2013-10-25 08:30:06 CEST
2013-10-25 08:30:10 CEST
REGULATED INFORMATION
Finnair Oyj - Interim report (Q1 and Q3)
Finnair Group interim report 1 January – 30 September 2013
Unit costs continued to decline in Q3, but the operational result was hurt by
the weaker yen.
Finnair Plc. Interim report 25 October 2013 at 09:30
This is a summary of Finnair's January-September 2013 Interim report. The
Finnair Group Interim report 1 January - 30 September 2013 is attached to this
release in pdf format and is also available on the company's website at
www.finnairgroup.com.
The historical comparative financials presented in the interim report
include certain changes to previously reported information. These changes
result from retrospective application of an amendment to IFRS accounting
standard IAS19 Employee Benefits. The changes are described in detail in notes
2 and 17 to the interim report.
Key figures 7-9 7-9 Change 1-9 1-9 Change 2012
2013 2012 % 2013 2012 %
--------------------------------------------------------------------------------
Turnover and result
--------------------------------------------------------------------------------
Turnover, EUR million 636.9 650.3 -2.1 1,839.8 1, 0.2 2,449.4
836.5
Operational result, 38.4 50.4 -23.7 26.9 43.1 -37.7 43.2
EBIT, EUR million*
Operational result, % 6.0 7.7 -1.7%- 1.5 2.3 -0.9%- 1.8
of turnover p. p.
Operating result, 35.2 72.6 -51.5 9.7 37.3 -74.1 33.8
EBIT, EUR million
EBITDAR, EUR million 82.4 99.3 -17.0 162.0 191.4 -15.3 240.2
Result before taxes, 31.3 68.8 -54.5 33.9 20.1 68.6 14.8
EUR million
Net result, EUR 23.5 51.9 -54.7 24.7 14.0 76.9 10.5
million
Balance sheet and
cash flow
--------------------------------------------------------------------------------
Equity ratio, % 32.9 33.3 -0.4 35.4
%-p.
Gearing, % 9.9 26.1 -16.2 18.0
%-p.
Adjusted gearing, % 63.0 90.3 -27.3 77.8
%-p.
Capital expenditure, 3.6 7.4 -51.2 30.6 17.7 72,9 41.4
CAPEX, EUR million
Return on capital
employed, ROCE, 12
months
rolling, % 3.9 0.3 3.5 2.8
%-p.
Return on equity, 2.8 -2.4 5.2 1.4
ROE, 12 months %-p.
rolling, %
Net cash flow from 29.7 44.5 -33.3 108.3 136.8 -20.9 154.7
operating activities
Share
--------------------------------------------------------------------------------
Share price at end of 3.12 2.07 50.7 3.12 2.07 50.7 2.38
quarter, EUR
Net result for the 0.18 0.41 -54.9 0.19 0.11 78.5 0.08
period per share**
Earnings per share 0.16 0.39 -58.8 0.12 0.06 107.3 0.01
(EPS)
Traffic data,
--------------------------------------------------------------------------------
unit costs and
revenue
--------------------------------------------------------------------------------
Passengers, 1,000 2,565 2,361 8.6 7,121 6,693 6.4 8,774
Available seat 8,275 7,810 6.0 23,732 22,799 4.1 30,366
kilometres (ASK),
million
Revenue passenger 6,982 6,352 9.9 19,174 17,871 7.3 23,563
kilometres (RPK),
million
Passenger load factor 84.4 81.3 3.0%-p 80.8 78.4 2.4%-p 77.6
(PLF), %
Unit revenue per
available seat
kilometre,
(RASK), cents/ASK 6.44 6.93 -7.1 6.30 6.53 -3.5 6.49
Unit revenue per
revenue passenger
kilometre,
yield, cents/RPK 6.74 7.54 -10.7 6.86 7.33 -6.4 7.30
Unit cost per
available seat
kilometre,
(CASK), cents/ASK 6.29 6.60 -4.6 6.49 6.59 -1.5 6.58
CASK excluding fuel, 4.16 4.43 -6.2 4.37 4.51 -3,1 4.50
cents/ASK
Available tonne 1,264 1,187 6.5 3,578 3,511 1.9 4,647
kilometres (ATK),
million
Revenue tonne 864 801 7.9 2,378 2,295 3.6 3,029
kilometres (RTK),
million
Cargo and mail, 39,611 37,338 6.1 108,670 112,084 -3.0 148,132
tonnes
Cargo traffic unit
revenue per
revenue tonne 23.99 24.41 -1.7 24.42 25.12 -2.8 25.45
kilometre, cents/RTK
Overall load factor, 68.4 67.5 0.9%-p 66.5 65.4 1.1%-p 65.2
%
Flights, number*** 24,955 23,915 4,3 73,712 71,742 2,7 95,097
Personnel
--------------------------------------------------------------------------------
Average number of 5,913 6,966 -15.1 6,784
employees
* Operational result: Operating result excluding changes in the fair value of
derivatives and in the value of foreign currency denominated fleet maintenance
reserves, non-recurring items and capital gains.
