausen Caviar House Sprüngli Arrival Duty Free 2, opened June 1, 2011 Arrival Duty Free 1, opened July 19, 2011 Walkthrough Duty Free, opened December 1, 2011 2010 2012 ~ 10 000 m 2 ~ 14 000 m 2 Landside Restaurant uppderdeck 2010 ~ 17 000 m 2 2012 ~ 18`000 m 2 16 21.08.2012 2012 Half Year Financial Results
Commercial Openings Airside June 2012 June 2012 July 2012 August 2012 August 2012 August 2012 17 21.08.2012 2012 Half Year Financial Results
5. Financial Key Figures 18 21.08.2012 2012 Half Year Financial Results
Operating Expenses Disproportionate increase of total operating expenses by 4.1% in comparison to total revenues More FTEs as a result of the new infrastructure & nominal salary increase Cost reduction of police and security as a result of the optimisation of centralised security checks in million CHF Higher costs for external support and marketing expenditures lead to an increase of SG&A by 18.6%. Extraordinary results include the net of capitalised and one off costs Jan-Jun 2012 Jan-Jun 2011 Delta Personnel 83.1 80.3 3.5% Police and security 57.6 58.8-2.1% Energy and waste 13.1 12.8 2.0% Maintenance and material 19.1 18.0 5.9% Other operating costs 25.1 25.2-0.2% SG&A 20.4 17.2 18.6% Extraordinary results -3.5-6.0-40.9% Total operating expenses 214.8 206.3 4.1% 19 21.08.2012 2012 Half Year Financial Results
Net Result Increase of EBITDA margin to 53.0% Significant higher depreciation due to newly capitalised infrastructure (primarily Dock B & SCB) Net profit incl. noise increased by 9.1% (excl. noise by 6.7%) in million CHF Jan-Jun 2012 Jan-Jun 2011 Delta EBITDA 242.2 225.6 7.4% EBITDA margin 53.0% 52.2% Depreciation and amortisation -108.0-99.1 9.0% EBIT 134.2 126.5 6.1% EBIT margin 29.4% 29.3% Finance result (net) -34.9-35.2-0.7% Associated companies 1.2 1.1 15.9% Taxes -20.3-18.9 7.5% Net profit 80.2 73.5 9.1% 20 21.08.2012 2012 Half Year Financial Results
Other Key Figures Overall solid key figures in million CHF Increase of ROCE excl. noise by 7.3% Slight increase of interestbearing liabilities (net) primarily due to foreign currency movements Substantial Free Cash Flow incl. noise excl. noise HY 2012 HY 2011 HY 2012 HY 2011 Interest-bearing liabilities/ebitda* 1.67x 1.55x 2.42x 2.20x Interest-bearing liabilities** 837.1 818.3 1'101.1 1'063.5 ROCE* 7.9% 7.7% 7.3% 7.2% Return on Equity* 10.0% 9.7% 9.7% 9.5% Equity Ratio 49.0% 46.7% 51.9% 49.0% Cash flow operating activities 167.4 211.5 149.9 191.8 whereof CAPEX -53.5-154.0-53.5-154.0 Free cash flow 113.9 57.5 96.4 37.8 * 12 months rolling ** Interest-bearing liabilities are disclosed HY12 vs. FY11 21 21.08.2012 2012 Half Year Financial Results
6. Other Key Topics 22 21.08.2012 2012 Half Year Financial Results
The Circle at Zürich Airport Two important milestones achieved: 03/2012: Hyatt signed agreement for two hotels with 550 rooms and conference facilities 04/2012: building permit legally binding Current step in project development: preliminary study until Q1 2013 Final triggers for project approval: investment cost risks to be mitigated achievement of expected hurdle rate pre-letting quote funding in place 23 21.08.2012 2012 Half Year Financial Results
Settlement between DE & CH regarding Aircraft Noise The draft treaty contains the following key points: No numeric restriction for approaches. Northern approaches over German territory from 6h30 until 18h00 CET (before: 7h00 until 21h00 CET). on Weekends/Holidays from 9h00 until 18h00 CET (before: 9h00 until 20h00 CET). This form of operations requires the extension of runway 28 and 32. The curved northern approach (CNA) on Swiss territory remains a possible option. Operational implementation of Treaty in year 2020. Flughafen Zürich AG welcomes that a consensus has been reached. 24 21.08.2012 2012 Half Year Financial Results
