15.2 - finnair/media/files/f/finnair-ir/... · 2019-02-19 · q4 2018 q4 2014 q4 2017 q4 2016 q4...
TRANSCRIPT
1
2
15.2.2019
Topi Manner
A profitable fourth quarter in a challenging environment
• 3.2 million passengers carried
• RPK up by 4.4 % and ASK up by 9.0%
• We added capacity especially to European
destinations, also to Lapland
• More flights to Japan, China and United States
• 101 weekly flights to Asia
• Now twelve A350 aircraft3
Q4 2018: we continued to grow
Passengers
4
Growth continued in Q4 – challenging market conditions reflected in our result
Revenue Comparable
operating result
9.2 M€22.9 M€
3.2 mill+6.7%
683 M€+5.8%
NPS
46+1
NPS = Net Promoter Score
Comparable operating result, 12 months rolling
5
Comparable operating result close to last year’s level
-50
50
100
200
0
150
-48
Q2
2016
Q3
2014
169
Q1
2015
183
Q4
2018
Q4
2014
Q4
2017
Q4
2016
Q4
2015
Q2
2015
Q3
2015
Q1
2016
Q3
2016
Q1
2017
194
-24
Q2
2017
Q3
2017
Q1
2018
Q2
2018
Q3
2018
55
-31-36
2437
53
183
14
61
96
149
170
54
% of revenue
M€
-2.1 -1.6 -1.4 -1.1 0.6 1.1 1.6 2.3 2.3 2.4 2.6 4.0 6.0 6.6 6.9 7.1 6.5 6.0
Revenue, M€
• Asia +5.8%
• North-Atlantic +7.2%
• Europe +3.6%
• Domestic -0.2%
• Unallocated +60.4%
Passenger Load Factor, %
6
• Asia -3.5%-p
• North-Atlantic -0.3%-p
• Europe -3.6%-p
• Domestic -3.1%-p
• Total -3.4%-p
Capacity (ASK), Mill. km
• Asia +2.3%
• North-Atlantic +5.5%
• Europe +19.3%
• Domestic +12.5%
Asia North-
Atlantic
Europe Domestic
5 039
722
3 385
461
5 156
762
4 036
518
200
150
0
50
250
100
300
North-
Atlantic
51
263
295
Asia Europe Domestic Un-
allocated
25
279
36 39
272
51
16
Q4 2017
Q4 2018
Revenue increased in the main market areas
8279 79
67
8079 7976
64
77
EuropeAsia North-
Atlantic
Domestic Total
2018 was a year of growth and transformation
• The year begun in a favorable environment but got
more challenging towards the end of the year
• We continued to grow and invest in the future
• New passenger record 13.3 million
• The COOL Nordic Cargo Hub
• Wi-Fi connection on European flights
• Five star APEX rating
• New destinations Nanjing, Lisbon, Stuttgart and
Lyon
7
Exploiting new technologies
• 25 % ticket sales and over 50% of our
ancillaries are bought through Finnair’s
digital channels
• Fast Wi-Fi on our Narrow-body fleet
• iPhones and new applications for personnel
• Exploiting artificial intelligence
8
Competition increased in 2018
9
+ Asian traffic remained robust
+ Finnair's new COOL terminal strengthened our
cargo operations
+ Rising fuel price pressure eased during Q4
- Competition tightened especially on European routes
- Travel services competition increased towards end of
the year
- Cancellations due to weather and shortage of spare
narrow-body engines
- Currency movements unfavorable
-36
24
55
170 169
2014 2015 2016 2017 2018
Revenue Passengers
10
Full year 2018: Development of key indicators reflect growth
2 284 2 255 2 317
2 568
2 835
7.7 % 10.2 % 11.7 %
17.0 % 16.8 %
2014 2015 2016 2017 2018
Revenue, M€
Comparable EBITDAR, % of revenue
9 63010 294
10 867
11 905
13 281
2014 2015 2016 2017 2018
Comparable EBIT
1,1 % 2,4 %-1,6 % 6,0 %
Comparable EBIT, % of revenue
79,8%
Passenger load factor (PLF), %
83,3%
6,6 %
81,8%80,2% 80,4%
M€ M€
Comparable EBIT, M€ Passengers, 1 000
Financial target: Comparable EBITDAR of
revenue, 17 %
Financial target: Comparable EBIT of
revenue, 6 %
Capacity growth continues - new destinations and
frequencies in 2019
• Hannover, Bologna, Bordeaux, Porto
• Los Angeles, Sapporo, Punta Cana
• Hong Kong and Osaka
Economic, social and environmental responsibility is
in our focus in all operational development
We utilize the potential of technology to improve
productivity and customer experience
Long-term investment to develop customer
experience and people experience continues11
Aiming for sustainable profitable growth
Outlook and dividend proposal
Global airline traffic is expected to continue growing in 2019.
