Slide 1: Q3 Road Show Presentation
November 2012 Q3 Road Show Presentation Simone Menne, Member of the Executive Board and CFO lufthansagroup.com
Slide 2: Executive Summary
Executive Summary Strong Q3 but challenges ahead – Bottom line improvement in focus Strong Q3 / 9M 2012 • Q3 result above last year, 9M below last year – both above market expectation • Increase in result based on forex driven improvement in traffic revenue • Strongly improving earnings at service c
Slide 3: Key figures improved, operating result remains below previous year
Key figures improved, operating result remains below previous year Key figures for the Group Q1-Q3 2012 vs. Q1-Q3 2011 in m EUR Q1-Q3 2012 vs. PY Revenue 22,821 +6.1% - thereof traffic revenue 18,786 +5.4% Operating result 628 -13.3% Adj. operating margin [in %] 3.1% -0.7 PP EBIT 697 -1.6%
Slide 4: Revenue growth continues, supported by currency
Revenue growth continues, supported by currency Group revenue Q1-Q3 2012 vs. Q1-Q3 2011 Currency +558 18,786 Price Volume +59 +351 in m EUR 17,818 Traffic revenue (+5.4%) 3,692 4,035 Other revenue (+9.3%) ∑ 21,510 ∑ Group revenue (+6.1%) ∑ 22,821 Q1-Q3 2011 Q1-Q3 2012 Previous year's figures of the
Slide 5: Small increase in manageable costs but fuel costs weigh heavily
Small increase in manageable costs but fuel costs weigh heavily Operating expenses Q1-Q3 2012 vs. Q1-Q3 2011 Q1-Q3 2012 Change in m EUR in % Cost of materials 13,545 Staff costs 5,107 Depreciation & amortisation 1,345 Other operating expenses 3,726 TOTAL 23,723 +1.5% excl. fuel costs Previous year's
Slide 6: Oil price and currency drive up costs, hedges are hardly effective
Oil price and currency drive up costs, hedges are hardly effective Fuel costs Q1-Q3 2012 vs. Q1-Q3 2011 Currency +455 5,567 Price Hedging +720 -154 in m EUR Volume 4,595 -49 +972 m EUR (+21.2%) Q1-Q3 2011 Q1-Q3 2012 Previous year's figures of the profit and loss statement have been adjusted due to t
Slide 7: Airlines are down year-on-year, service companies increase results
Airlines are down year-on-year, service companies increase results Key figures of the business segments and airlines Q1-Q3 12 vs. Q1-Q3 11 Passenger in m EUR Airline Group Logistics MRO IT Services Catering Revenue 17,851 2,005 3,002 448 1,897 vs. PY in % +7.0% -9.7% -1.5% +2.8% +10.9% Op. result 34
Slide 8: Different drivers for positive traffic revenue, premium is stable
Different drivers for positive traffic revenue, premium is stable Traffic regions Passenger Airline Group Q1-Q3 2012 vs. Q1-Q3 2011 Americas Europe Asia / Pacific ASK +0.2% ASK +3.5% ASK +1.7% RPK +2.4% RPK +4.9% RPK +2.6% SLF +1.8PP SLF +0.9PP SLF +0.7PP Yield per RPK +8.6% Yield per RPK +2.3% Yiel
Slide 9: Strong Q3 / 9M 2012
Strong Q3 / 9M 2012 • Q3 result above last year, 9M below last year – both above market expectation • Increase in result is based on forex driven improvement in traffic revenue • Strongly improving earnings at service companies • Heavy fuel impact only partly compensated, hedging with little effect
Slide 10: Airlines continue to focus on flexible capacity management
Airlines continue to focus on flexible capacity management Booking and capacity development in passenger and cargo business Passenger business Freight business Short-term booking patterns require tight Sales remain depressed, capacity management capacity adjustments stay in focus • Solid traffic dev
Slide 11: Despite hedging fuel remains significant cost driver
Despite hedging fuel remains significant cost driver Fuel costs and hedging 2012 Oil price scenarios for the Lufthansa Group Expected fuel costs and sensitivities Fuel expenses LH Group (in bn EUR post hedging) 150 7.5 (+1%) LH price 137USD/bbl (+20%) 140 2012 7.5 (+1%) 125 USD/bbl (+10%) 130 7.3 (-
Slide 12: Cost base heavily effected by oil price and currency
Cost base heavily effected by oil price and currency Lufthansa hedging strategy and oil price development 2006-2012 • Lufthansa's hedging strategy designed to • Oil price in USD below old levels reduce volatility – not price effects – by – but not in Euros rolling system with 24 months lead time 160
Slide 13: Profit guidance for financial year 2012 is unchanged
Profit guidance for financial year 2012 is unchanged Operating result in the mid three-digit million euro range* Development of operating result Outlook 2012 in m EUR Increase in revenue Operating result in the mid three-digit million euro range Dynamic market parameters will define absolute p
Slide 14: Strong Q3 / 9M 2012