Scenarios from ratification Model E DVO+1h Settlement Ratification in CH & DE from 2020 Runway expansion YES Runway expansion NO Model J Treaty Model J South Ratification failed todays DVO* Model E DVO tightened DVO* Model? *DVO = Unilateral Ordinance issued by Germany, Durchführungsverordnung zur Luftverkehrsordnung 25 21.08.2012 2012 Half Year Financial Results
Interpretation Flughafen Zürich AG: Air Traffic 2020 (Model J Treaty ) Time 06:00-08:00 08:00-10:00 10:00-12:00 12:00-14:00 14:00-16:00 16:00-18:00 18:00-20:00 20:00-22:00 22:00-23:30 today Model E DVO+1h Model J Treaty MO-FR SA/SO + F. MO-FR SA/SO + PH MO-FR SA/SO + Public Holidays CNA South South 06:30 07:00 07:00 CNA South South South North East* 09:00 20:00 21:00 North North 09:00 North East* East* East* * South: Exepctions under certain weather conditions and some intercontinental-landings 18:00 North 09:00 Model 1 Model 2 North North East** East** East** ** South: Exepctions under certain weather conditions 26 21.08.2012 2012 Half Year Financial Results
Political & Regulatory Update Employee Pension Fund of the Canton of Zurich (BVK): Cantonal Council approved single payment of CHF 2bn & package of measures FZAG is assessing all available options. This may lead to classifying the employee benefit plan according to IAS 19.27 Negotiations about noise charges: Initial meetings with the negotiating parties have been taking place Negotiations are on track To be implemented as per Swiss Federal Court on April 1, 2013 Noise compensation Federal Appraisal Commission confirmed 1961 as the year for predictable aircraft noise in the South. Building Permit for parking first tranche of applied parking spaces has been approved. 27 21.08.2012 2012 Half Year Financial Results
7. Outlook 28 21.08.2012 2012 Half Year Financial Results
Outlook 2012: Traffic in millions Jan-Jul 2012 Jan-Jul 2011 Delta Local passengers 9.3 9.1 2.1% Transfer passengers 4.9 4.7 3.9% Transfer share 34.3% 33.9% Total passengers 14.3 13.9 2.7% Movements (in thousand) 158.3 163.0-2.9% whereof Line & Charter movements 135.6 138.1-1.7% Cargo (in thousand tons) 245.0 246.5-0.6% 29 21.08.2012 2012 Half Year Financial Results
Outlook Traffic: Changes Winter Timetable 2012 SWISS: Additions/reductions: Miami, daily increased to 11x weekly Athens, 21x decreased to 16x weekly Montreal, 6x decreased to 5x weekly Thessaloniki, ceased service from daily Other airlines: New services/frequency additions: Alitalia Rome, 12x weekly (new airline) British Airways London (LHR), 39x weekly increased to 42x weekly (6 flights per day) Niki Vienna, 20x weekly increased to 23x weekly (4 flights per day) Other airlines: Cancellations/reductions: Air Baltic Riga, from 5x weekly to 4x weekly airberlin Hamburg, 3x daily (ceased service) Darwin Genoa, 11x weekly (ceased service) easyjet London (LTN), from daily to 5-6x weekly Helvetic Airways Bari, from daily to 5x weekly Helvetic Airways Cardiff, 3x weekly (ceased service) SriLankan Airlines Colombo, 3x weekly (combined service with Male) Vueling Paris (Orly), 9x weekly (ceased service) 30 21.08.2012 2012 Half Year Financial Results (All information as of August 15, 2012)
Outlook 2012: Commercial Activities Jan-Jul 2012 Jan-Jul 2011 Delta Total turnover, m CHF 295.0 276.6 6.7% Airside (change versus prev. year) 13.5% -1.2% Landside (change versus prev. year) -0.7% 2.0% Commercial turnover/dep. pax, CHF 41.3 39.8 3.9% Airside (change versus prev. year) 10.5% -9.3% Landside (change versus prev. year) -3.3% -6.4% 31 21.08.2012 2012 Half Year Financial Results