Finnair expects increased competition as capacity is added,
particularly on routes linking Europe with Asia as well as in
short-haul traffic. The slowdown in the economy of Finnair´s key
markets and the continued uncertainties surrounding global
trade, including from Brexit, could impact the demand for air
travel and cargo.
Finnair plans to increase its capacity by approximately 10 per
cent in 2019, down from its 14.8 per cent capacity growth in
2018. This growth is mainly focused on the Asian market.
Revenue is expected to grow at a somewhat slower pace than
capacity in 2019.
In line with its disclosure policy, Finnair will issue guidance on
its full-year comparable operating result as part of its half-year
report in July.
The Board of Directors proposes to the Annual General Meeting
that a dividend of 0.274 euros per share be distributed for
2018.
12
14
FinancePekka Vähähyyppä
Fuel cost the most significant driver for EBIT decline compared to Q4/2017
15
1) Avg. fare = Passenger revenue per revenue passengers.
• Operating expenses excluding fuel +5.2% (ASKs +9.0%)
• Fuel costs including hedging results and emissions trading cost
+18.9%
• Unit cost (CASK) -0.7%, CASK ex fuel at constant currency
-4.3%
Fuel
-10.2
-16.1
Other exp.
-9.3
9.2
Aircraft
10.7
Passenger 39.4
Staff Other (NET) Q4 EBIT
Ancillary& retail 1.9
Cargo 2.8
Travel services -6.4
-3.5
Revenue Traffic
charges &
Ground
handling
-23.1
Q4 PY EBIT
22.9
37.7
-13.7
28,969
Q4 PY
31,089
Q4
+7.3%
10,4739,607
Q4 PY Q4
+9.0%
Q4
2,956
Q4 PY
3,155
+6.7%
166
EUR /
PAX
Q4 PY
168
EUR /
PAX
Q4
+1.2%
Q4 PY
80.3
76.9
Q4
-3.4pp
12.6
EUR /
PAX
Q4 PY
12.4
EUR /
PAX
Q4
-1.4%
6.72 6.52
Q4 PY Q4
-2.9%
Q4 PY
40.9
KG
44.5
KG
Q4
+8.8%
1.40
EUR /
KG
Q4 PY
1.35
EUR /
KG
Q4
-3.6%
RASK FLIGHTS ASK, mill
PAX, 1000 Avg. fare1 PLF, %
Ancillary REV Cargo, mill Cargo yield
Fuel costs Q4/17 vs. Q4/18
Q4/17 hedging gain 6.9 M€
Q4/18 hedging gain 27.7 M€
Fuel hedges 31 December 2018
16
Higher price of jet fuel and Finnair’s growing volume increased fuel costs in Q4
2017 Ground
handling
Passenger 223.5
Ancillary & retail 16.2
Traffic
charges
Fuel Tour
operator
-45.9
-12.9
Other
exp.
-108.9
-34.4
Staff Leases&
depreciation
-10.2
2018
-10.1
-4.7
-40.2
Revenue
Travel services 16.9
Other
(NET)
Cargo 9.5
170.4
266.2
169.4
-1.0
114,718
2017
125,848
2018
+9,7%
2017
36,922
42,386
2018
+14.8%
2018
11,905 13,281
2017
+11.6%
169
EUR /
PAX
2017
170
EUR /
PAX
2018
-0.5%
83.3
2017
81.8
2018
-1.5pp
12.1
EUR /
PAX
2017
12.1
EUR /
PAX
2018
-0.3%
6.96
2017
6.69
2018
-3.9%
2017
157.0
KG
158.2
KG
2018
+0.7%
2017
1.26
EUR /
KG
1.31
EUR /
KG
2018
+4.1%
2,475
2017
2,739
2018
+10.7%
2,835
2017
2,568
2018
10.4%
Full year EBIT -1 mEUR below previous year
17
RASK FLIGHTS ASK, mill
PAX, 1000 Avg. fare1 PLF, %
Ancillary REV Cargo, mill Cargo yield
REVENUE COSTS
1) Avg. fare = Passenger revenue per revenue passengers
18
Adjusted net debt
0
-1,000
-1,500
-2,000
-500
7x aircraft
leases +
currency
hedges
Adjusted
net debt
Adjusted
interest-bearing
liabilities
-1,085 1,073
-687
Cash
-675
1) HFS = Held-for-Sale. 2) I-B = Interest-bearing
Healthy balance sheet supports future investments
• Equity ratio 34.7%
• Adjusted gearing 67.2%
450
983
1 022
167
435
1 271
1 119
31.12.2017
15
170
2 947
385
1 336
30.9.2018
11
171
1 073
327
1 376
30.12.2018
669
1710
699664
112
31.12.2018
678
466
100104
1 154
445
719
656
2 947
1 016
30.9.2018
2 8873 076 3 076
2 887
31.12.2017
Other fixed assets
Liabilities HFS
Assets HFS
Cash
Fleet
Other assets
I-B debt
Tickets
Other liabilities
Provisions
Equity
One new A350 aircraft and one A350 SLB main drivers for cash flow changes
19
-15.1
Working
capital
-45.6
Other
-161.4
Investments
Disposals
-2.3-14.9
-15.8-3.7
Purchase
of own
shares
655.8
