Lufthansa Group Roadshow Presentation March 2014

Transcription

1 Lufthansa Group Roadshow Presentation March 2014 Page 1

2 Disclaimer in respect of forward-looking statements Information published in this presentation concerning the future development of the Lufthansa Group and its subsidiaries consists purely of forecasts and assessments and not of definitive historical facts. These forward-looking statements are based on all discernible information, facts and expectations available at the time. They can, therefore, only claim validity up to the date of their publication. Since forward-looking statements are by their nature subject to uncertainties and imponderable risk factors such as changes in underlying economic conditions and rest on assumptions that may not occur, or may occur differently, it is possible that the Group s actual results and development may differ materially from the forecasts. Lufthansa makes a point of checking and updating the information it publishes. However, the Company is under no obligation to update forward-looking statements or adapt them to subsequent events or developments. Accordingly, it neither explicitly nor implicitly accepts liability, nor gives any guarantee for the actuality, accuracy or completeness of this data and information. Page 2

3 Executive Summary FY 2013: Lufthansa Group increased operating result excl. one-offs by 62%; dividend reinstated Improvement mainly driven by passenger airlines and MRO business; dividend of 0.45 EUR per share proposed FY 2014: Lufthansa Group targets bn EUR operating profit excl. one-offs ( reported) Improving unit costs (CASK) vs. unit revenues (RASK) at passenger airlines is key FY 2015: operating profit target adjusted to 2.65 bn EUR due to new D&A policy Pipeline of profit improvement measures is well filled; additional measures under review Lufthansa Group's strong financial profile and business portfolio allows for non-cyclical capex Non-cyclical profit base from non-flying segments; strong free cash flow; low net debt; investment grade rating Page 3

4 Key KPIs improved in FY 2013 and Q Key figures for the Lufthansa Group Lufthansa Group (in m EUR) FY 2013 FY 2012 vs. PY Q Q vs. PY Total revenue 30,028 30, % 7,260 7, % of which traffic revenue 24,565 24, % 5,902 6, % Operating result % One-off items* % Normalized operating result 1, % % Net income 313 1,228-74,5% FY 2013 FY 2012 vs. PY Operating cash flow 3,290 2, % Net invest 1,982 1, % Free cash flow 1,308 1, % Passenger Airline KPIs FY 2013 Q No. of flights -3.7% -2.6% ASK (capacity) +1.0% +1.4% RPK (volume) +2.3% +2.6% SLF (load factor) +1.0pts. +1.0pts. FY 2013 FY 2012 vs. PY Equity ratio 21.0% 16.9% +4.1 P. Net debt (excl. pensions) 1,697 1, % Yield ex. currency -0.1% -1.1% RASK (unit revenue) -1.1% -2.8% CASK (unit costs) -2.4% -4.3% * adjusted for one-off items: 2012: -356 m EUR bmi & Austrian Airlines; +160 m EUR SCORE restructuring costs 2013: +245 m EUR SCORE restructuring costs, +100 m EUR project costs Page 4

5 Operating profit trend has been reversed in 2013 Dividend proposal of 0.45 Euros for financial year 2013 Lufthansa Group - Normalized operating result excluding one-off effects 1,680-1,880 in m EUR 1,020 1, Dividend of 0.45 Euro (subject to AGM approval) e effect from change in depreciation policy Page 5

6 Profit improvement was driven by passenger airlines and MRO Segment overview for 2013 Share of LH Group s external revenue 76.1% 8.0% 8.6% 6.4% 0.9% FY 2013 vs. FY 2012 in EUR m Passenger Airline Group Logistics MRO Catering IT Services Other & consolidation Revenue vs. PY in% 23, % 2, % 4, % 2, % % -3, % Operating result vs. PY in m EUR m EUR excl. one-offs -50 m EUR excl. one-offs in EUR m Lufthansa Passenger Airlines SWISS Austrian Airlines Total revenue vs. PY 17, % 4, % 2, % Operating result vs. PY m EUR excl. one-offs +30 m EUR excl. one-offs Page 6

