Deutsche Lufthansa Ag · XETR:LHA
Deutsche Lufthansa — Q2 2016 Earnings Presentation
28 slides from Deutsche Lufthansa's earnings presentation, Aug 2, 2016
Slide 1: Analyst and Investor Conference Call Q2 2016
Analyst and Investor Conference Call Q2 2016 Frankfurt, 02 August 2016
Slide 2: Disclaimer in respect of forward-looking statements
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 facts. These forward-looking statements are based on all dis
Slide 3: Analyst and Investor Conference Call Q2 2016 - Simone Menne, CFO
Analyst and Investor Conference Call Q2 2016 Simone Menne, CFO Frankfurt, 02 August 2016
Slide 4: Overview
Overview Adjusted EBIT of 529 m EUR in first half-year (+61 m EUR), margin increases to 3.5% (+0.5pts.) Profit improvement driven by Lufthansa Passenger Airlines Passenger Airline Group with stable results in Q2, Aviation Services below previous year Passenger airlines achieve Adj. EBIT of 508 m
Slide 5: Adj. EBIT improved in first half-year, financial stability increased
Adj. EBIT improved in first half-year, financial stability increased 6M and Q2 2016 at a glance Lufthansa Group (in m EUR) 6M 16 6M 15 vs. PY Q2 16 Q2 15 vs. PY Total revenue 15,042 15,365 -2.1% 8,126 8,392 -3.2% of which traffic revenue 11,637 12,181 -4.5% 6,402 6,734 -4.9% EBIT 518 463 +11.9% 567
Slide 6: Passenger Airlines compensate profit development of other segments
Passenger Airlines compensate profit development of other segments Segment overview 6M 2016 Passenger in m EUR Airline Group Revenue 11,302 7,405 2,094 972 922 vs. PY -340 -286 -110 +20 +68 Others & Consolidation3 Adj. EBIT1 441 387 131 -1 -89 Revenue -1,300 +192 +281 -47 +16 -67 vs. PY +188 vs. PY
Slide 7: Constant currency pricing development remains clearly negative
Constant currency pricing development remains clearly negative Operating KPIs Passenger Airline Group Total 6M '16 Q2 '16 Europe 6M '16 Q2 '16 Asia/Pacific 6M '16 Q2 '16 Number of flights +2.4% +2.0% ASK +1.6% +0.4% ASK +0.3% -1.7% ASK +4.2% +2.2% RPK -1.1% -3.1% RPK -1.7% -4.1% RPK +1.6% -1.1% SLF
Slide 8: Lufthansa Group expects Adj. EBIT below previous year for 2016
Lufthansa Group expects Adj. EBIT below previous year for 2016 Forecast Lufthansa Group 2016 Lufthansa Group Adjusted EBIT Actual and Forecast Updated forecast FY 2016: Expected fuel costs: 4.8 bn EUR1 Tailwind of 950 m EUR vs. PY, 1,817 below thereof 350 m EUR in second half-year previous year
Slide 9: Analyst and Investor Conference Call Q2 2016 - Carsten Spohr, CEO
Analyst and Investor Conference Call Q2 2016 Carsten Spohr, CEO and Chairman of the Executive Board Frankfurt, 02 August 2016
Slide 10: Our goal: #1 for customers, shareholders, employees & partners
Our goal: #1 for customers, shareholders, employees & partners Differentiated objectives for three strategic pillars #1 for customers, shareholders, employees and partners Premium network Eurowings Group Aviation Services airline system #1 in Europe #1 in home markets1 #1 worldwide Premium positioni
Slide 11: Revenue and cost optimization still in focus
Network Airlines Revenue and cost optimization still in focus Measures at network airlines Ongoing revenue optimization Achieved cost optimization Extension of premium product Fleet renewal Broadband internet Upgrade products & C-Series A320neo short-haul services -23% seats, -19% ~ 300 A320 CoC1 vs
Slide 12: Increased capacity discipline in tense market environment
Netzwerk Airlines Increased capacity discipline in tense market environment Measures at network airlines Market situation Capacity discipline Political and economic uncertainties Lower capacity growth in 20162 Original Adjusted Weaker bookings due to terroristic events Plan Plan and political troubl
Slide 13: Eurowings is number one in home markets
Eurowings Eurowings is number one in home markets Development of the new Eurowings Consistent focus on costs Continuation of growth path Competitive platforms Establishment of European brand 87% brand recognition2 Launch of Eurowings Europe in Vienna as first basis outside of Germany Homogeneous and
Slide 14: Aviation Services with growth and efficiency improvement targets
Aviation Services Aviation Services with growth and efficiency improvement targets Individual projects and programs for each service company Growth projects Efficiency programs • Strategic partnerships • Engines: efficiency increase of 40% e.g., with GE, Rolls Royce, P&W (e.g., reduction of 700 posi
Slide 15: Visible progress in reorganization
Gruppe Visible progress in reorganization Status quo at administrative functions Profit contribution through synergies: Reduction of management positions 500 m EUR p.a.1 by approx. 15% 500 22% reduction achieved Network 300 Airlines2 Admin Aviation Services 100 H1 2016 H2 2016 H1 2017 H2 2017 m EU
Slide 16: Consistent implementation of strategy continues
Consistent implementation of strategy continues Summary and outlook Solid development in first half-year Adjusted EBIT 61 m EUR above previous year Financial stability further improved Equity ratio on better level than at comparably high pension deficit in Q1 2015; further improvement due to tar
Slide 17: Appendix – Financial Figures 6M 2016
Appendix – Financial Figures 6M 2016 – Page 17
Slide 18: Capacity planning at network airlines and Eurowings further reduced
Capacity planning at network airlines and Eurowings further reduced Lufthansa Group capacity growth 2016 per region 10.3% 3.9% 2.2% nmf. 2.2% Network Eurowings LH Group Airlines 0.4% nmf. Network Eurowings LH Group 10.9% Airlines 8.5% nmf. Network Eurowings LH Group -2.9% -2.2% Airlines Network Euro
Slide 19: Expected fuel costs decrease versus previous year
Expected Fuel costs decrease versus previous year Fuel forecast and sensitivities FY 2016 und 2017 Lufthansa Group fuel expenses after hedging Lufthansa Group price curve remainder of 2016 and 2017 (in bn EUR) 130 LH price 2016 120 LH price 2017 Sensitivities with deviating oil price Market price 5.
