Slide 1: Analyst and Investor Conference Call FY 2016
Analyst and Investor Conference Call FY 2016 Carsten Spohr, CEO and Chairman of the Executive Board Munich, 16 March 2017
Slide 2: Disclaimer
Disclaimer The information herein is based on publicly available information. It has been prepared by the Company solely for use in this presentation and has not been verified by independent third parties. No representation, warranty or undertaking, express or implied, is made as to, and no reliance
Slide 3: Lufthansa Group successfully on track with good results in 2016
Lufthansa Group successfully on track with good results in 2016 Highlights Financial Year 2016 Strong financial development Adj. EBIT with 1.75bn EUR (incl. 100m EUR strike costs) on previous year’s level Clearly value creating: EACC of 817m EUR Equity ratio raised to 20.6% Strategic agenda Good ope
Slide 4: Analyst and Investor Conference Call FY 2016 (CFO)
Analyst and Investor Conference Call FY 2016 Ulrik Svensson, CFO and Member of the Executive Board Munich, 16 March 2017
Slide 5: Adjusted EBIT approximately on previous year's level
Adjusted EBIT approximately on previous year‘s level FY and Q4 2016 operating KPIs and key profit figures at a glance Network Airlines Point-to-Point Airlines Aviation Services FY ‘16 Q4 ‘16 in m EUR FY ’16 Q4 ’16 ASK +4.6% +6.2% Adj. EBIT3 225 -46 RASK -5.8% -5.9% Δ year-on-year -87 -15 (constant c
Slide 6: Stronger balance sheet and increased value generation
Stronger balance sheet and increased value generation Key balance sheet and cash flow figures at a glance Network Airlines Point-to-Point Airlines Aviation Services Balance Sheet in m EUR FY ‘16 vs. PY Cash Flow in m EUR FY ‘16 vs. PY Net financial debt 2,701 -19.3% Operating cash flow 3,246 -4.3% P
Slide 7: Strong performance of Lufthansa Passenger Airlines
Strong performance of Lufthansa Passenger Airlines Segment overview FY 2016 Passenger in m EUR Airline Group Revenue 23,891 15,409 4,471 2,153 2,060 vs. PY -608 -657 -71 +51 +151 Adj. EBIT1 1,527 1,135 414 58 -91 vs. PY +22 +254 -15 +6 -129 Adj. EBIT Margin1 6.4% 7.4% 9.3% 2.7% -4.4% vs. PY +0.3pts.
Slide 8: Pressure on unit revenues, but Q4 better than expected
Pressure on unit revenues, but Q4 better than expected Operating KPIs Passenger Airline Group FY ‘16 Q4 ‘16 4.8% 3.2% -2.4% FY ‘16 Q4 ‘16 -4.3% FY ‘16 Q4 ‘16 10.0% 9.6% 1.5% 2.6% -6.7% -6.0% -7.1% FY ‘16 Q4 ‘16 -10.6% 7.7% North America -8.1% | -6.1% South America -19.9% | -10.8% -3.3% -2.8% FY ‘16
Slide 9: Shareholders to participate through established dividend policy
Shareholders to participate through established dividend policy Dividend payment and policy Cumulative Dividend Payments in m EUR 2,000 1,500 ~ 3% average 1,000 dividend yield p.a. 500 2.0bn EUR since 2008 since 2008 1 Year of payout 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Annual R
Slide 10: LH Group expects Adj. EBIT 2017 slightly below previous year
LH Group expects Adj. EBIT 2017 slightly below previous year Forecast Lufthansa Group 2017 Network Airlines Point-to-Point Airlines Aviation Services1 ASK +4.5% organic growth2 RASK Less negative than last year (constant currency) FX to further support reported figure CASK Reduction at FY16 level (c
Slide 11: Analyst and Investor Conference Call FY 2016 (CEO)
Analyst and Investor Conference Call FY 2016 Carsten Spohr, CEO and Chairman of the Executive Board Munich, 16 March 2017
Slide 12: Our goal: #1 for customers, shareholders, employees and partners
Our goal: #1 for customers, shareholders, employees and partners Execution of strategy based on three strategic pillars #1 for customers, shareholders, employees and partners Network Airlines Point-to-Point Airlines Aviation Services #1 in Europe #1 in home markets1 #1 world-wide Premium positioning
