Qantas Airways Limited · ASX:QAN
Qantas Airways — H1 2019 Earnings Presentation
24 slides from Qantas Airways's earnings presentation, Feb 21, 2019
Slide 1: Qantas Airways Limited 1H19 Results
For personal use only Qantas Airways Limited 1H19 Results 21 February 2019 ASX:QAN US OTC:QABSY
Slide 2: 1H19 Highlights
1H19 Highlights For personal use only Revenue strength substantially offset fuel cost increases • First half Underlying Profit Before Tax (PBT)1 $780m, Statutory PBT $735m, Statutory EPS 30.0 cps • Continued strong Group Return on Invested Capital (ROIC) of 19.3%2, All segments delivering ROIC > WAC
Slide 3: Integrated Portfolio Provides a Stable Earnings Base
Integrated Portfolio Provides a Stable Earnings Base For personal use only Dual Brand Domestic strategy at the core of the Group’s Operating Segment EBIT4 portfolio strength. Two largest1 outbound airlines in Australia $1.2b Record Group Domestic2 Underlying EBIT3 of $659m $ supported by proactive c
Slide 4: 1H19 Key Group Financial Metrics
1H19 Key Group Financial Metrics For personal use only Underlying PBT1 Underlying EPS3 12 Month ROIC% Cash Flow $780m 31.8c $1,254m Down $179m2 Down 16%2 Operating cash flow, Down $480m2 (fuel costs up $416m2) 19.3% > WACC Statutory EPS 30.0c $218m Statutory PBT $735m Down 10%2 Net free cash flow4,
Slide 5: 1H19 Profit Bridge
1H19 Profit Bridge For personal use only Underlying Profit Before Tax ($M) 959 408 (61) (37) Ticketed Passenger (125) (61) 780 338 109 4 (416) Revenue2 Net Freight 70 Revenue Net Revenue benefits4 $ 79m Fuel efficiency benefits5 $ 18m Non-fuel cost reduction $ 109m Transformation benefits $ 206m 1H1
Slide 6: Operating Cash Flow Trend
Operating Cash Flow Trend For personal use only Rolling 12 Months Statutory EBITDA ($M)1 First Half Operating Cash Flow ($M) 2,863 2,937 3,070 1,734 2,677 1,373 1,173 1,254 A B 12 months to 12 months to 12 months to 12 months to 1H16 1H17 1H18 1H19 Dec 15 Dec 16 Dec 17 Dec 18 • Stable Statutory EBIT
Slide 7: Maximising Leading Dual Brand Domestic Position
Maximising Leading Dual Brand Domestic Position Dual brand strategy at the core of Group’s portfolio strength For personal use only Group Domestic Unit Revenue Growth6 Record Group Domestic1 Underlying EBIT in 1H19. Generating Market Capacity growth7 Group Domestic Unit Revenue growth $659m 80% of t
Slide 8: Building a Resilient Qantas International
Building a Resilient Qantas International For personal use only Rolling 12 Months Airline Group Operating Margin3 Qantas International Underlying EBIT in 1H19 reduced by a $90m $219m fuel cost increase1. Fleet and network transition building resilience 10.9% Japan Airlines 12.5% 9.1% 5% Increase in
Slide 9: Segment Results
For personal use only Segment Results
Slide 10: Qantas Domestic
Qantas Domestic For personal use only • Record1 first half Underlying EBIT, Unit Revenue up 7.5% 1H18 1H18 1H19 VLY %8 (Reported) (Restated) – Recovered increased fuel costs Revenue $M 3,070 3,057 3,230 5.7 – Disciplined capacity management; includes impact of increased pilot training Underlying EBI
Slide 11: Qantas International
Qantas International For personal use only • Strong Unit Revenue growth of 5.0% offset by a $219m increase in fuel cost and 1H18 1H18 1H19 VLY %2 increase in other costs including: (Reported) (Restated) Revenue $M 3,439 3,460 3,693 6.7 – FX on non-fuel costs, cost of increased activity, commissions
Slide 12: Jetstar Group