Liquid
funds
Q3
Hybrid
bond
interests
114.2
Liquid
funds
Q4
Loan
payments
Other
98.2
702.2
EBITDA
Operating+37.5mEUR
Change in cash flows-46.4 M€
Investing-49.5mEUR
Financing-34.4mEUR
475
198
656
417
181
702
505
30 Sep 2018
417
31 Dec 2018
1,1191,073
Cash funds-45.6 M€
Commercial paper, deposits and funds > 3 months
Cash and bank deposits
Commercial paper, deposits and funds < 3 months
Liquid funds in cash flow
IFRS 16 Leases standard replaces IAS 17
20
• Finnair will adopt the IFRS 16 -standard from 2019 onwards, and plans to apply the full retrospective method
→ significant impacts on Finnair financial statements and key ratios.
• The present value of the future operating lease payments for aircraft and other lease agreements will be recognized as
right-of-use -assets and interest-bearing liabilities in the balance sheet.* Lease cost is divided into depreciation of the
right-of-use -asset (operating result) and interest cost for the liability (finance net).
• Significant impacts on following key ratios: operating result, EBITDA, cash flow from operating activities, cash flow from
financing activities, interest-bearing net debt, gearing and equity ratio.
INCOME STATEMENT
20
Lease expenseDepreciation of
ALL leases
Interest
expense of ALL
leases
EBIT
PBT
CURRENT NEW
Finance lease
depreciation
Finance lease
Interest expense
BALANCE SHEET
CURRENT NEW
Finance Lease
Asset
Finance Lease
Liability
OFF-Balance sheet
Operating lease
commitment
“Right-to-use”
Lease Asset
Lease Liability
for ALL leases
ASSETS
DEBT
OFF BS
*Currently, future lease
payments are presented in
the notes as operating lease
commitments at their
nominal value. Based on
Finnair's preliminary
evaluation, service contracts
that relate to the usage of
airports and terminals (HEL
hub) do not qualify as lease
arrangements for IFRS 16
purposes.
IFRS 16 implementation and its estimated impacts
in mill. EUR 31 Dec 2018
ASSETS
Intangible assets 20.4
Tangible assets 1 526.6
Investments in associates and joint ventures 3.3
Loan and other receivables 4.3
Assets total 2 947.3
in mill. EUR 31 Dec 2018
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 75.4
Other equity 946.2
Equity total 1 021.7
Deferred tax liabilities 73.5
Interest-bearing liabilities 561.0
Pension obligations 17.0
Provisions 91.3
Other liabilities 4.8
Total liabilities 1 925.3
+€1.0 bn(due to the
recognition of
right-of-use
asset)
-€0.1 bn(Due to
restatement of
comparative
information)
+€1.1 bn(due to the
recognition of
lease
liabilities)
• Equity ratio is expected to decrease by more than -10%-points
• Gearing to increase by more than 100 percentage points, to
approximately 70 per cent, which corresponds with the Adjusted
Gearing used earlier
Balance sheet
Key figures
+€1.0 bn
-€0.1 bn
+€1.1 bn
Cashflow statement
• Repayments of lease liabilities will be moved from
operating cash flow to financing cash flow in
accordance with IFRS 16.
• Operating cash flow in 2018 will increase by
approximately 30%, with a corresponding negative
adjustment in financing cash flow.
IFRS 16 implementation and estimated impacts
Year 1 Year 2 Year 3 Year 4 Year 5
Interest cost associated with the liability Depreciation of the right-to-use-asset
Periodicity of interest expense and right-to-use-asset
in mill. EUR 2018 Direction
Operating expenses
Other rents -154.9
Comparable EBITDAR 475.4
Lease payments for aircraft -155.0
Depreciation and impairment -151.1
Comparable operating result 169.4
Operating result 207.5
Financial expenses -16.0
Result for the period 150.7
Income statement
24
Appendix
26
Finnair’s earnings are sensitive to changes in fuel price
Impact on comparable operating profit rolling 12
monthsJet-fuel* price development since 2015
Comp.