7 Passenger airlines showed strong operating performance Operating KPIs of Passenger Airline Group Total FY '13 Q4 '13 Number of flights -3.7% -2.6% ASK +1.0% +1.4% RPK +2.3% +2.6% SLF +1.0pts. +1.0pts. Europe FY '13 Q4 '13 ASK +1.5% +3.2% RPK +4.3% +5.0% SLF +1.9pts. +1.3pts. Yield -1.1% -4.3% Yield ex currency +0.3% -2.2% RASK +1.3% -2.8% RASK ex currency +2.7% -0.8% Asia/Pacific FY '13 Q4 '13 ASK +2.4% +3.7% RPK +2.6% +5.5% SLF +0.2pts. +1.4pts. Yield -8.1% -7.8% Yield ex currency -3.6% -2.9% RASK -7.8% -6.1% RASK ex currency -3.3% -1.2% Yield -2.3% -4.0% Yield ex currency -0.1% -1.1% RASK -1.1% -2.8% RASK ex currency +1.2% +0.1% CASK* excl. fuel -1.3% -1.9% CASK* incl. fuel -2.4% -4.4% profitability growth: widened spread of unit revenues versus unit costs Americas FY '13 Q4 '13 ASK +6.7% +5.2% RPK +7.1% +5.5% SLF +0.4pts. +0.2pts. Yield +0.2% -1.5% Yield ex currency +2.3% +1.4% RASK +0.6% -1.2% RASK ex currency +2.7% +1.7% Mid East / Africa FY '13 Q4 '13 ASK -1.7% -1.8% RPK -1.2% -0.4% SLF +0.3pts. +1.1pts. Yield -1.7% -1.5% Yield ex currency +0.5% +1.2% RASK -1.3% -0.6% RASK ex currency +1.0% +2.2% *adjusted for one-off items Page 7

8 FY 2013: Lufthansa Group increased operating result excl. one-offs by 62%; dividend reinstated Improvement mainly driven by passenger airlines and MRO business; dividend of 0.45 EUR per share proposed FY 2014: Lufthansa Group targets bn EUR operating profit excl. one-offs ( reported) Improving unit costs (CASK) vs. unit revenues (RASK) at passenger airlines is key FY 2015: operating profit target adjusted to 2.65 bn EUR due to new D&A policy Pipeline of profit improvement measures is well filled; additional measures under review Lufthansa Group's strong financial profile and business portfolio allows for non-cyclical capex Non-cyclical profit base from non-flying segments; strong free cash flow; low net debt; investment grade rating Page 8

9 Good development since initiation of SCORE in passenger business Operating KPIs have developed satisfactory since 2011 Fleet Size (no. of aircraft) FY 2013 vs. FY % Explanation fleet rollover, phase-out of small, non-efficient aircraft Capacity (ASK) +1.7% capacity growth realized through larger aircraft with more seats per aircraft Volume (RPK) +4.6% Load Factor (SLF) Pricing (Yield) Unit Revenue (RASK) +2.2% +1.2% +4.1% increase driven by higher load factor and yield increases Unit Costs (CASK ex fuel) -1.9% SCORE cost reductions: transfer of non-hub traffic to Germanwings, Austrian restructuring, etc. Cargo Capacity -8.5% Reduction mainly due to terminated joint ventures and decrease in belly capacity Page 9

10 Unit costs reduction by c. 4% and increasing revenue per flight Trading assumptions FY 2014 Fleet Size (no. of aircraft) Outlook 2014 overall stable Explanation fleet rollover, phase-out of small, non-efficient aircraft Capacity (ASK) Volume (RPK) Load Factor (SLF) Pricing (Yield) Unit Revenue (RASK ex currency) c. +5% above capacity growth slightly up negative slightly negative capacity growth realized through larger aircraft (more seats per aircraft), 2-class fleet on 30 LH Passenger Airlines' aircraft and transfer to Germanwings Unit Costs (CASK ex currency, ex fuel) c. -4% more capacity (ASK) at stable fleet; SCORE measures; -2pts. from changed depreciation Cargo Capacity c. +1% growth driven by belly capacity Page 10

