2013-02-08 08:30:00 CET
2013-02-08 08:31:16 CET
REGULATED INFORMATION
Finnair Oyj - Financial Statement Release
Finnair Group Financial Statements Bulletin 2012
Finnair Plc. Financial Statement Release 8 February 2013 at 09:30
In 2012, turnover grew by 8.5 per cent; operational profit was 44.9 million
euros.
Key figures 10-12 10-12 Change 2012 2011 Change
2012 2011 % %
--------------------------------------------------------------------------------
Turnover and result
--------------------------------------------------------------------------------
Turnover, EUR million 612.9 577.4 6.1 2 2 8.5
449.4 257.7
Operational result, EBIT, EUR 6.3 -31.6 - 44.9 -60.9 -
million
Operational result, % of 1.0 -5.5 6.5 %-p 1.8 -2.7 4.5 %-p
turnover
Operating result, EBIT, EUR 2.7 -30.1 - 35.5 -87.8 -
million
EBITDAR, EUR million 55.0 26.4 108.3 241.9 139.6 73.3
Result before taxes, EUR 0.9 -38.2 - 16.5 -111.5 -
million
Net result, EUR million 1.2 -32.6 - 11.8 -87.5 -
Balance sheet and cash flow
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Equity ratio, % 35.7 32.6 3.1 %-p
Gearing, % 17.6 43.3 -25.7
%-p
Adjusted gearing, % 76.8 108.4 -31.6
%-p
Gross investment, EUR million 23.7 31.9 -25.7 41.4 203.9 -79.7
Return on capital employed, 3.0 -5.2 8.2 %-p
ROCE, 12 months rolling, %
Return on equity, ROE, 12 1.5 -10.9 12.4
months rolling, % %-p
Net cash flow from operating 17.9 -1.2 > 154.7 50.8 >
activities 200 % 200 %
Share
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Share price at end of quarter, 2.38 2.30 3.50 2.38 2.30 3.5
EUR
Earnings per share, from the 0.01 -0.25 104.0 0.09 -0.69 113.0
result of the period**
Earnings per share -0.06 -0.27 77.8 0.02 -0.75 102.7
--------------------------------------------------------------------------------
Traffic data,
unit costs and revenue
--------------------------------------------------------------------------------
Passengers, thousand people 2 081 1 913 8.8 8 774 8 013 9.5
Available seat kilometres 7 568 7 288 3.8 30 366 29 345 3.5
(ASK), million
Revenue passenger kilometres 5 693 5 192 9.6 23 563 21 498 9.6
(RPK), million
Passenger load factor (PLF), % 75.2 71.2 4.0 %-p 77.6 73.3 4.3 %-p
Unit revenue per available
seat kilometre,
(RASK), cents/ASK 6.37 6.09 4.8 6.49 6.03 7.7
Unit revenue per revenue
passenger kilometre,
yield, cents/RPK 7.20 7.44 -3.2 7.30 7.24 0.9
Unit cost per available seat
kilometre,
(CASK), cents/ASK 6.54 6.74 -2.9 6.58 6.43 2.3
CASK excluding fuel, cents/ASK 4.47 4.89 -8.6 4.50 4.67 -3.6
Available tonne kilometres 1 135 1 151 -1.3 4 647 4 571 1.7
(ATK), million
Revenue tonne kilometres 734 698 5.1 3 029 2 823 7.3
(RTK), million
Cargo and mail, tonnes 36 047 38 031 -5.2 148 145 1.5
132 883
Cargo traffic unit revenue per
revenue tonne kilometre, 26.49 26.09 1.5 25.45 26.50 -4.0
cents/RTK
Overall load factor, % 64.6 60.7 3.9 %-p 65.2 61.8 3.4-p
Number of flights, pcs 13 794 18 683 -26.2 67 805 78 916 -14.1
Personnel
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Average number of employees 6 784 7 467 -9.1
* 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
Mika Vehviläinen, President and CEO:
Overall, 2012 and its last quarter were gratifying for Finnair. We were able
to turn the whole year into a profit, for the first time since 2007. The
operational result for the entire year stood at 44.9 million euros and turnover
grew by 8.5 per cent to 2,449.4 million euros. Our sales and marketing efforts
brought results, and our unit revenue improved by a record 7.7 per cent.
