Deutsche Lufthansa Ag · XETR:LHA
Deutsche Lufthansa — FY2015 Earnings Presentation
34 slides from Deutsche Lufthansa's earnings presentation, Mar 17, 2016
Slide 1: Analyst and Investor Conference
Analyst and Investor Conference Carsten Spohr, CEO and Chairman of the Executive Board Frankfurt, 17 March 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: Lufthansa Group achieves good result
Lufthansa Group achieves good result Key financial figures FY 2015 in m EUR FY 2015 vs. PY Revenue 32,056 +6.8% Adjusted EBIT 1,817 +55.2% Adjusted EBIT Margin 5.7% +1.8pts. Net income 1,698 +2,987.3% Gross Invest 2,569 -7.5% Dividend1 0.50 EUR per share -- 1 Proposal for dividend payment Page 3
Slide 4: Result helped by oil price and successfully implemented measures
Result helped by oil price and successfully implemented measures Main reasons for positive development of earnings in 2015 Low oil price supports positive result High acceptance of premium products by customers Strict capacity discipline: fleet downsized by 15 aircraft compared to 2014 Germanwings/E
Slide 5: Highlights of 7to1 – Our Way Forward in 2015
Structural measures ensure future viability Highlights of „7to1 – Our Way Forward“ in 2015 Customer Completion of cabin centricity & quality focus retrofit at Lufthansa Passenger Airlines Innovation Implementation of Effective and digitali- Decision about new zation new distribution and lean strateg
Slide 6: Analyst and Investor Conference – Simone Menne, CFO
Analyst and Investor Conference Simone Menne, CFO Frankfurt, 17 March 2016
Slide 7: Financial KPIs developed positively
Financial KPIs developed positively FY 2015 at a glance Lufthansa Group (in m EUR) FY 15 FY 14 vs. PY Q4 15 Q4 14 vs. PY Total revenue 32,056 30,011 +6.8% 7,752 7,387 +4.9% of which traffic revenue 25,322 24,388 +3.8% 5,935 5,928 +0.1% EBIT 1,676 1,000 +67.6% 13 -48 -- Adjusted EBIT 1,817 1,171 +55.
Slide 8: Result improvement mainly driven by passenger airlines
Result improvement mainly driven by passenger airlines Segment overview FY 2015 2 Passenger in m EUR Airline Group Revenue 24,449 17,944 4,542 2,102 1,909 vs. PY in % +5.1% +4.9% +7.1% +1.6% Others & Consolidation3 Adj. EBIT1 1,505 970 429 52 38 Revenue -2,919 vs. PY in % +114.7% +143.1% +54.3% +477
Slide 9: Pricing developed better in Q4; one-time effects burden unit costs
Pricing developed better in Q4; one-time effects burden unit costs Operative KPIs Passenger Airline Group Total FY '15 Q4 '15 Europa FY '15 Q4 '15 Asia/Pacific FY '15 Q4 '15 Number of flights +0.2% +0.7% ASK +0.0% -0.4% ASK +3.4% -0.5% ASK +2.2% -0.3% RPK +1.1% -0.7% RPK +4.2% -0.2% RPK +2.7% -0.5%
Slide 10: Lufthansa Group expects Adj. EBIT slightly above PY for 2016
Lufthansa Group expects Adj. EBIT slightly above PY for 2016 Forecast Lufthansa Group 2016 Lufthansa Group Adjusted EBIT Actual and Forecast Forecast FY 2016: Expected fuel costs: 4.8 bn EUR1 slightly above previous year Tailwind of 1.0 bn EUR vs. PY at Brent forward of 39 USD/bbl;1.10 USD/EUR 1
Slide 11: Shareholders to participate in good result
Shareholders to participate in good result Payout proposal in line with dividend policy Cumulative dividend payments in m EUR Shareholder Return in % of 2,000 > 1.7 bn EUR since 2008 market capitalization 2008 - 2016 Lufthansa Group 25% 1,500 Ryanair 21% 1,000 easyJet 14% 500 Air France KLM 8% IAG 4
Slide 12: Analyst and Investor Conference – Carsten Spohr, CEO
Analyst and Investor Conference Carsten Spohr, CEO and Chairman of the Executive Board Frankfurt, 17 March 2016