Jetstar Group For personal use only • Jetstar Group solid earnings performance with revenue up 5.1% 1H18 1H18 1H19 VLY %8 (Reported) (Restated) – Record Domestic result1 with Unit Revenue up 3.7%, improved seat factor and Revenue7 $M 1,936 1,949 2,048 5.1 11% increase in Ancillary revenue per passen
Slide 13: Qantas Loyalty
Qantas Loyalty For personal use only • Record1 first half Underlying EBIT result up 4.2% 1H18 1H18 1H19 VLY %7 (Reported) (Restated) ‒ EBIT growth in Coalition and New Businesses Revenue $M 763 747 809 8.3 • Coalition Business fundamentals remain strong with positive momentum Underlying EBIT $M 184
Slide 14: Financial Framework
For personal use only Financial Framework
Slide 15: Financial Framework Aligned with Shareholder Objectives
Financial Framework Aligned with Shareholder Objectives For personal use only 1. Maintaining an Optimal 2. ROIC > WACC2 3. Disciplined Allocation Capital Structure Through the Cycle of Capital Minimise cost of capital by Deliver ROIC > 10%3 Grow invested capital with targeting a Net Debt range of th
Slide 16: Maintaining an Optimal Capital Structure
Maintaining an Optimal Capital Structure Leverage and liquidity For personal use only Optimal capital structure Net Debt Profile FY14 to 1H19 ($B) • Net Debt1 at $5.2b, at the bottom of the target range 8 29% Reduction • Extended innovative A$ Corporate Debt Program; refinancing 6 FY19 maturities 4
Slide 17: Delivering ROIC >10% Through the Cycle
Delivering ROIC >10% Through the Cycle Protecting ROIC through the disciplined hedging program For personal use only FY19 Fuel Cost Outlook (A$B) • At current pricing FY19 fuel cost is expected to be ~A$3.90b1 4.181 3.90 3.901 – Expected fuel cost is 90% hedged for the remainder of FY19 3.23 3.23 3.
Slide 18: Delivering ROIC >10% Through the Cycle: Transformation status
Delivering ROIC >10% Through the Cycle Transformation status For personal use only Achieved $206m Transformation benefits in 1H191 57% of FY19 Additional initiatives for the remainder of FY19 • Continuous improvement resulting in cost benefits of $109m pipeline completed4 • Telemetry technology on g
Slide 19: Disciplined Capital Allocation
Disciplined Capital Allocation Disciplined capital expenditure For personal use only • Net capital expenditure1 of $1.0b in 1H19, excluding aircraft operating lease refinancing – 3 new 787-9 Dreamliners delivered – Reconfiguration and refresh programs for A321, A380 and Turboprop aircraft – Lounges
Slide 20: Disciplined Capital Allocation: Shareholder distributions
Disciplined Capital Allocation Shareholder distributions For personal use only • Completed on-market share buy-back of $332m in 1H19 Shares on Issue (M) ~28% reduction2 – 3.4% of issued capital purchased – 26%1 reduction in shares on issue since October 2015 at an average price of $4.46 2,196 2,062
Slide 21: Outlook
For personal use only Outlook
Slide 22: Outlook
Outlook For personal use only 2H19 – Domestic and International Operating Environment FY19 Group Outlook • We believe the Group is well positioned for a strong second half and to completely • Current Group operating expectations: recover our increased fuel cost by the end of this financial year – FY
Slide 23: Questions?
For personal use only Questions?
Slide 24: Disclaimer & ASIC Guidance
Disclaimer & ASIC Guidance For personal use only This Presentation has been prepared by Qantas Airways Limited (ABN 16 009 661 901) (Qantas). Summary information This Presentation contains summary information about Qantas and its subsidiaries (Qantas Group) and their activities current as at 21 Febr