Deutsche Lufthansa Ag · XETR:LHA
Deutsche Lufthansa — Q2 2018 Earnings Presentation
23 slides from Deutsche Lufthansa's earnings presentation, Jul 31, 2018
Slide 1: Analyst and Investor Conference Call – Q2 2018
Analyst and Investor Conference Call – Q2 2018 Ulrik Svensson CFO and Member of the Executive Board Frankfurt, 31 July 2018
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: Strong operating performance across all businesses
Strong operating performance across all businesses Overview Q2 2018 Q2 operating profit slightly below last year • Q2: Adjusted EBIT of 982m EUR (-3.4%) • Profit above prior year level excluding one-off integration costs at Eurowings Group Airlines continue to perform well in Q2 • Combined constant
Slide 4: Good operating performance largely offsets fuel cost and fx pressures
Good operating performance largely offsets fuel cost and fx pressures Q2 2018 operating KPIs and key profit figures at a glance Passenger Airlines Aviation Services Q2 ‘18 H1 ’18 in m EUR Q2 ‘18 H1 ‘18 • 2.3% unit cost reduction at ASK +7.8% +8.2% Network Airlines in Q2 above Adj. EBIT2 141 256 RASK
Slide 5: Strong yield performance in North Atlantic business
Strong yield performance in North Atlantic business Operating KPIs Passenger Airlines Q2 ‘18 H1 ‘18 +11.4% +12.7% Q2 ‘18 H1 ‘18 +7.8% +8.2% +2.3pts. +2.2 pts. +1.1% +1.1 pts. +0.7% 0.0 pts. Q2 ‘18 H1 ‘18 -1.6% -0.9% Q2 ‘18 H1 ‘18 +7.2% ASK SLF Yield excl. currency +6.3% +5.3% +4.3% +3.0% +0.5 pts. +
Slide 6: Network Airlines and Logistics drive growth and margin improvement
Network Airlines and Logistics drive growth and margin improvement Segment overview Q2 and H1 2018 Network Airlines Eurowings2 in m EUR Q2 H1 Q2 H1 Q2 H1 Q2 H1 Q2 H1 Revenue1 5,940 10,668 4,154 7,494 1,242 2,303 612 1,008 1,142 1,935 vs. 2017 -228 -429 -204 -346 +32 +32 -39 -83 +53 +163 Adj. EBIT 83
Slide 7: Cash flow generation remains strong despite higher investments
Cash flow generation remains strong despite higher investments Key balance sheet and cash flow figures at a glance Network Airlines Eurowings Aviation Services Balance Sheet in m EUR H1 ‘18 vs. FY ‘17 Cash Flow in m EUR H1 ‘18 vs. H1 ‘17 Net financial debt 2,554 -11,4% Operating cash flow 3,018 -6.4
Slide 8: Lufthansa Group confirms operating profit guidance
Lufthansa Group confirms operating profit guidance Full year 2018 outlook Forecast Capacity Growth (ASK, organic and inorganic) c. +8% Unit Revenue Group Airlines (RASK, ex. currency) slightly positive Unit Cost (CASK, ex. currency, ex. fuel) c. -1% Fuel (compared to previous year) additional cost o
Slide 9: Appendix - supplementary information
Appendix - supplementary information-
Slide 10: Passenger Airlines expand capacity in a consolidating market
Passenger Airlines expand capacity in a consolidating market Lufthansa Group capacity growth 2018 by region 13% 12% Total growth incl. inorganic growth1 5% H1 ‘18 FY ‘18 5% 8% H1 ’18 FY ’18 6% 9% 8% 9% 8% H1 ’18 FY ’18 H1 ’18 FY ’18 5% 6% Landings ASK Landings ASK H1 ’18 FY ’18 1 Growth through Air
Slide 11: Fuel costs expected to increase by c. 850m EUR in 2018
Fuel costs expected to increase by c. 850m EUR in 2018 Fuel forecast and sensitivities FY 2018 Lufthansa Group fuel expenses after hedging (in bn EUR) Lufthansa Group price curve for 2018 6.1 6.3 (+20%) 6.2 (+10%) Sensitivities 110 5.2 6.0 (- 10%) (deviating oil price) LH price 2018 2017 5.8 (- 20%)
Slide 12: Passenger Airlines and Cargo drive growth and margin improvement
Passenger Airlines and Cargo drive growth and margin improvement Segment overview Q2 and H1 2018 – excluding IFRS 15 effect Network Airlines Eurowings1 in m EUR Q2 H1 Q2 H1 Q2 H1 Q2 H1 Q2 H1 Revenue 6,365 11,456 4,489 8,110 1,265 2,335 678 1,148 1,307 2,219 vs. 2017 +197 +359 +131 +270 +55 +64 +27 +