Slide 13: Network Airlines: Implementation of revenue and cost measures
Network Airlines Network Airlines: Implementation of revenue and cost measures Premium positioning, innovation driver and margin improvement Increasing revenues Reducing costs Strong revenue backbone Efficient and modern fleet One single LH Group Successful phase-in of revenue management C Series, A
Slide 14: Eurowings: Successful growth with unique market position
Point-to-Point Airlines Eurowings: Successful growth with unique market position Growth with low unit costs in point-to-point segment Total fleet size Organic growth and active consolidation 2016 2017 thereof Increasing scale: >160 a/c 2012 c. 90 >160 33 AB 32 A/C A/C A/C 50 SN 1 out of 3 short-haul
Slide 15: Aviation Services: Optimizing the core and exploring growth options
Aviation Services Aviation Services: Optimizing the core and exploring growth options Innovative growth concepts complement product portfolio Optimizing existing business Growth & Exploring New Business • 80m EUR result program launched • Extending JV Partnerships, • Cargo fleet reduced by 2 MD11 e.
Slide 16: Strategic agenda unchanged and consistently implemented
Strategic agenda unchanged and consistently implemented Summary and Outlook Lufthansa Group developed strongly in 2016 • Adj. EBIT of 1.75 bn EUR on previous year’s level • Stable margin in demanding environment • Clearly value creating with EACC of 817m EUR • Unit cost reduction of 2.5% Adjusted EB
Slide 17: Appendix – supplementary information
Appendix – supplementary information – Page 17
Slide 18: Focus on capacity discipline, growth driven inorganically
Focus on capacity discipline, growth driven inorganically Lufthansa Group capacity growth 2017 per region 4% 5% 1% Network Airlines Eurowings (organic) (organic) -6% Network Eurowings Airlines (organic) (organic) 120% 113% 10% 3% Network Eurowings Network Eurowings Airlines (organic) Airlines (organ
Slide 19: Appendix – financial figures FY 2016
Appendix – financial figures FY 2016 – Page 19
Slide 20: Fuel costs increase due to stronger USD and higher oil prices
Fuel costs increase due to stronger USD and higher oil prices Fuel forecast and sensitivities FY 2017 Lufthansa Group fuel expenses after hedging Lufthansa Group price curve remainder of 2017 (in bn EUR) 105 LH price 2017 95 Market price Sensitivities with deviating oil price 5.2 85 4.9 5.6 (+20%) +
Slide 21: Adj. EBIT expected slightly below the previous year
Adj. EBIT expected slightly below the previous year Forecast 2017 per segment Segment Adj. EBIT 2016 (m EUR) Adj. EBIT Forecast for 2017 Lufthansa German Airlines 1,090 slightly below previous year SWISS 405 slightly below previous year Austrian Airlines 58 slightly below previous year Network airli
Slide 22: Absolute costs (excl. fuel) continue to decrease in fourth quarter
Absolute costs (excl. fuel) continue to decrease in fourth quarter Operating costs and revenues Lufthansa Group (in m EUR) FY 2016 vs. PY Q4 2016 vs. PY Total revenue 31,660 -1.2% 7,790 +0.5% Other operating income 2,279 -24.9% 638 -25.0% Total operating income 33,939 -3.3% 8,428 -2.0% Operating exp
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) FY 2016 vs. PY 3.3 3.4 3.2 2.8 EBT (earnings before income taxes) 2,248 222 2.0 Depreciation & amortization (incl. non-current assets) 1,820 30 Net proceeds from disposal of non-current assets -38 15 FY 2012 F
Slide 24: Pressure on unit revenues offset by strong cost performance
Pressure on unit revenues offset by strong cost performance Operating KPIs Passenger Airline Group Total FY '16 Q4 '16 Europe FY '16 Q4 '16 Asia/Pacific FY '16 Q4 '16 Number of flights +1.9% -1.4% ASK +3.2% +4.8% ASK +1.5% +2.6% ASK +4.6% +6.2% RPK +1.4% +4.8% RPK -0.1% +2.1% RPK +2.8% +6.5% SLF -1.