Slide 13: Our goal: #1 for customers, shareholders, employees and partners
Our goal: #1 for customers, shareholders, employees and partners Further development of three strategic pillars #1 for customers, shareholders, employees and partners Premium network Eurowings Group Aviation Services airline system #1 in Europe #1 in Home Markets* #1 worldwide Premium positioning &
Slide 14: Revenue and cost optimization at Hub Airlines
Hub Airlines Revenue and cost optimization at Hub Airlines Strengthening of yield premium and improvement of cost position Revenue optimization Premium products Network quality Distribution / individualization Personalization & digitalization One Uniform website fares New revenue management system C
Slide 15: Stable and profitable growth at Eurowings
Eurowings Stable and profitable growth at Eurowings Positive performance und unit cost advantages Status Eurowings Competitive cost structures Development unit costs Eurowings (excl. fuel)1 Safeguarding operational stability High load factors and good development of bookings on long-haul Development
Slide 16: Development of product portfolio at Aviation Services
Aviation Services Development of product portfolio at Aviation Services Profitable growth opportunities in new markets Growth e.g. in the field of Focus on integrated buy-on- Program to sustainably maintenance services for board service concepts (RIM*) increase profitability is set up low cost
Slide 17: Realignment of Group makes progress
Realignment of Group makes progress Summary Good development of results in 2015 Adjusted EBIT of 1.8 bn. EUR in 2015 Proposal for dividend payment of 0.50 EUR per share Expansion of premium positioning at hub airlines Completion of terminal extension at Munich airport, implementation of new firs
Slide 18: Appendix – Financial Figures FY 2015
Appendix – Financial Figures FY 2015 – Page 18
Slide 19: Capacity planning at hub airlines and Eurowings
Capacity planning at hub airlines and Eurowings Lufthansa Group capacity growth 2016 per region 11.5% 4.2% 2.4% nmf. 3.8% Hub Eurowings LH 1.8% Airlines Group nmf. Hub Eurowings LH 12.5% Airlines Group 9.2% nmf. -0.5% Hub Eurowings LH -2.3% Airlines Group Hub Eurowings LH Airlines Group 35.2% Landin
Slide 20: Expected fuel costs decrease versus previous year
Expected fuel costs decrease versus previous year Fuel forecast and sensitivities FY 2016 and 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 21: Trading assumptions 2016 indicate profit improvement
Trading assumptions 2016 indicate profit improvement Trading assumptions FY 2015 and 2016 FY15 FY16 assumptions Explanation FY16 assumptions c. 2.3% Slight increase at hub airlines; No. of Flights +0.2% increase mainly due to Eurowings fleet growth Hub airlines +4.3% (thereof 1.3pts. strike effect);
Slide 22: Passenger Airlines to improve Adj. EBIT, other segments slightly lower
Passenger Airlines to improve Adj. EBIT, other segments slightly lower Forecast 2016 per segment Segment Adj. EBIT 2015 (m EUR) Adj. EBIT Forecast for 2016 Lufthansa Passenger Airlines 970 slightly above previous year SWISS 429 slightly below previous year Austrian Airlines 52 significantly above pr
Slide 23: Fuel and currency effects provide significant relief
Fuel and currency effects provide significant relief Operating costs and revenues Lufthansa Group (in m EUR) FY 2015 vs. PY Q4 2015 vs. PY Total revenue 32,056 +6.8% 7,752 +4.9% Other operating income 3,035 +44.4% 851 +35.9% Total operating income 35,091 +9.3% 8,603 +7.4% Operating expenses 33,536 +