Consumers have more often chosen Finnair, which is satisfying as we have
invested significantly in improving customer experience and operational quality
in the past few years.
In recent years, the last quarter of the year has been lossmaking due to
seasonal fluctuations, but this year the operational result showed a profit of
6.3 million euros. This proves that our structural change and cost-reduction
programme is bringing results. The programme has progressed faster than the
original schedule, and, at the end of the year, we had already achieved
permanent annual cost reductions of 100 million euros. Unit cost excluding fuel
decreased by 3.6 per cent in 2012, while capacity simultaneously grew by 3.5
per cent and fuel costs rose by one-fifth. Showing a profit is a great
achievement that required hard work. Thanks for the result belong to the entire
Finnair team.
The good work and results are also seen in the fact that the company's Board
of Directors is proposing that a dividend of 0.10 euros per share be
distributed and that 4,8 million euros be contributed to the Personnel Fund
this year.
However, following through with the structural change and cost-reduction
programme of 140 million euros launched in 2011 and implementing the additional
cost-reduction programme of 60 million euros announced in October 2012 still
requires hard work and further difficult changes.
There's still room for improved efficiency in Finnair's operations. The
partnership agreements made during last year make room for further process
development and re-evaluating of functions and structures. The aim is to
question existing practises and to rethink, in what ways we could improve our
profitability.
With regard to personnel costs, we are still more expensive than our
competitors, and this problem has to be solved. The intention is to find
solutions together with personnel groups to simplify the complex salary and
remuneration structures. Implementing such reforms is never easy, but I hope
and believe that by discussing matters together and considering the different
options it is possible to reach a reasonable solution from the point of view of
both parties.
Additional cost reductions are absolutely necessary for Finnair: the goal is
sustainable profitability so that Finnair is capable of investing in new Airbus
350 aircraft that are vital for a competitive future. Finnair is thus
determined to continue working toward improved profitability.
Finnair will be celebrating its 90th anniversary in 2013, and 2012 provided
the company with a good basis for making the current year a turning point.
Finnair is progressing towards its aim of doubling its revenue from Asian
traffic by 2020. The Xian and Hanoi routes that will open in the summer of 2013
will increase the number of Finnair's Asian routes to thirteen. Finnair
expects that the operational result of 2013 will show a profit.
2012 was my last full year at Finnair. For my part, I give warm thanks to our
customers, shareholders and personnel. During my Finnair years, I have learned
how much Finnair as a company means to all of us, and it will always have a
place in my heart.
Business environment
Global airline industry is currently undergoing structural changes, the
typical characteristics of which are market liberalisation, increasing
competition, overcapacity, consolidation, alliances and specialisation. In
2012, the intense competition in the industry was seen in major cost-reduction
and structural change programmes and bankruptcies of a number of European
airlines. The capacity growth in the market is clearly more controlled than
previously, and various partnerships have emerged, especially in international
long-haul traffic. Finnair's goal is to take advantage of the opportunities
presented by the changes in its industry and to strengthen its position in
traffic between Asia and Europe and within Europe.
The largest individual cost factor of airlines is jet fuel, which already
accounts for one fourth of Finnair's costs. The price of jet fuel was still
high in the last quarter of 2012, creating significant cost pressures for
airlines. On the other hand, it has made the industry healthier as the
financially weakest competitors have exited the market.
Despite the poor economic environment, passenger traffic continued to grow in
Europe in the fourth quarter, which, combined with moderate capacity increases
by airlines, improved aircraft load factors. Traffic between Asia and Europe
also grew as a result of strong demand. However, the uncertain economic outlook
in Europe, together with slower growth in Asia, increase the uncertainty
related to future development.
In the last quarter of the year, uncertainty in the world economy depressed
demand in cargo traffic between Asia and Europe. Unit revenues in cargo traffic
continue to be under pressure due to the decline of import demand in the euro
area and the overcapacity of air cargo traffic.
Progress of the structural change and cost-reduction programme
The implementation of the structural reform and cost-reduction programme
commenced by Finnair in August 2011 continued in the last quarter of the year.