EBIT
EUR 169
Million
Jet-fuel price
change
10 % without hedging
EUR 59 million
taking hedging
into account
EUR 25 million
*Jet-fuel Price/ Weekly Averages, Platts Jet Fuel CIF NWE
USD/tonne
284 $
544 $
Fuel sensitivities rolling 12 months from date of financial statements
Hedging ratio for the next 12 months is 66%
100
200
300
400
500
600
700
800
900
2015 2016 2017 2018
789 $
Revenue Comparable operating result
29
Revenue and comparable operating result development
0
300
100
200
500
700
400
600
800
900
Q1
683735
Q2
715
570
Q3
521 536 554635
544 570633 622 641
801
568645
Q4
2015
2016
2017
2018
-40
80
60
-20
0
20
40
100
120
119
Q1
6664
2
-28
Q4
-15 -94
-133
38
Q3
48
Q2
108
1
239
2018
2015
2016
2017
Income statement
in mill. EUR Q4 2018 Q4 2017 Change % 2018 2017 Change %
Revenue 683.1 645.3 5.8 2 834.6 2 568.4 10.4
Other operating income 18.6 19.8 -5.8 73.7 77.0 -4.2
Operating expenses
Staff costs -102.3 -113.0 -9.5 -433.4 -423.3 2.4
Fuel costs -145.4 -122.3 18.9 -581.0 -472.2 23.1
Other rents -40.9 -38.4 6.5 -154.9 -157.9 -1.9
Aircraft materials and overhaul -47.1 -40.7 15.5 -169.1 -165.7 2.0
Traffic charges -74.4 -67.0 11.1 -300.8 -266.5 12.9
Ground handling and catering expenses -65.4 -62.7 4.4 -256.9 -252.2 1.9
Expenses for tour operations -27.8 -27.7 0.4 -113.4 -100.5 12.9
Sales and marketing expenses -25.2 -25.5 -1.0 -92.4 -85.8 7.7
Other expenses -83.1 -73.9 12.6 -330.9 -285.1 16.1
Comparable EBITDAR 90.0 94.0 -4.2 475.4 436.2 9.0
Lease payments for aircraft -38.5 -36.1 6.5 -155.0 -136.6 13.4
Depreciation and impairment -42.4 -34.9 21.2 -151.1 -129.2 16.9
Comparable operating result 9.2 22.9 -59.9 169.4 170.4 -0.6
30
Hedging currencies and sensitivities 31 December 2018
Fuel sensitivities10% change
without hedging
10% change. taking
hedging into account
Hedging ratio
(rolling 12 months from date of financial statements) H1/2019 H2/2019
Fuel EUR 59 million EUR 25 million 75% 58%
Currency distribution
%
10-12
2018
10-12
20172018 2017
Currency sensitivities
USD and JPY
(rolling 12 months from date of financial statements for
operational cash flows)
Hedging ratio for
operational cash flows
(rolling next 12
months)
Sales currencies 10% change without hedging10% change. taking
hedging into account
EUR 56 59 55 55 - -
USD*4 3 4 4
see below see below see below
JPY10 7 10 10
EUR 32m EUR 15m 64%
CNY 6 6 7 7 - -
KRW3 3 3 3
- -
SEK4 4 3 4
- -
Other18 18 17 17
- -
Purchase currencies
EUR55 58 56 57
- -
USD*38 34 37 35
EUR 85m EUR 33m 65%
Other7 8 7 7
31 * Hedging ratio for USD-basket, which consists of USD- and HKD net cash flows. The sensitivity analysis assumes that the Hong Kong dollar continues to correlate
strongly with the US dollar.
Share of operating costs %, 692,5M€
32
Fuel the single largest cost item in Q4/2018
21 %
15 %
12 %12 %
11 %
9 %
7 %
6 %
4 % 3 %Fuel costs
Staff costs
Other expenses
Leasing, depreciation and impairment
Traffic charges
Ground handling and catering expenses
Aircraft materials and overhaul
Other rents
Expenses for tour operations
Sales and marketing expenses
Operating costs Q4/2018 Q4/2017 Change %
Staff costs -102.3 -113.0 -9.5
Fuel costs -145.4 -122.3 18.9
Other rents -40.9 -38.4 6.5
Aircraft materials and overhaul -47.1 -40.7 15.5
Traffic charges -74.4 -67.0 11.1
Ground handling and catering expenses -65.4 -62.7 4.4
Expenses for tour operations -27.8 -27.7 0.4
Sales and marketing expenses -25.2 -25.5 -1.0
Other expenses -83.1 -73.9 12.6
Lease payments for aircraft -38.5 -36.1 6.5
Depreciation and impairment -42.4 -34.9 21.2