Slide 24: CASK in Q4 significantly impacted by one-off effects
CASK in Q4 significantly impacted by one-off effects Development unit costs in Q4 2015 9.5 9.1 One-off effects 1.9 Tariff agreements 85 m EUR Reduction ASK growth (strikes) 3,2P. ASK 2.3 +7.4% 0.4 0.4 0.1 CASK cc. ex. fuel +2.1% 6.7 6.8 thereof fuel thereof currency thereof one-off effects comparabl
Slide 25: Cash flow increases significantly, liquidity is on good level
Cash flow increases significantly, liquidity is on good level Cash flow statement Lufthansa Group (in m EUR) FY 2015 vs. PY 3.3 3.4 2.8 2.4 EBT (earnings before income taxes) 2,026 +1,846 2.0 Depreciation & amortization (incl. non-current assets) 1,790 +282 Net proceeds from disposal of non-current
Slide 26: Group revenue and currency influence
Group revenue and currency influence FY 2015 vs. FY 2014 Currency influence on EBIT (in m EUR) in m EUR Q1 Q2 Q3 Q4 FY -134 -24 -18 -37 -213 Currency: +5.9% Volume: +2.0% Price: -4.1% 495 1,443 -1,004 25.322 Traffic revenue (+3.8%) 24,388 6,734 5,623 Other revenue (+19.8%) FY 2014 FY 2015 ∑ 30,011 ∑
Slide 27: Fuel costs FY 2015 vs. FY 2014
Fuel costs FY 2015 vs. FY 2014 Hedging result by quarter (in m EUR) in m EUR Q1 Q2 Q3 Q4 FY 2014 -20 -3 -30 -96 -149 2015 -203 -205 -271 -309 -988 -967 Volume Price 6,751 119 Currency 5,784 -3,283 1,358 Hedging 839 FY 2014 FY 2015 Page 27
Slide 28: 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 2014 -240 418 810 183 178 988 1,171 incl. strikes -10 -60 -35 -127 -70 -105 -232 incl. Venezuela -38 -23 +7 -5 -61 -54 -59 Adjusted EBIT ex one-off factors -192 501 838 315 309 1,147 1,46
Slide 29: Adjusted EBIT margins FY 2015 vs. FY 2014
Adjusted EBIT margins FY 2015 vs. FY 2014 13.0 all figures in % 12.0 11.0 10.0 9.4 8.9 8.8 9.0 8.0 7.0 6.6 6.1 6.0 5.7 5.4 5.1 5.0 3.9 4.0 3.1 3.3 3.3 3.0 3.0 2.5 2.3 2.0 1.0 0.4 0.0 Lufthansa SWISS Austrian Airlines Passenger Logistics MRO Catering Lufthansa Passenger Airline Group Group Airlines F
Slide 30: Adjusted EBIT margins Q4 2015 vs. Q4 2014
Adjusted EBIT margins Q4 2015 vs. Q4 2014 18.0 all figures in % 16.0 14.0 12.0 10.0 8.1 8.0 6.3 6.6 6.0 5.0 4.6 4.1 4.0 3.2 2.8 2.7 2.7 2.8 3.0 2.5 1.9 1.6 2.0 0.0 -2.0 -1.8 Lufthansa SWISS Austrian Airlines Passenger Logistics MRO Catering Lufthansa Passenger Airline Group Group Airlines Q4 2015 Q4
Slide 31: Reconciliation from EBIT to Adjusted EBIT per segment
Reconciliation from EBIT to Adjusted EBIT per segment FY 2015 Book gains/losses Adj. EBIT FY 15 Segment EBIT FY 15 (m EUR) Impairments Pension changes on asset disposals (m EUR) LH Passenger Airlines 904 28 45 -7 970 SWISS 462 -32 -1 429 Austrian Airlines 54 -2 52 Consolidation 45 9 54 Passenger Air
Slide 32: 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
Slide 33: WACC is based on a target capital structure of 50:50
WACC is based on a target capital structure of 50:50 Current WACC is 4.8% Cost of Debt1 Cost of Equity2 2.4% (FY 2016) 7.2% (FY 2016) Target Capital Structure 50 : 50 WACC: 4.8% 1 Currently no consideration of tax shield 2 Cost of Equity FY 2016 = Risk-free market interest rate of 1.7% + (Market ris
Slide 34: Current capital employed is ca. 18.8 bn EUR
Current capital employed is ca. 18.8 bn EUR Weighted average cost of capital is 5.9% 18,101 17,526 17,545 17,565 Average Capital Employed WACC 7.0% 6.2% 5.9 % 5.9% 2012 2013 2014 2015 Balance Sheet Total 28.559 29,108 30,474 32,462 ./. Non-Interest Bearing Liabilities 10.940 11,563 12,890 13,657 - l