Slide 25: Group revenue and currency impact
Group revenue and currency impact FY 2016 vs. FY 2015 Currency influence on EBIT (in m EUR) in m EUR Q1 Q2 Q3 Q4 FY (YTD) +85 -28 -22 -138 -103 Volume: +2.7% Price: -5.1% 676 -1,288 Currency: -0.9% -233 Traffic revenue (-3.3%) 25,506 24,661 6,999 Other revenue (+6.9%) 6,550 FY 2015 FY 2016 ∑ 32,056
Slide 26: Fuel costs FY 2016 vs. FY 2015
Fuel costs FY 2016 vs. FY 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 -219 -115 -905 Change versus previous year -899 Volume Price 5,784 123 -973 Currency 4,885 -83 34 Hedging FY 2015 FY 2016 Page 26
Slide 27: Adjusted EBIT and one-off factors
Adjusted EBIT and one-off factors Quarterly results 2015-2016 in m EUR Q1 Q2 Q3 Q4 6M 9M Full Year Adjusted EBIT 2015 -167 635 1,225 124 468 1,693 1,817 Strikes -42 -58 -30 -101 -100 -130 -231 Venezuela -60 +5 -5 -12 -55 -60 -72 Adjusted EBIT ex one-off factors -65 688 1,260 237 623 1,883 2,120 Adju
Slide 28: Reconciliation from EBIT to Adjusted EBIT per segment
Reconciliation from EBIT to Adjusted EBIT per segment FY 2016 Book gains/losses Adj. EBIT FY 16 Segment EBIT FY 16 (m EUR) Impairments Pension changes on asset disposals (m EUR) LH Passenger Airlines 1,723 116 -669 -35 1,135 SWISS 412 4 -2 414 Austrian Airlines 64 -6 58 Eurowings -90 -1 -91 Consolid
Slide 29: Adjusted EBIT and EBIT per quarter 2016
Adjusted EBIT and EBIT per quarter 2016 in m EUR Q1 Q2 Q3 Q4 6M 9M FY Adj. EBIT -53 582 1,148 75 529 1,677 1,752 pension changes 0 0 +721 -43 0 +721 +678 book gains / losses on asset disposals +5 +37 +7 -11 +42 +49 +38 impairments / badwill -1 -52 -64 -76 -53 -117 -193 EBIT -49 567 1,812 -55 518 2,3
Slide 30: Adjusted EBIT and EBIT per quarter 2015
Adjusted EBIT and EBIT per quarter 2015 in m EUR Q1 Q2 Q3 Q4 6M 9M FY 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 -6 +46 +46 +39 impairments / badwill +1 -84 -25 -48 -83 -108 -155 EBIT -144 607 1,200 13 463 1,6
Slide 31: WACC is based on a target capital structure of 50:50
WACC is based on a target capital structure of 50:50 WACC of 4.2% from FY 2017 onwards Cost of Debt1 Cost of Equity2 1.7% (FY 2017) 6.8% (FY 2017) Target Capital Structure 50 : 50 WACC: 4.2% 1 Currently no consideration of tax shield 2 Cost of Equity FY 2017 = Risk-free market interest rate of 1.2%
Slide 32: Current capital employed is ca. 20.3 bn EUR
Current capital employed is ca. 20.3 bn EUR Weighted average cost of capital was 4.8% Average Capital Employed 18,195 19,533 17,545 17,565 WACC 6.2% 5.9% 5.9 % 4.8% 2013 2014 2015 2016 Balance Sheet Total 29,108 30,474 32,462 34,697 ./. Non-Interest Bearing Liabilities 11,563 12,890 13,657 13,657 -