Kenya Airways PLC · NSEKE:KQ
Kenya Airways — FY2007 Earnings Presentation
36 slides from Kenya Airways's earnings presentation, September 2007
Slide 1: Business and Financial Review
Business and Financial Review Year Ended 31st March 2007
Slide 2: Global Economy
Global Economy • Growth in world economy - High growth rate in Developing Nations - Africa in recovery stage - Increased Chinese and Indian interest in Africa • Softening in Oil prices from mid-2006 but still higher than previous year
Slide 3: Airline Industry
Airline Industry • Passenger traffic up 5.9% on prior year slightly below 7.6% achieved in 2005 (IATA data). - Industry long term Passenger forecast estimated at average 5-6% • Fastest growing regions in passenger traffic:- - Middle East 15.4% - Africa 8.6% (KQ Africa 9.6%) • Freight traffic up 4.6%
Slide 4: Industry Performance
Industry Performance International Passenger Statistics: Calendar Year End 2006 Over 2005 RPK% ASK% PLF % PLF % Growth Growth 2006 2005 Africa 8.6 8.7 68.3 68.6 Asia/Pacific 5.3 2.8 74.6 72.7 Europe 5.3 4.5 77.0 76.4 Middle East 15.4 15.6 73.4 73.6 North America 5.7 4.8 80.2 79.5 South America (2.4)
Slide 5: Industry Performance
Industry Performance First Quarter Passenger Traffic -2007 Statistics from IATA Website RPK% ASK% PLF % PLF % Growth Growth 2007 2006 Africa 10.1 10.3 67.5 68.8 Asia/Pacific 5.9 5.3 74.3 74.3 Europe 6.6 4.9 74.7 73.6 Middle East 19.7 16.4 75.2 73.4 North America 6.1 5.2 78.2 73.7 South America (2.8)
Slide 6: Industry Performance
Industry Performance International Cargo Statistics: Year End Calendar 2006 Over 2005 FTK% Growth FTK% Growth 2006 2005 Africa 5.9 7.9 Asia/Pacific 4.7 5.2 Europe 1.7 2.1 Middle East 16.1 16.8 North America 6.0 6.2 South America (2.6) 3.0 Industry 4.6 5.2 KQ ( Based on March year end) 12.5 25.9 Sour
Slide 7: JKIA Rehabilitation
JKIA Rehabilitation • Divided into 3 Projects: - Apron and Taxiways - Terminal 4 and Vehicle parking - Rehabilitation of current terminals 1-3 • Progress: - Work on Apron and taxiways to finish by Oct 07 (2 months delay mainly due to rainy season effect) - Terminal 4 and Parking cost justification r
Slide 8: Key Activities for past one year
Key Activities for past one year
Slide 9: People
People • Abinitio training pilot training in the year - 60 pilots at KShs 240m • Leadership centre
Slide 10: Performance Improvement Project - PIP
Performance Improvement Project - PIP • What we set out to achieve: - To reduce budgeted costs by KShs 1.3B for the FY 2006/07 - To improve customer service at JKIA - To improve customer service on board KQ flights •What we achieved - Cost Initiatives benefits ………Ksh 787.1M - JKIA customer service i
Slide 11: Fleet
Fleet •Entry • Leasing of an additional B767 in June 2006 • Received 3 B737-800’s between October and December 2006 replacing 3 B737-200’s • 4th B777 delivered in February 2007 •Exit • Retirement of the last 2 B737-200 w.e.f February 2007
Slide 12: Network
Network • Successfully launched services to: - Oct 06: Charles de Gaulle (Paris) - Nov 06: Dzaoudzi combined with Moroni - Mar 07: Cotonou (Benin) extending to Abidjan - Mar 07: Monrovia via Accra - Mar 07: Direct service to Lubumbashi
Slide 13: Corporate Social Responsibility - Projects
Corporate Social Responsibility - Projects Makueni & Taita Taveta Water Wells With AMREF Mukuru Community School jointly built with KLM & Boeing Refurbishment of Kwale primary school Tree planting in Kiserian 130,000 seedlings planted - Co-sponsored by: KQ, KLM, Rolls Royce, Coca Cola, TARDA
Slide 14: Mukuru Community School Before
Mukuru Community School Before
Slide 15: CSR Cont.