** Before hybrid bond interest.
*** The number of flights also includes Finnair's purchased traffic. Numbers
for the comparison periods have been changed accordingly.
CEO Pekka Vauramo:
Finnair's turnover decreased slightly in the third quarter of the year from
the corresponding period in 2012 and totalled 637 million euros. Turnover was
affected especially by the year-on-year decline in euro-denominated revenue,
driven by the weak yen. Demand for air traffic developed well, but not enough
to compensate the decrease in unit revenues, which was reflected both in
turnover and in operating profit.
As the third quarter is seasonally our strongest, the operational result of
38.4 million euros is disappointing. The bright spot during the period was the
continued decline in our costs: airline unit costs excluding fuel decreased by
6.2 per cent year-on-year.
Due to the weakening unit revenue development and the weakened outlook for
the rest of the year especially in cargo and leisure traffic, we lowered our
financial guidance regarding turnover and operational profit for 2013. In this
situation the full implementation of our structural change and cost-reduction
programs is absolutely essential for securing Finnair's future vitality and
achieving profitable growth. A significant part of the ongoing 60 million euro
cost-reduction program is targeted at personnel-related costs. During the
autumn, Finnair has engaged in negotiations on collective labour agreements
with several key personnel groups.
Going forward, we must also focus on ways to improve unit revenues. Work on
revising our commercial strategy began in the third quarter and will continue
in the coming months. I am also confident that the organisational changes we
implemented during the period under review will promote the further development
of our service products as well as our operations.
Our strong balance sheet is an important resource for future investments in
our fleet. The good situation in the aircraft financing market facilitates the
implementation of sales and leaseback arrangements on very competitive terms.
In the third quarter, we successfully carried out a number of financing
arrangements, which is evidence of investor trust in Finnair.
Business environment in the third quarter
There were no significant changes in Finnair's business environment in the
third quarter of the year and the market remained difficult. European network
carriers, Finnair included, continued to implement structural change and
cost-reduction programs to improve their competitiveness in the prevailing
tight competitive situation.
Despite many European economies remaining in recession, demand for passenger
traffic in Europe continued to grow. Combined with the conservative stance
airlines have taken towards increasing their capacity, this led to improved
load factors. Measured in passenger volume, the market for flights between
Helsinki and Finnair's European destinations grew by 4.0 per cent, while the
market between Finnair's Asian and European destinations increased by 3.8 per
cent.* Finnair was successful in increasing its market share in both
markets.*The demand for air cargo in traffic between Asia and Europe grew
year-on-year.
The price of the largest individual cost factor of airlines, i.e. jet fuel,
remained at a high level. The euro appreciated by one third against the
Japanese yen and approximately six per cent against the US dollar compared to
the corresponding period last year. The yen is an important income currency in
Finnair's operations, while the dollar is a significant expense currency.
Progress of the structural change and cost-reduction programs
By the end of June, Finnair had achieved the cost-reduction target of 140
million euros set for structural change and cost-reduction program commenced in
August 2011. During the period under review, Finnair continued to seek cost
reductions in all of the program's cost categories, with the primary focus
being on personnel and maintenance costs, two categories in which progress has
lagged behind the original cost reduction targets.
Regarding the supplementary cost-reduction program of 60 million euros
commenced in October 2012, Finnair made an announcement in August stating its
aim to reduce flight crew costs by approximately 35 million euros and technical
services and customer service personnel costs by approximately 8 million. In
the review period, Finnair continued negotiations with personnel and their
trade union representatives regarding the solutions and schedules for achieving
these cost reduction targets. The objective is to achieve the level of market
wages and labour costs in the industry, primarily by implementing changes to
wage structures and working hours.
As of the third quarter of the year, Finnair has monitored the progress of its
cost-reduction programs against a combined total target of reducing annual
costs permanently by 200 million euros. The point of reference for the cost
reduction target is the company's cost level in 2010. By the end of September
2013, Finnair had achieved a total cost reduction of 150 million euros, which
was reflected in decreased airline business unit costs during the period under
review. At the same time, the company has been able to move a significant share
of fixed costs to volume-based variable costs.
Achieving the targets of the cost-reduction program is essential for improving
the company's competitiveness, as high fuel prices, cost reduction measures
taken by competitors, intensified competition and fleet investments in the
coming years require a substantial improvement in profitability. The long-term
return objective set for the company by Finnair's Board of Directors is an
operating profit margin of six per cent.