11 Fuel costs are expected to ease mainly due to weaker USD in 2014 Fuel forecast and sensitivities USD/barrel LH price 2014 Market price break-even of hedges at 110 USD/bbl Lufthansa Group fuel expenses after hedging (in bn EUR) Sensitivities costs with deviating oil price 7.2bn (+20%) 7.0bn (+10%) 6.4bn (-10%) 5.9bn (-20%) 3.7 USD/barrel e 2014e FY 2014 FY 2015 Current fuel hedging levels 77% 34% as of 03 March 2014 Brent forward 109 USD/barrel EUR/USD 1.37 Page 11

12 Aircraft depreciation policy changed to 20 years and 5% residual value New depreciation policy Old: 12 years to 15% residual value New: 20 years to 5% residual value Reason for D&A change: IAS 16: joint review with auditors of assets' useful life and residual value FY 2013: no impact on operating result FY 2014: c. 340 m EUR positive operating profit impact FY 2015: c. 350 m EUR positive operating profit impact Operating profit target 2015: adjusted to 2.65 bn EUR Dividend policy: will be reviewed to reflect changed earnings profile CVA: concept to be reviewed to reflect new capital recovery assumptions Page 12

13 Lufthansa Group operating profit 2014 expected at 1.3 to 1.5 bn EUR Outlook for the Group Segment Result 2013 (m EUR) Forecast for 2014 Lufthansa Passenger Airlines 265 significantly above previous year, but diluted by project costs SWISS 226 significantly above previous year Austrian Airlines 25 significantly above previous year Consolidation -21 Passenger Airline Group ,100 m EUR (incl. 300 m EUR project costs at LHP) Logistics 77 significantly above previous year, at least on previous year's level MRO 404 on par with 2012 (328 m EUR) Catering 105 slightly above previous year IT Services 36 slightly above previous year Others -378 significant improvements due to lower restructuring costs Internal Result / Consolidation -42 LH Group (reported) 697 1,300 1,500* Restructuring costs Project costs Lufthansa Passenger Airlines LH Group (normalised) 1,042 1,680 1,880* *incl. 340 m EUR lower depreciation for aircraft and engines Page 13

14 FY 2013: Lufthansa Group increased operating result excl. one-offs by 62%; dividend reinstated Improvement mainly driven by passenger airlines and MRO business; dividend of 0.45 EUR per share proposed FY 2014: Lufthansa Group targets bn EUR operating profit excl. one-offs ( reported) Improving unit costs (CASK) vs. unit revenues (RASK) at passenger airlines is key FY 2015: operating profit target adjusted to 2.65 bn EUR due to new D&A policy Pipeline of profit improvement measures is well filled; additional measures under review Lufthansa Group's strong financial profile and business portfolio allows for non-cyclical capex Non-cyclical profit base from non-flying segments; strong free cash flow; low net debt; investment grade rating Page 14

15 Depreciation change leads to 2.65 bn EUR operating profit target 2015 SCORE target remains unchanged changed depreciation 2.65 bn EUR SCORE 0.35 bn EUR 1.5bnEUR 0.8bnEUR Page 15

16 SCORE pipeline is well filled with measures until 2015 SCORE pipeline potential further headwinds that must be compensated by additional measures Normalized operating result 886 Projects in idea status Projects in implementation Projects concluded / P&L effective Headwinds 1,187 2,650 as of March 2014 in m EUR 926 1, normalized operating result 2013 SCORE gross measures 2013 headwinds 2013 normalized operating result Change in depreciation policy 2014 SCORE gross measures 2015 SCORE gross measures potential 2014 & 2015 headwinds 2015 operating profit target Page 16

17 Top SCORE projects in 2014 and 2015 Selected SCORE measures and additional measures under review Projects in existing SCORE pipeline Key projects in 2014 and 2015 Further projects under review Aim: Build buffer for potential further headwinds Germanwings Two-class-fleet Premium Economy New surcharge structure as of April '14 Simplify hub structure Munich Ancillary revenue potentials MRO set-up at Austrian Airlines IT Infrastructure Outsourcing Calvin New base in Geneva Page 17

