Deutsche Lufthansa AG · XETR:LHA
Deutsche Lufthansa — Deutsche Bank Conference 2013
32 slides from Deutsche Lufthansa's conference presentation, May 14, 2013
Slide 1: Simone Menne, Member of the Executive Board and CFO
Simone Menne, Member of the Executive Board and CFO Frankfurt/Main, May 14, 2013 Page 1
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 historical facts. These forward-looking statements are based
Slide 3: Overview
Overview European airline industry is consolidating and becoming increasingly rational Consolidation and financial pressure are driving change at all major European airlines Capacity discipline is intact Benefits of tight capacity management are already becoming visible Lufthansa is in the pole posi
Slide 4: Consolidation and cost pressure are driving industry rationality
Consolidation and cost pressure are driving industry rationality Capacity growth is on low levels, fuel costs remain high Competition is driven by three network Oil price remains on high level, Capacity growth in Europe is carriers and two main LCCs especially in EUR terms on record low levels 160 1
Slide 5: Business models are converging
Business models are converging Legacy carriers reduce costs and low cost carriers increase prices Legacy carriers focus on margin improvement. Capacity discipline LCCs with moderate growth and more yield focus continues (Communicated outlooks) (Communicated capacity plans) 1.6 bn EUR operating profi
Slide 6: Positive effect of capacity discipline is visible in operational figures
Positive effect of capacity discipline is visible in operational figures Higher seat load factor and yield increases Lufthansa Group Passenger Airline Group Q1 12 Q2 12 Q3 12 Q4 12 FY 12 Q1 13 Capacity vs. Demand (ASK vs. RPK) Seat Load Factor +1.3 pts. +1.0 pts. +1.3pts. +1.4 pts. +1.2 pts. +1.9pts
Slide 7: Lufthansa will continue its restrictive capacity path in 2013
Lufthansa will continue its restrictive capacity path in 2013 Capacity forecast and current business development Passenger Business – Current Trading Capacity outlook for full year 2013 Passenger Airline Group [ASK] Capacity growth only driven by long-haul capacity, in particular due to larger aircr
Slide 8: Aircraft orders are mainly for replacements not growth
Aircraft orders are mainly for replacements not growth Fleet rollover is being accelerated and new products are introduced Aircraft deliveries 2013-2025 Total Example: Lufthansa Passenger Airlines market growth Airbus 380 4 LH base case ca. +2% p.a. Boeing 747-8i 15 stable fleet Boeing 777 (of which
Slide 9: Financial strength puts LH in pole position for future developments
Financial strength puts LH in pole position for future developments Cash flow generation is strong and financial profile is conservative 1. Lufthansa is profitable and 2. Solid financial profile provides 3. Conservative fleet structure produces strong cash flows competitive edge in financing allows
Slide 10: Non-airline segments are key for the solid financial profile
Non-airline segments are key for the solid financial profile Diversified portfolio provides LH Group with stable baseline profits Revenue Operating result Range of op. margin Airlines 23.6 bn +4.8% Passenger Airlines 258 m Group -0.1% +11.4% 2.7 bn Logistics 104 m (Cargo) -8.0% Service Companies 4.0
Slide 11: The profit trend at Lufthansa Group must be turned around
The profit trend at Lufthansa Group must be turned around Passenger business in focus Lufthansa Group Largest Segment: Passenger Airline Group Operating result and adj. op margin Operating result and adj. op margin 1,280 1,020 820 5.8% 789 4.7% 4.9% 629 524 4.0% 3.4% 349 1.4% 2.3% 2.1% 258 1.6% 130
Slide 12: SCORE transforms Lufthansa into a strong and more profitable Group
SCORE transforms Lufthansa into a strong and more profitable Group Comprehensive restructuring and SCORE measures Unprofitable Lufthansa Italia shut down in Oct 2011 Highly loss making British Midland sold Exit from Jade Cargo Austrian Airlines' operations transferred into ca. -25% lower cost subsid
Slide 13: SCORE is to improve the Group operating profit to 2.3 bn EUR by 2015
SCORE is to improve the Group operating profit to 2.3 bn EUR by 2015 Current SCORE pipeline of gross contributions before cost headwinds further headwinds to be compensated by additional measures in m EUR 744 768 900 Target 2013: 740 m EUR gross contributions numbers as of snapshot as of 28 February
Slide 14: Operating segments are on track to improve results
Operating segments are on track to improve results Key figures for Q1 2013 Share of LH Group’s 74.1% 9.0% 9.4% 6.5% 1.0% external revenue Q1 2013 Passenger Other & in €m Airline Group Logistics MRO Catering IT Services consolidation Revenue 5,069 599 994 569 150 -753 vs. PY +0.6% -9.5% -3.1% +0.2% +
Slide 15: Group Outlook unchanged: operating profit higher than last year's
Group Outlook unchanged: operating profit higher than last year's Outlook for the Group for FY 2013 Outlook 2013 Revenue above previous year Operating profit 2013 higher than reported operating profit for 2012 SCORE activities should make a substantial gross contribution to earnings in 2013 Operatin
Slide 16: Summary