Slide 13: Adoption of IFRS reduces revenues and costs
Adoption of IFRS 15 reduces revenues and costs Profit & Loss effect of IFRS 15 Context • IFRS 15 relates to the accounting of revenues arising from contracts with customers • Netting of revenues and related expenses required in some cases (e.g. ticket related taxes, airport fees) IFRS 15 effect in H
Slide 14: Group Adjusted EBIT expected to be slightly below previous year
Group Adjusted EBIT expected to be “slightly below previous year” Forecast 2018 by segments and units Segment Adj. EBIT 2017 (m EUR) Adj. EBIT Forecast for 2018 Lufthansa German Airlines 1,627 slightly below previous year SWISS 542 broadly stable Austrian Airlines 94 slightly below previous year Net
Slide 15: Appendix - financial figures Q2/H1
Appendix - financial figures Q2/H1-
Slide 16: Group revenue bridge H1 2018 vs. H1 2017
Group revenue bridge H1 2018 vs. H1 2017 in m EUR Price: +2.3% Volume: +8.4% 301 -470 Currency: -3.5% -1,072 1,104 IFRS 15 adj.: -8.1% 13,293 13,156 Traffic revenue (-1.0%) 3,782 Other revenue (+3.4%)1 3,658 H1 2017 H1 2018 ∑ 16,951 ∑ Group revenue (-0.1%) ∑ 16,938 1 Including positive 180m EUR IFRS
Slide 17: Operating KPIs of Passenger Airlines by region
Operating KPIs of Passenger Airlines by region Q2 & H1 2018 Total Q2 '18 H1 '18 Europe Q2 '18 H1 '18 Asia/ Pacific Q2 '18 H1 '18 Number of flights +8.3% +8.5% ASK +11.4% +12.7% ASK +4.3% +5.3% ASK +7.8% +8.2% RPK +14.6% +16.1% RPK +2.0% +3.9% RPK +7.9% +9.2% SLF +2.3pts. +2.2pts. SLF -1.9pts. -1.1pt
Slide 18: Calculation of Operational KPIs at Network Airlines
Calculation of Operational KPIs at Network Airlines Q2 2018 (1) Traffic revenues 5,498 Quarterly Data.xls 1 Traffic Figures 1 Yield (2) RPK 2 60,944 Yield: 0.9 (1) / (2) * 100 Q2 2018 Netw ork Airlines CONSOLDIATON LOGISTICS MRO CATERING OTHER LH GROUP Profit and Loss (1) Total revenues 5,940 LHP SW
Slide 19: Fuel cost bridge H1 2018 vs. H1 2017
Fuel cost bridge H1 2018 vs. H1 2017 Hedging result by quarter (in m EUR) Q1 Q2 Q3 Q4 FY (YTD) 2017 -30 -63 -93 2018 107 229 336 in m EUR Change versus previous year +216 Price -429 +771 2,776 Volume Hedging -272 2,560 +146 Currency H1 2017 H1 2018 Page 19
Slide 20: Operating costs and revenues Q2/H1 2018 vs. Q2/H1 2017
Operating costs and revenues Q2/H1 2018 vs. Q2/H1 2017 Lufthansa Group (in m EUR) Q2 ‘18 vs. Q2 ‘17 H1 ’18 vs. H1 ‘17 • Excluding IFRS 15, “Total operating income“ would Total revenue 9,298 +0.4% 16,938 -0.1% have increased by 4.9% Other operating income 469 -23.5% 874 -25.6% versus Q2 ’17 (+4.2% vs
Slide 21: EBIT and Adjusted EBIT by quarter 2018
EBIT and Adjusted EBIT by quarter 2018 in m EUR Q1 Q2 Q3 Q4 6M 9M FY EBIT 27 983 1,010 pension changes +2 -1 +1 book gains / losses on asset disposals -3 +2 -1 impairments gains / losses // badwill 0 -2 -2 Adj. EBIT 26 982 1,008 interest on liquidity taxes (25% lump sum) cost of capital EACC average
Slide 22: EBIT and Adjusted EBIT by quarter 2017
EBIT and Adjusted EBIT by quarter 2017 in m EUR Q1 Q2 Q3 Q4 6M 9M FY EBIT 16 1,015 1,404 875 1,031 2,435 3,310 pension changes +32 0 +9 -592 +32 +41 -551 book gains / losses on asset disposals -23 -5 -6 -3 -28 -34 -37 impairments gains / losses // badwill 0 +7 +111 +133 +7 +118 +251 Adj. EBIT 25 1,0
Slide 23: Cash flow statement H1 2018 vs. H1 2017
Cash flow statement H1 2018 vs. H1 2017 5.0 Lufthansa Group (in m EUR) H1‘18 vs. H1 ‘17 3.4 3.2 3.0 EBT (earnings before income taxes) 955 +73 2.0 Depreciation & amortization (incl. non-current assets) 907 +5 FY 2014 FY 2015 FY 2016 FY 2017 H1 2018 Net proceeds from disposal of non-current assets -2