18 SCORE burdens operating result with one-offs costs Mainly 2013 and 2014 are strongly burdened; strong relief in 2015 SCORE one-off costs FY2013 FY2014 FY2015 Restructuring Costs (provisions for headcount reductions, severance payments,..) 245 m EUR 80 m EUR 20 m EUR Project Costs (additional costs due to accelerated fleet roll-over and product upgrades) 100 m EUR (30 m EUR in Q3) (70 m EUR in Q4) 300 m EUR major relief <100 m EUR from high project costs Page 18

19 FY 2013: Lufthansa Group increased operating result excl. one-offs by 62%; dividend reinstated Improvement mainly driven by passenger airlines and MRO business; dividend of 0.45 EUR per share proposed FY 2014: Lufthansa Group targets bn EUR operating profit excl. one-offs ( reported) Improving unit costs (CASK) vs. unit revenues (RASK) at passenger airlines is key FY 2015: operating profit target adjusted to 2.65 bn EUR due to new D&A policy Pipeline of profit improvement measures is well filled; additional measures under review Lufthansa Group's strong financial profile and business portfolio allows for non-cyclical capex Non-cyclical profit base from non-flying segments; strong free cash flow; low net debt; investment grade rating Page 19

20 Lufthansa operates a broad portfolio incl. non-cyclical businesses m EUR non-cylical profit base Airlines Revenue Operating result Op. margin range Passenger Airline Group 23.5 bn 495 m % -0.1% Logistics (Cargo) 2.4 bn m % -8.0% Service Companies 4.2 bn 404 m +10.9% MRO % Catering 2.5 bn m % +3.1% non-cyclical profit base of ca m EUR 0.6 bn 36 m +6.2% IT Services % -420 m Others incl. Group Functions (burdened by restructuring costs) Page 20

21 Lufthansa Technik and LSG produced best ever results in 2013 Service companies as competitive advantage for the Lufthansa Group No. 1 Independent MRO-provider Operating result 2013: 404 m EUR No. 1 Airline caterer Operating result 2013: 105 m EUR Global market leader as independent MRO-provider Global market leader in airline-catering Product innovations and strategic partnerships enable access to new customers and markets World-wide capacities and flexibility Increasing revenue and operating result despite challenging market environment Growth in demand and geographical expansion lead to increasing revenues Continuously enhanced product and service portfolio Successful transfer of know how in food and logistics to new adjacent markets Page 21

22 Miles & More will be transferred into separate legal entity New legal structure Bonus program activities to be transferred into separate legal entity AGM approval in April 2014 Implementation from July 2014 Objectives Higher degree of transparency and integrated commercial steering Accelerated speed to market through dedicated resources and higher degree of entrepreneurial freedom Facilitate partnerships with new non-airline program partners Improved customer value proposition also for "non frequent flyers" Enable business and profits to grow Page 22

23 Strong cash flow generation and conservative financial setup Strong balance sheet, fleet in ownership 1. Lufthansa Group is profitable and produces strong cash flows 2. Conservative fleet structure and ambitious balance sheet targets provide security buffer 3. Solid financial profile provides competitive edge in financing conditions and allows for constant capex in bn EUR Depreciation Operating Profit Operating CF Free Cash Flow ca. 90% of fleet is owned vs. 10% leased Equity Ratio Debt Repayment Ratio Minimum Liquidity Target 25% mid-term 45% (min. 35%) 2.3 bn EUR >70% of fleet is financially unburdened (not used as security for financing deals) Current Status 21% 37% 4.7 bn EUR bn EUR 1.7 bn EUR 4.7 bn EUR Gross Capex S&P Investment Grade Rating (BBB-, stable) confirmed in June 2013 high liquidity moderate net debt pension provision flexible funding model, no "margin call" for additional fundings Net Capex Page 23

24 Lufthansa Passage aims at becoming the first Western 5 Star airline Service initiatives underway to significantly improve customer experience Aircraft order book 2014 et sqq. Total Orders: 260 aircraft Short haul: 177 aircraft Long haul: 83 aircraft Equals EUR 32 bn in list prices Aircraft Orders x A320ceo, 70x A320neo 25x A x 777-9X Unit cost reduction of 20% (CASK) Superior comfort, lower emissions Planned product improvements Premium Economy Available for sale as of May Up in the air from October New Business Class 80% of long-haul fleet by end 2014 More than 100 aircraft Two-Class Fleet 30 aircraft to be reconfigured Revenue maximization per flight 5 STAR Page 24