Financial performance in July-September 2013
Finnair's turnover in July-September declined slightly year-on-year,
amounting to 636.9 million euros (650.3), while capacity increased by 6.0 per
cent. The depreciation of the Japanese yen by one third year-on-year had a
negative effect on euro-denominated revenue. Operational costs excluding fuel
remained largely unchanged from the comparison period and stood at 418.8
million euros (422.4). Fuel costs, including hedging and costs incurred from
emissions trading, were 185.1 million euros (179.6). Personnel costs declined
by 10.0 per cent to 86.6 million euros (96.2) due to the personnel reductions
implemented after the comparison period, but part of the personnel costs in the
comparison period are now seen in the form of higher costs for outsourced
catering and maintenance services. Euro-denominated operational costs amounted
to 603.9 million euros (602.0). The operational result, which refers to the
operating result excluding non-recurring items, capital gains and the change in
the fair value of derivatives and in the value of foreign currency denominated
fleet maintenance reserves, was 38.4 million euros (50.4).
Finnair's income statement includes the change in the fair value of
derivatives and in the value of foreign currency denominated fleet maintenance
reserves that took place during the period under review but will fall due
later. This is an unrealised valuation result based on IFRS, where the result
has no cash flow effect and which is not included in the operational result.
The change in the fair value of derivatives and in the value of foreign
currency denominated fleet maintenance reserves amounted to -0.7 million euros
(7.7). Non-recurring costs during the period totalled -3.5 million euros (-6.8)
and the operational result was 35.2 million euros (72.6). The operational
result for the comparison period was increased by capital gains of 21.3 million
euros, of which approximately 15 million euros were related to a catering
arrangement implemented with LSG Sky Chefs in August 2012. Finnair's result
before taxes for July-September was 31.3 million euros (68.8) and the result
after taxes 23.5 million euros (51.9).
Unit revenue per available seat kilometre (RASK) declined primarily due to
the depreciation of the Japanese yen by 7.1 per cent compared to the
corresponding period in 2012 and amounted to 6.44 euro cents (6.93). Excluding
the effect of exchange rate fluctuations, passenger unit revenue declined by
0.2 per cent from the comparison period. Unit cost per available seat kilometre
(CASK) decreased by 4.6 per cent and amounted to 6.29 euro cents (6.60). Unit
cost excluding fuel (CASK excl. fuel) decreased by 6.2 per cent and totalled
4.16 euro cents (4.43) as a result of successful cost-reduction measures.
Outlook for 2013
Finnair lowered its financial guidance regarding turnover and operational
profit for 2013 due to the weakening unit revenue development on 24 October
2013.
Current outlook (given on 24 October 2013):
The weak visibility of air traffic development continues due to the uncertain
economic outlook in Europe and slower growth in Asia. Fuel costs are expected
to remain high in the last quarter of 2013, and the demand for air traffic is
estimated to grow moderately.
Due to the continuing negative effect of the weak yen on unit revenue in
Japanese sales, and the deterioration of cargo and leisure traffic revenues,
Finnair expects its turnover in 2013 to be below the 2012 level. Unit costs
excluding fuel (CASK excl. fuel) are expected to decrease compared to 2012. If
the strong deterioration of unit revenues continues in the last quarter of the
year, it is possible that Finnair will not reach a profitable operational
result in 2013.
Previous Outlook (given on 14 August 2013):
The uncertain economic outlook in Europe, weakened consumer demand and slower
growth in Asia increase the uncertainty of the future development of air
traffic. Fuel costs are expected to remain high in 2013 as well, and the demand
for air traffic is estimated to grow moderately.
Due to the negative effect of the weak yen on unit revenue in Japanese sales,
Finnair expects its turnover in 2013 to be largely unchanged from 2012. Unit
costs excluding fuel (CASK excl. fuel) are expected to decrease compared to
2012. Finnair estimates that its operational result will show a profit in 2013.
Finnair's financial statements bulletin for 2013 will be published on Tuesday
11 February 2014.
FINNAIR PLC
Board of Directors
Briefings
Finnair will hold a press conference on 25 October 2013 at 11:00 a.m. and an
analyst briefing at 12:30 p.m. at its office at Tietotie 9. An English-language
telephone conference will begin at 3:30 p.m. Finnish time. The conference may
be attended by dialing your local access number +358 800 770 306 and using the
PIN code 255856#
Finnair Plc
Communications
25 October 2013
For further information, please contact:
Chief Financial Officer
Erno Hilden
Tel. +358 9 818 8550
erno.hilden@finnair.com
Financial Communications and Investor Relations Director
Mari Reponen
Tel. +358 9 818 4054
mari.reponen@finnair.com
Investor Relations Officer
Kati Kaksonen
Financial Communications and Investor Relations
Tel. +358 9 818 2780
kati.kaksonen@finnair.com
© 2024 Nasdaq, Inc. All Rights Reserved |