Slide 20: Trading assumptions 2016 indicate profit below previous year
Trading assumptions 2016 indicate profit below previous year Updated Trading assumptions FY 2015 and 2016 FY15 FY16 assumptions Explanation FY16 assumptions c. 1.4% Slight increase at network airlines; No. of Flights +0.2% increase mainly due to Eurowings fleet growth Network airlines +3.6% (thereof
Slide 21: Passenger Airlines now expected Adj. EBIT below previous year
Passenger Airlines now expected Adj. EBIT below previous year Forecast 2016 per segment Segment Adj. EBIT 2015 (m EUR) Adj. EBIT Forecast for 2016 Lufthansa Passenger Airlines 970 below previous year* SWISS 429 below previous year* Austrian Airlines 52 above previous year* Eurowings negative result*
Slide 22: Absolute costs (excl. fuel) decrease for two consecutive quarters
Absolute costs (excl. fuel) decrease for two consecutive quarters Operating costs and revenues Lufthansa Group (in m EUR) 6M 2016 vs. PY Q2 2016 vs. PY Total revenue 15,042 -2.1% 8,126 -3.2% Other operating income 1,232 -23.0% 579 -15.6% Total operating income 16,274 -4.1% 8,705 -4.1% Operating expe
Slide 23: Free cash flow increases due to lower capex
Free cash flow increases due to lower capex Cash flow statement Lufthansa Group (in m EUR) 6M 2016 vs. PY 3.3 3.4 2.8 EBT (earnings before income taxes) 498 -483 2.0 2.2 Depreciation & amortization (incl. non-current assets) 895 +8 Net proceeds from disposal of non-current assets -42 +4 FY 2012 FY 2
Slide 24: Group revenue and currency influence
Group revenue and currency influence 6M 2016 vs. 6M 2015 Currency influence on EBIT (in m EUR) in m EUR Q1 Q2 Q3 Q4 FY (YTD) +85 -28 +57 Volume: +1.1% Price: -4.1% 138 -495 Currency: -1.5% -187 Traffic revenue (-4.5%) 12,181 11,637 3,405 3,184 Other revenue (+6.9%) 6M 2015 6M 2016 ∑ 15,365 ∑ Group r
Slide 25: Fuel costs 6M 2016 vs. 6M 2015
Fuel costs 6M 2016 vs. 6M 2015 Hedging result by quarter (in m EUR) in m EUR Q1 Q2 Q3 Q4 FY (YTD) 2015 -203 -205 -271 -309 -988 2016 -336 -235 -571 Change versus previous year -597 Volume Price 2,934 58 -829 Hedging Currency 2,337 10 164 6M 2015 6M 2016 Page 25
Slide 26: Adjusted EBIT and one-off factors
Adjusted EBIT and one-off factors Quarterly results 2014-2015 in m EUR Q1 Q2 Q3 Q4 6M 9M Full Year Adjusted EBIT 2015 -167 635 1,225 124 468 1,693 1,817 incl. strikes -42 -58 -30 -101 -100 -130 -231 incl. Venezuela -60 +5 -5 -12 -55 -60 -72 Adjusted EBIT ex one-off factors -65 688 1,260 237 623 1,88
Slide 27: Reconciliation from EBIT to Adjusted EBIT per segment
Reconciliation from EBIT to Adjusted EBIT per segment 6M 2016 Book gains/losses Adj. EBIT 6M 16 Segment EBIT 6M 16 (m EUR) Impairments Pension changes on asset disposals (m EUR) LH Passenger Airlines 354 +51 -18 387 SWISS 131 131 Austrian Airlines 1 -2 -1 Eurowings -89 -89 Consolidation -4 +17 13 Pa
Slide 28: Adjusted EBIT and EBIT per quarter 2015
Adjusted EBIT and EBIT per quarter 2015 in m EUR Q1 Q2 Q3 Q4 6M 9M Full Year Adj. EBIT -167 635 1,225 124 468 1,693 1,817 pension changes 0 +32 0 -57 +32 +32 -25 book gains / losses on asset disposals +22 +24 0 -7 +46 +46 +39 impairments +1 -84 -25 -47 -83 -108 -155 EBIT -144 607 1,200 13 463 1,663