25 Dividend policy is integral part of financial strategy Lufthansa Group dividend past dividend pay-out Group dividend policy 30-40% pay-out ratio of operating result Net profit of Deutsche Lufthansa AG (German GAAP/HGB) must allow for dividend payment Further payments possibly from extraordinary income, if capital structure targets are met Lufthansa results and dividends * Operating result m EUR Net profit/loss (Group) m EUR Net profit/loss (HGB) m EUR Dividend paid (p. share) EUR ,378 1, , , , Payout ratio (Op. result) 40% 38% 41% 25% - 31% 14% - 30% Dividend yield (gross) 4.0% 3.4% 6.9% 6.3% - 3.7% 2.7% - 2.9% *proposal Page 25

26 Deutsche Lufthansa AG Investor Relations / FRA IR Lufthansa Aviation Center Airportring D Frankfurt Andreas Hagenbring, Head of IR Phone: +49 (0) Fax: +49 (0) investor.relations@dlh.de Page 26

27 Page 27 Supplementary Information Lufthansa Passenger Airlines

28 Balanced network supported by leading intercontinental JVs Passenger network overview Largest Airline Group in Europe Largest Transatlantic Joint Venture First Asian-European Joint Venture North America 21.4% (+0.8pts.) Intra- European 46.6% (+0.3pts.) Mid-East 4.1% (-0.4pts.) Asia Pacific 17.6% (-1.3pts) South America 6.3% (+0.6pts.) Africa 4.0% (+0.0pts.) Traffic revenue shares Passenger Airline Group as of 31 December 2013 (comparison to previous year) Page 28

29 LH focuses on markets with highest margins: large and premium Fleet and network clusters Share of premium passengers 30% Small Niche Mid-Size Premium Premium Trunk 20% New Technology Aircraft Expansion of A380 and 747-8I Fleet 10% 5% Introduction of 2 Class Fleet & New Technology Aircraft Small & Growing Medium Volume Large Volume 350, million 14 million long-haul O&Ds Europe-World served by Lufthansa long-haul O&Ds Europe-World total market total passengers p.a. Page 29

30 Reduce complexity, lower unit costs, but also invest in new aircraft SCORE at Lufthansa Passenger Airlines onwards 1 Capacity & fleet dimensioning freeze fleet size at 400 aircraft, ASK growth at half of market rate (ca. 3% p.a.) ASK growth mainly through more seats per plane (i.e. CASK reduction) 2 Restructuring of long-haul shift in premium vs. non premium to optimize RASK vs. CASK introduction of 2 class long-haul fleet ca. 50 further cost reduction measures launch new technology aircraft from Restructuring of short-haul reduce short-haul fleet from 9 to 3 aircraft models exit from 70-seater fleet return non-hub operations to break-even (new Germanwings) A320neo first delivery 4 5 Reduce unit cost Invest in revenue quality and best product turn LH from functional to process oriented company (project Shape!) reduce overhead costs through shared services restructure outstation operations reduce costs at all suppliers (ATC, internal suppliers, etc.) Roll-out new First Class roll-out of new long-haul Business Class launch of Premium Economy become Europe s first 5 Star Airline Page 30

31 Fleet is being modernized and complexity is reduced Example: Lufthansa Passenger Airlines aircraft types 5 aircraft types long-haul seats seats A A Development Phase-out by age Phase-out by age A I 777-9X -20%CASK vs. replaced aircraft seats A A Phase-out by age Development almost complete A A aircraft types 3 aircraft types Classic A310/19/20/21 733/5 Development & rollover Phase-out by 2015 A320Family short-haul Regional sustainable Regional in transition E90/95 CR9 CR7 DH4 AT7 Used as hub-feeder Used as hub-feeder and selected non-hub ops Phase-out by 2015 targeted Phase-out 2013 E90/95 CR9 F100 AR8 Phase-out Page 31