Strong Q3 / 9M 2012 • Q3 result above last year, 9M below last year – both above market expectation • Increase in result is based on forex driven improvement in traffic revenue • Strongly improving earnings at service companies • Heavy fuel impact only partly compensated, hedging with little effect
Slide 15: Earnings of Lufthansa Pass. Airlines need structural improvement
Earnings of Lufthansa Pass. Airlines need structural improvement Adjusted operating margin per airline and business segment Q1-Q3 10% 8.3% 8.2% 8.2% 8% 7.1% 6% 5.2% 4.6% 3.8% 3.8% 4% 3.5% 3.3% 2.9%2.8% 3.1% 2.5% 2.2% 2% 1.6% 0.8% 0.5%* 0% -2% -2,0% Lufthansa SWISS Austrian Passenger Logistics MRO IT
Slide 16: "New Germanwings": Reducing complexity, improving productivity
"New Germanwings": Reducing complexity, improving productivity Full integration of LH's non-hub traffic into Germanwings by 2015 Seite 16 Page
Slide 17: Lufthansa merges administrative functions across the Group
Lufthansa merges administrative functions across the Group Project GLOBE develops Global Business Service Organisation by 2015 Group 1 Group 2 Group n Core business Merging Finance, HR and Procurement into one Global Admin ABC Business Services (GBS) Functions organisation Shared Competitiveness
Slide 18: Group-wide SCORE projects make progress
Group-wide SCORE projects make progress 1.5 bn EUR profit improvement targeted by 2015 • Staff cost package (~500 m EUR) Project package I • Joint Group-wide procurement (500 m EUR until 2015) Q1 2012 • Optimization of neighborhood traffic (30 m EUR) • Review of fleet structure and aircraft specific
Slide 19: SCORE works, but results not yet visible – further measures to come
SCORE works, but results not yet visible – further measures to come SCORE is a net program Seite 19 Page
Slide 20: Back-up material
back-up material Seite 20 Page
Slide 21: Operating result remains some 100 m EUR below previous year
Operating result remains some 100 m EUR below previous year Profit from op. activities and op. result Q1-Q3 2012 vs. Q1-Q3 2011 in m EUR Q1-Q3 2012 Q1-Q3 2011 vs. PY Profit from operating activities 640 791 -151 Net book profit / loss assets / financial investments -25 -4 -21 - thereof aircraft disp
Slide 22: Earnings figures show different developments
Earnings figures show different developments Earnings figures Q1-Q3 2012 vs. Q1-Q3 2011 in m EUR Q1-Q3 2012 Q1-Q3 2011 vs. PY Profit from operating activities 640 791 -151 Income from subsidiaries, joint ventures and associates 77 62 +15 Other financial items -20 -145 +125 - thereof changes in time
Slide 23: Free Cash Flow and liquidity strengthened
Free Cash Flow and liquidity strengthened Cash flow statement Q1-Q3 2012 vs. Q1-Q3 2011 in m EUR Q1-Q3 2012 Q1-Q3 2011 vs. PY EBT (earnings before income taxes) 456 501 -45 Depreciation and amortisation 1,423 1,254 +169 Result from fixed asset disposals -22 -34 +12 Income from subsidiaries, joint ve
Slide 24: High flexibility is the key in volatile times
High flexibility is the key in volatile times Example: LH Cargo flexibly adapts to all market phases % 50 ton km sales in % vs. previous year 40 2008 2009 2010 2011 2012 30 Operating profit in m EUR (per quarter) 20 109 10 86 80 76 47 35 64 69 40 4 29 19 28 19 0 -10 -72 -62 -66 -20 full fleet reacti
Slide 25: Closer international cooperations enhance our offer to the customer
Closer international cooperations enhance our offer to the customer Largest alliance, complemented by strong intercontinental JVs Scope of Atlantic++ Scope of Japan+ • 27 airlines Strengthen • 21,500 daily flights Increasing competitiveness Enhancing customer yields proposition • to 1,356 airports •
Slide 26: Product enhancement through heavy investments
Product enhancement through heavy investments Cumulative 9 bn EUR capex in the next three years Seite 26 Page
Slide 27: Dividend policy is embedded in financial strategy
Dividend policy is embedded in financial strategy Guidelines for distributing profits to shareholders Our dividend policy • Dividends are linked to operating result • Net profit of Deutsche Lufthansa AG (German GAAP/HGB) must allow for dividend payment • In this framework we seek continuity (30-40%
Slide 28: Disclaimer in respect of forward-looking statements
Disclaimer in respect of forward-looking statements Information published in this presentation with regard to 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 b
Slide 29: Lufthansa Investor Relations contact
Lufthansa Investor Relations contact Deutsche Lufthansa AG Investor Relations / FRA IR Lufthansa Aviation Center Airportring D-60546 Frankfurt Phone: +49 (0) 69 696 28010 Fax: +49 (0) 69 696 90990 E-mail: investor.relations@dlh.de Andreas Hagenbring Senior Vice President Investor Relations Phone: +4