Guidance Full Year 2012 confirmed with slight adjustments Passenger volume increase by approx. 2.5% Total revenues to increase by 4 to 5% Aviation revenue to grow slightly above passenger volume as a result of revised noise split between FZAG and Canton ZH Non-Aviation revenue to grow over-proportionately, mainly attributable to commercial income but also fixed rent income Opex to increase disproportionately by 3 to 4% Increase of depreciation to approx. CHF 215 million Net result incl. noise up by 5 to 10% Net result excl. noise up by approx. 5% Capex CHF 200 220 million 32 21.08.2012 2012 Half Year Financial Results
8. Your Questions 33 21.08.2012 2012 Half Year Financial Results
Guidance on mid term Capex Plan CAPEX (Mio CHF) 2010 2011 2012 2013 2014 2015 2016 2017 2018 Terminal Area Zürich 2010 105 170 5 Zone Terminal 2 15 30 45 50 40 25 15 Zone Terminal 1 and Baggage Sorting System 5 18 20 10 Parking Parking (replacement and additional capacity) 5 11 25 35 40 25 10 20 10 Parking refurbishments/ Access roads to Parking and Airport 9 6 10 25 15 10 5 5 5 Cargo infrastructure Freight infrastructure 15 10 30 30 Runways, Stands & Apron Additional Stands 5 25 40 25 60 50 40 Maintenance & Renovation RWY 10/28 20 20 Maintenance & Renovation RWY 14/32 10 15 45 10 Other Investments Constructional facility maintenance 20 20 27 25 25 25 25 25 25 Airfield maintenance 30 28 29 30 30 30 30 30 30 Surface/Water treatment facilities 6 18 10 5 Other investments 43 52 35 52 35 45 30 40 60 Total CAPEX excluding The Circle 242 332 215 275 280 220 205 220 200 34 21.08.2012 2012 Half Year Financial Results
Repayment Schedule (as per 30.06.2012) Major repayments: 2024 421.2 Last repayment CBL in Dec. 2012 Partly repayments US PP (2011-15) Maturities Bonds CHF 225m (2014) CHF 250m (2017) Repayment Japanese PP (2024) ~ 2017 2016 2015 2014 2013 0.0 73.2 73.2 250.0 298.2 Settlement of new Bond CHF 300m (2020) was on July 3, 2012 2012 repaid in April 2012 129.2 0 50 100 150 200 250 300 350 400 450 USPP CBL Bonds JPP 35 21.08.2012 2012 Half Year Financial Results
Debt Maturity Structure (Financial Liabilities) 30.06.2012 8.7% 53.1% 38.1% 2011 8.1% 34.4% 57.4% 2010 9.0% 47.2% 43.8% 2009 15.6% 44.2% 40.2% 2008 14.3% 38.1% 47.6% 2007 3.6% 48.0% 48.4% 2006 8.7% 38.8% 52.5% 2005 7.8% 23.5% 68.7% 2004 6.9% 26.5% 66.5% 2003 6.5% 25.1% 68.4% 2002 17.4% 54.4% 28.2% 0% 20% 40% 60% 80% 100% within 1 year between 1 and 5 years longer than 5 years 36 21.08.2012 2012 Half Year Financial Results
Customer Segments ZRH Jan-Jun 2012 Star Alliance 69.9% 2011 YTD 2012 YTD Low Cost Carrier 10.6% One World 10.2% Passenger development vs. previous year Star Alliance YTD recent month Low Cost Carrier Sky Team 3.7% One World Sky Team Charter 1.4% Charter -20% -10% 0% 10% 20% 0% 20% 40% 60% 80% 100% 37 21.08.2012 2012 Half Year Financial Results
Star Alliance Hubs 20% 2011 2012 Impact of volcanic erruption in Island in April 2010 BRU CPH FRA 15% MUC VIE ZRH 10% VIE 5% FRA CPH BRU ZRH MUC 0% -5% 38 21.08.2012 2012 Half Year Financial Results
ZRH Passenger Market Share & Growth (HY 2012) North America June 2012 YTD 2012 Market share +1.3% +2.4% from/to ZRH +10.0% +4.7% Europe June 2012 YTD 2012 Market share +3.0% +2.6% from/to ZRH +0.8% +1.8% Middle East June 2012 YTD 2012 Market share +13.1% +13.2% from/to ZRH +16.4% +8.1% Africa June 2012 YTD 2012 Global market +11.6% +9.5% from/to ZRH -8.2% +4.6% Latin America June 2012 YTD 2012 Market share +11.8% +6.7% from/to ZRH -1.9% -4.2% Asia Pacific June 2012 YTD 2012 Market share +7.7% +8.5% from/to ZRH +20.9% +15.2% 39 21.08.2012 2012 Half Year Financial Results Global market June 2012 YTD 2012 Market share +4.7% +4.9% from/to ZRH +2.9% +3.1% Source: ACI & ZRH data warehouse