32 Capacity growth with stable fleet size leads to unit cost reductions Example: Lufthansa Passenger Airlines Number of aircraft fleet size Fleet size frozen at 400 aircraft throughout 2016 ASK growth year-on-year 3% roll-over effects 1% 2-class fleet 1% productivity, stage length 3% long-term growth rate capacity growth FY14 and FY15 with higher ASK growth due to increase in number of seats from roll-over, introduction of 2-class long-haul fleet, stage length effects and replacing 70 seaters with larger models on short-haul Expected non-fuel CASK development unit costs Unit costs expected to further decrease in FY14 and FY15 Page 32

33 Page 33 Supplementary Financial Information

34 Group Revenue FY2013 vs. FY 2012 in m EUR Volume: +2.1% 513 Price: -0.7% -175 Currency: -2.3% 30, ,028 Traffic revenue (-0.9%) 24,793 24,565 5,342 Other revenue (+2.3%) 5,463 FY 2012 FY ,135 Group revenue (-0.4%) 30,028 Page 34

35 Good underlying cost development was achieved in 2013 Operating costs and revenues Lufthansa Group (in m EUR) FY 2013 vs. PY Q vs. PY Total revenue 30, % 7, % Other operating income 1, % % Total operating income 31, % 7, % Operating expenses -31, % -7, % Non-fuel operating expenses -24, % -0.7% excl. one-offs -6, % +0.9% excl. one-offs Cost of materials and services -17, % -4, % Fuel expenses -7, % -1, % Fees and charges -5, % -1, % Staff costs -7, % -1, % +2.6% excl. one-offs +2.3% excl. one-offs Scheduled depreciation -1, % % Other operating expenses -4, % -1, % Operating result % +62.1% excl. one-offs % excl. one-offs Page 35

36 Fuel Cost FY 2013 vs. FY 2012 Hedging results by Quarter Q1 Q2 Q3 Q in m EUR +7,392 Volume -334 m EUR -114 Price Hedging Currency ,058 FY 2012 FY 2013 Page 36

37 Excluding one-off items operating profit shows clear improvement Normalized operating results for FY and Q % ,042 FY 2012 operating profit Austrian one-offs (Tyrolean Transfer) bmi pernsions one-offs IAS 19 restatement of Austrian and bmi one-offs restructuring costs FY 2012 normalized operating profit FY 2013 operating profit restructuring costs project costs FY 2013 normalized operating result FY 2012 FY Q operating profit -4 Austrian one-offs (Tyrolean Transfer) restructuring costs Q normalized operating profit Q operating profit % restructuring costs Q Q project costs Q normalized operating profit Page 37 all numbers in m EUR

38 Cash generation was again strong in 2013 Cash flow statement Group Cash Flow Statement in m EUR FY 2013 vs. PY EBT (earnings before income taxes) Depreciation & amortisation (incl. D&A for non-current assets) 1, Net proceeds from disposal of non-current assets Result from equity investments Net interest Income tax payments/reimbursements Non-cash changes in measurement of financial derivatives Change in working capital Cash flow from continuing operating activities 3, Cash flow from discontinued operating activities Operating cash flow 3, Capital expenditure (net) -1, Free cash flow 1, Cash and cash equivalents as of , Liquidity reserves (non-current securities) 3, Total Group liquidity 4, Page 38

39 Operating margins (normalized*) FY2013 vs. FY all numbers in % Lufthansa Passenger Airlines SWISS -2.1 Austrian Airlines Passenger Airline Group Logistics MRO Catering IT Services LH Group FY 2013 FY 2012 * excluding one-off effects Page 39

40 Unchanged rolling approach reduces fuel cost volatility Lufthansa Group's fuel hedging strategy Current hedging level status FY % FY % Lufthansa Group's hedging strategy is designed to reduce volatility Rolling approach with 24 months lead time before actual consumption Hedging level increases month-by-month until 85% is hedged Mainly options not fixed contracts in order to still benefit from falling oil prices Lufthansa Cargo (not hedged) and Germanwings (twelve month hedging horizon) with differing approaches due to competition reasons # months before actual date of consumption Page 40