Summary European airline industry is consolidating and becoming increasingly rational Consolidation and financial pressure are driving change at all major European airlines Capacity discipline is intact Benefits of tight capacity management are already becoming visible Lufthansa is in the pole posit
Slide 17: Simone Menne, Member of the Executive Board and CFO
Simone Menne, Member of the Executive Board and CFO Frankfurt/Main, May 14, 2013 Page 17
Slide 18: Appendix – Supplementary Financial Information
Appendix – Supplementary Financial Information – Page 18
Slide 19: All segments expect to improve or maintain their profits in FY 2013
All segments expect to improve or maintain their profits in FY 2013 Outlook for business segments Passenger Airline Group Logistics MRO Catering IT Services Outlook moderate increase in operating profit in the expectations of moderate increase in moderate revenue revenue and operating three-digit mi
Slide 20: FY 2012 Key Figures for the Group
FY 2012 Key Figures for the Group Lufthansa Group (in m EUR) FY 2012 FY 2011 vs. PY Group Revenue 30,135 28,734 +4.9% of which traffic revenue 24,793 23,779 +4.3% Operating result 524 820 -36.1% Adj. operating margin* 2.3% 3.4% -1.1pts. EBITDA 3,270 2,546 +28.4% Net Income 990 -13 n.a. Operating Cas
Slide 21: FY 2012 Overview Group segments
FY 2012 Overview Group segments Share of external LH Group 75.8% 8.8% 8.1% 6.4% 0.9% Revenue Passenger Others & in m EUR Airline Group Logistics MRO Catering IT Services Consolidation Revenue 23,559 2,688 4,013 2,503 609 -3,237 vs. PY +5.7% -8,7% -2.0% +8.9% +1.7% -7.2% Op. result 258 104 318 97 21
Slide 22: FY 2012: Adj. operating margin per airline and business segment
FY 2012: Adj. operating margin per airline and business segment FY2012 vs. FY2011 10,0% 9,1% 8,6% 8,0% 6,9% 6,6% 6,0% 4,7% 4,2% 4,0% 3,8% 3,9% 4,0% 3,6% 3,7% 3,4% 2,1% 2,3% 2,0% 1,4% 1,6% 0,3% 0,0% -2,0% -2,7% -4,0% Lufthansa SWISS Austrian Passenger Logistics MRO IT Services Catering LH Group Passe
Slide 23: Q1 2013 Key figures for the Lufthansa Group
Q1 2013 Key figures for the Lufthansa Group Lufthansa Group (in EUR m) Q1 2013 Q1 2012 vs. PY Total revenue 6,628 6,619 +0.1% of which traffic revenue 5,337 5,349 -0.2% Operating result -359 -359 +0.0% Adjusted operating margin* -5.2% -5.2% +0.0 pts. EBITDA -3 76 - Net profit/loss for the period -45
Slide 24: As expected, IAS 19 resulted in a clear shift on the balance sheet
As expected, IAS 19 resulted in a clear shift on the balance sheet Implementation of IAS 19 Balance sheet as of 31.12.2012 (prior to new accounting) Balance sheet as of 31.3.2013 (based on new accounting) assets equity and liabilities assets equity and liabilities non current assets equity ratio equ
Slide 25: Balance sheet targets adjusted with regards to new IFRS rules
Balance sheet targets adjusted with regards to new IFRS rules Financial targets New Old Current Target Target Status IFRS changes (especially pensions) have impaired equity Equity Equity 25% 25% 30% 15% sustainably but do not change underlying economic Ratio Ratio mid-term situation. Equity ratio ta
Slide 26: SCORE transforms the Group in all areas
SCORE transforms the Group in all areas All operating entities are contributing through own projects Examplatory projects per airline / segment Number of projects per Group segment Company Project Passenger Airline LHP New Germanwings Group Logistics MRO Catering IT Services Premium Economy Extensio
Slide 27: Exemplary SCORE project: New Germanwings
Examplatory SCORE project: New Germanwings Non-hub traffic merged into one profitable carrier with only two aircraft types 2009 2012 2015 # of 5 3 1 brands (Lufthansa, Germanwings, Eurowings, Cityline, Contact Air) (Lufthansa, Germanwings, Eurowings) (Germanwings) # of aircraft 8 5 2 (B737-300,-500,
Slide 28: SCORE leads to one-off restructuring costs
SCORE leads to one-off restructuring costs Overview of staff measures Provisions for >2,000 severances packages Further restructuring measures have recently been announced in FY 2012 GLOBE Group-wide pooling of HR, Procurement, Finance and Accounting ~ 1.100 FTEs affected ~ 200 m EUR cumulative savi
Slide 29: Fuel cost for 2013 now expected at EUR 7.0 bn
Fuel cost for 2013 now expected at EUR 7.0 bn Fuel forecast and sensitivities 150 LH price 140 2013 130 7.8bn (+20% oil price) USD/barrel 120 Market price 7.4bn (+10% oil price) 7.0bn (base case) 110 6.5bn (-10% oil price) 6.2bn (-20% oil price) USD 103/barrel as of 30.4.2013 100 90 80 70 as of 15 A
Slide 30: Lufthansa's fuel hedging strategy
Lufthansa's fuel hedging strategy Rolling approach to reduce volalitility of costs Current hedging level status FY2013 76% FY2014 38% Lufthansa's hedging strategy is designed to reduce volatility Rolling approach with 24 months lead time before actual consumption Hedging level is increased month-by-
Slide 31: High flexibility is the key in a volatile industry
High flexibility is the key in a volatile industry Example: LH Cargo flexibly adapts to all market phases % 50 ton km sales in % vs. previous year 40 2008 2009 2010 2011 2012 2013 30 Operating profit in m EUR (per quarter) 20 109 10 86 80 76 47 64 69 29 35 40 19 28 19 38 27 0 4 -72 -62 -66 -10 -20 f
Slide 32: 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 Visit our webpage: lufthansa-group.com/investor-relations Page 32