CSR Cont. KQ/KL Launch of Mukuru Community Centre School Jointly built by KLM & Boeing at a cost of KShs18m
Slide 16: Mukuru Community School
Mukuru Community School Kenya Airways Che JO rile of Africas
Slide 17: Financial Highlights
Financial Highlights 2006 2007 Var Var% • Group turnover (KShs mil) 52,804 58,792 5,987 11.3% • Operating costs (KShs mil) 44,948 51,153 (6,205) (13.8%) • Operating Margin% 14.9% 13.0% (1.9%) • Profit before tax (KShs mil) 6,960 5,975 (985) (14.2)% • Profit after tax (KShs mil) 4,829 4,098 (731) (15
Slide 18: Neil Canty, Finance Director
Neil Canty Finance Director Kenya Airways Che fOnicle of NA fricer
Slide 19: Fleet at Year-End
Fleet at Year-End 2007 2006 Aircraft in Service Boeing 777-200 4 3 Boeing 767-300 6 5 Boeing 737-800 3 0 Boeing 737-700 4 4 Boeing 737-300 4 4 Boeing 737-200 0 3 Saab 340 2 2 TOTAL 23 21
Slide 20: Group Income Statement
Group Income Statement KShs M 2007 2006 Var % Var Total Revenue 58,792 52,804 5,987 11.3 DOCs (35,126) (30,347) (4,779) (15.7) Fleet Own'ship(excl. int) (6,209) (5,105) (1,104) (21.6) Gross Profit 17,457 17,352 104 0.6 Overheads (9,818) (9,496) (322) (3.4) Operating Profit 7,639 7,856 (217) (2.8) Op
Slide 21: Group Turnover
Group Turnover KShs M % Split 2007 2006 Var % Var Passenger 85.8% 50,447 45,266 5,181 11.4 Cargo 9.8% 5,756 5,453 303 5.6 Handling 1.9% 1,139 1,172 (33) (2.8) Others 2.5% 1,450 914 537 58.8 Total Revenue 100% 58,792 52,804 5,987 11.3
Slide 22: Turnover in USD M
Turnover in USD M 900 OTH 800 700 600 CGO 500 400 300 PAX 200 100 - 2003 2004 2005 2006 2007
Slide 23: Passenger Load Factor %
Passenger Load Factor % 100 90 80 70 60 50 40 30 20 10 0 2003 2004 2005 2006 2007
Slide 24: Fuel Costs
Fuel Costs • Total cost up 20.0% on last year from KShs 13,221m to KShs 15,887m - Mainly due to price increase of 11.7% and volume growth 12.0% mitigated by US$ reduction 4.2% • Every 1.0% increase in the unit price reduced profit after Tax by KShs 111m • Currently hedged 80.0% of requirements until
Slide 25: Fuel Market Rates
Fuel Market Rates (cag) 240 220 200 180 160 140 120 100 80 60 40 20 0 Apr May Jun Jul Aug Sep Oc t Nov Dec Jan Feb Mar Apr May 2007 2006
Slide 26: Fleet Ownership Costs
Fleet Ownership Costs Actual Actual KShs M 2007 2006 Var % Var Hire of a/c & engines 3,643 3,215 (427) (13.3) Dep'n a/c, engines 2,735 2,043 (692) (33.9) Boeing credit (169) (153) 16 (10.3) TOTAL 6,209 5,105 (1,104) (21.6) Fleet cost as % of Total Cost 11.9% 11.1% (0.8%) Fleet cost as % of Turnover
Slide 27: Net Finance Costs
Net Finance Costs KShs M 2007 2006 Var % Var Aircraft Int. expense 1,636 1,603 (33) (2.1) Deposit Int. (income) (572) (440) 132 29.9 Overdraft Interest 81 57 (23) 40.7 TOTAL 1,144 1,220 75 6.2
Slide 28: Group Balance Sheet
Group Balance Sheet KShs M % ASSETS 2007 2006 MOVT MOVT Aircraft 48,994 42,033 6,961 14 Aircraft Advance Payments 2,106 4,187 (2,081) (99) Other Assets/Investments 5,884 5,221 663 11 Total Non-Current Assets 56,984 51,441 5,543 10 Inventories 962 803 159 17 Receivables 6,518 5,393 1,125 17 Tax recov
Slide 29: Group Balance Sheet
Group Balance Sheet KShs M % EQUITY AND LIABILITIES 2007 2006 MOVT. MOVT. Capital 2,308 2,308 - - Cumulative Profits 17,190 13,900 3,290 19 Hedge Reserve 2,142 1,049 1,093 51 Aircraft Loans 31,287 28,545 2,742 9 Deferred Taxation 7,210 4,969 2,241 31 Deferred Income 2,587 2,704 (117) (5) Total Non-C
Slide 30: Group Cash Flow
Group Cash Flow KShs M 2007 2006 VAR % VAR Cash generated by Ops 8,706 11,301 (2,595) (30) Income Tax paid (212) (1,272) 1,060 500 Net Interest Paid (1,145) (1,219) 74 6 Net Cash from Ops 7,349 8,810 (1,461) (20) Aircraft Acquisitions (9,696) (22,233) 12,537 129 Aircraft Loans Raised 7,807 19,086 (1
Slide 31: Ratio Analysis
Ratio Analysis 2007 2006 Var Op. Margin% 13.0% 14.9% (1.9% ) PAT Margin% 7.0% 9.2% (2.2% ) Return on Equity 21.1% 32.6% (11.5% ) Interest Cover 5.5 5.1 0.40 Debt Equity(On Bal/sheet) 0.9 1.0 0.13 Debt Equity(Off Bal/sheet) 1.7 1.7 0.02
Slide 32: PAT (KShs mil)
PAT (KShs mil) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2003 2004 2005 2006 2007
Slide 33: Dividend per Share - KShs
Dividend per Share - KShs 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 2003 2004 2005 2006 2007
Slide 34: KQ Share Price Vs NSE Index
KQ –Share Price Vs NSE Index 140 7000 120 6000 100 5000 80 4000 60 3000 40 2000 20 1000 - 0 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 KQ Share Price NSE Index
Slide 35: Benchmark
Benchmark KQ AF/KL BA EK 06/07 06/07 06/07 06/07 Turnover (USD Mil) 817 30,226 16,559 8,057 PBT (USD Mil) 83 1,465 1,173 902 PAT (USD Mil) 57 1,140 854 836 Op. Margin(%) 13.0% 5.4% 7.1% 11.4% Net Margin(%) 7.0% 3.8% 5.2% 10.6% Note: Op. margin includes interest implicit in Operating Leases but not L
Slide 36: Questions and Answers
Questions and Answers