Vienna Airport – Decline in Net Profit Due to Special Effects
Results were burdened by impairment charges and non-recurring effects relating to the Skylink terminal extension and the investment in Košice Airport. Net profit amounted to € 20.2m.
The Flughafen Wien Group today reported detailed results for the first three quarters of 2011. Revenue amounted to € 435.3m, an increase of 9.4% over the comparable prior year period. The impairment charges and non-recurring effects occurring in the third quarter of 2011 amount to approx. € 74m and involve identified damages in the VIE-Skylink, the investment in Košice Airport and a property at Vienna Airport as well as provisions for part-time work for older employees.
These non-recurring effects and impairment charges had a negative influence on third quarter results. In the first three quarters of 2011 the Flughafen Wien Group generated EBITDA of € 158.2m (+9.5%) and EBIT of € 63,0m (-33.8%). After the deduction of € 14.4m in tax expense (1-9/2010: € 21.8m), net profit for the period amounted to € 20.2m (1-9/2010: € 72.2m). The EBITDA margin remained stable at 36.3% (1-9/2010: 36.3%). Since the development of earnings did not match the growth in revenue, the EBIT margin declined to 14.5% (1-9/2010: 23.9%).
Earnings before interest, taxes, depreciation and amortisation (EBITDA) before the deduction of special effects rose by 13.4% year-on-year to € 163.8m, while earnings before interest and taxes (EBIT) before special effects totalled € 115.3m (1-9/2010: € 95.2m). Operating profit for the period before the deduction on non-recurring effects and impairment charges amounted to € 82.3m for the first nine months of 2011 (1-9/2010: € 72.2m).
Vienna Airport handled a total of 15,992,075 passengers during the first nine months of 2011, for an increase of 7.5% over the comparable prior year period. The number of transfer passengers rose by 8.1%. Traffic to Eastern Europe increased 13.7% during the period from January to September 2011 to comprise 18.7% of all departing passengers. Passenger traffic to the Middle East and the Far East increased 2.5% and 9.2%, respectively. This growth was contrasted by a decline of 30.6% in the number of passengers departing for Africa.
Activities to complete the terminal extension VIE-Skylink are proceeding and parallel to construction, which is now 97% complete, preparations are underway for the operational start-up. Full operations are scheduled to begin at the end of the first half of 2012. The release of risk provisions and a reduction in expenditures led to a reduction of € 30m in the maximum planned costs for this project to € 770m. In the cases reviewed by technical experts, damages of approx. € 57m were identified as the result of deficient performance by contractors and unjustified increases in costs. Consequently, an impairment charge of approx. € 29m was recognised. Flughafen Wien AG is actively pursuing claims for compensation from the involved companies.
In the fourth quarter of 2006 Flughafen Wien acquired a stake in Košice Airport through a consortium, and FWAG now holds an indirect share of 66%. The carrying amount of the investment in Košice Airport, which is accounted for at equity, equals € 47m before the recognition of any impairment charges. This company was profitable in the past, but the latest medium term forecasts indicate that traffic growth will fall substantially below earlier expectations. Accordingly, the carrying amount of the investment was reduced through an impairment charge of € 21m. Recent detailed examinations also indicate that a building at Vienna Airport will not reach the expected occupancy over the medium-term. The carrying amount of this investment was therefore reduced through an impairment charge of approx. € 18m as of 30 September 2011. Provisions of approx. € 6m were also recognised to cover part-time work for older employees.
The major investments during the first nine months of 2011 represented the terminal extension VIE-Skylink (€ 133.5m), security control lines (€ 1.8m), security systems in the VIE-Skylink (€ 3.3m), the revitalisation of bus gates (€ 4.3m) and baggage sorting equipment (€ 1.1m). Other investments included € 4.5m for technical noise protection and the environmental fund, € 3.5m for IT hardware and software, € 1.3m for the guidance system and € 2.2m for VIE-Skylink furnishings. Investments totalling € 590m (excl. land) are now planned for the period from 2011 to 2015, which means a reduction of € 70m to the previous investment planning.
The number of passengers rose by 4.7% year-on-year in October. Flight movements declined by 0.7%, while maximum take-off weight (MTOW) rose slightly to 724,443 tonnes. Passenger traffic to Eastern Europe rose by17.0%, but traffic to the Middle East declined by 1.7%. Cargo turnover (air cargo and trucking) declined 8.6% to 24,404 tonnes. Based on this sound development, Flughafen Wien expects an increase in the number of passengers above the 5% originally forecasted for 2011.