The aim of the programme is to cut Finnair's costs permanently by 140 million
euros by the end of 2013. Due to the actions taken, Finnair achieved
cumulative, annual savings of 100 million euros by the end of 2012. At the same
time, the company has been able to move a significant share of fixed costs to
volume based variable costs. The cost-reduction measures were also seen in the
decrease of airline unit costs in the last quarter of the year.
As a whole, the cost-reduction programme has progressed well, and Finnair
believes that the full target will be reached on schedule. With regard to
fleet, sales and distribution, and catering costs, the original objectives have
already been exceeded, but the progress of reductions has been slower than the
original objectives particularly in the personnel and maintenance cost
categories.
Despite the reduction of the cost level achieved in 2012, Finnair is still far
from the long-term return objective set for it, i.e. an operating profit margin
of six per cent. In addition, the high fuel price, intensifying competition and
significant fleet investments in the coming years require a clear improvement
in profitability. Due to this, Finnair published a new cost-reduction programme
at the end of October, which aims to reduce the cost level permanently by an
additional 60 million euros by the end of 2014.
The new cost-reduction programme supplements the previous programme of 140
million euros, and it primarily focuses on enhancing the efficiency of the
functions and processes of Finnair's different units so that they will best
respond to the future needs of Finnair. The company will analyse in detail how
efficiency could be further improved and different functions adjusted in its
streamlined organisation. Increasing productivity would also mean that the
remuneration structures are openly reviewed and compared to the current
practices in the industry.
Financial performance in October-December 2012
Finnair's turnover grew by 6.1 per cent in October-December compared with the
corresponding period in 2011 and totalled 612.9 million euros (577.4), mainly
as a result of growth in the demand for passenger traffic.
The progress of the structural reform and cost-reduction programme was seen in
the operational costs of the period under review. Operational costs excluding
fuel costs decreased by 3.5 per cent on the comparison period, while capacity
simultaneously grew by 3.8 per cent. Fuel costs, including hedging and costs
incurred for emissions trade, rose by 12.8 per cent to 165.2 million euros
(146.4), whereas personnel costs decreased by 14.8 per cent to 100.4 million
euros (117.8) due to the personnel reductions implemented in connection with
the structural change. Due to the increase in fuel costs, euro-denominated
operational costs rose by 0.4 per cent on the comparison period to 615.7
million euros (613.4). The group's operational result, which refers to the
operating result excluding non-recurring items, capital gains and changes in
the fair value of derivatives and in the value of foreign currency-denominated
fleet maintenance reserves, showed a profit at 6.3 million euros (-31.6).
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 0.0 million euros (4.6). Non-recurring
items stood at -4.5 million euros (-3.1). Operating result showed a profit and
amounted to 2.7 million euros (-30.1). The result before taxes for
October-December was 0.9 million euros (-38.2) and the result after taxes 1.2
million euros (-32.6).
The unit revenue per available seat kilometre (RASK) increased by 4.8 per cent
on the comparison period to 6.37 euro cents (6.09). Unit cost per available
seat kilometre (CASK) decreased by 2.9 per cent to 6.54 euro cents (6.74)
despite the increase in fuel price. Unit cost excluding fuel (CASK excl. fuel)
decreased by 8.6 per cent to 4.47 euro cents (4.89).
Outlook for 2013
The uncertain economic outlook in Europe, together with weakened consumer
demand and slower growth in Asia, make it difficult to assess how air traffic
will continue to develop. Fuel costs are expected to remain high in 2013 as
well, and the demand for air traffic is estimated to grow in moderation.
Finnair estimates that its turnover will grow in 2013. The airline unit costs
excluding fuel (CASK excl. fuel) are expected to decrease compared with 2012,
and operational result is expected to show a profit in 2013.
Disclosure procedure
Finnair Plc. follows the disclosure procedure enabled by Standard 5.2b
published by the Finnish Financial Supervision Authority and hereby publishes
its Finnair Group Financial Statements Bulletin 2012 enclosed to this stock
exchange release. The Finnair Group Financial Statements Bulletin 2012 is
attached to this release in pdf format and is also available on the company's
website at www.finnairgroup.com.
Publication of the Financial Statements and the Annual Report and the 2013
Annual General Meeting
Central parts of Finnair Plc Group's financial statements for 2012 and the
Board of Directors' Report for 2012 will be published as part of the financial
report for 2012 during week 10. The financial statements in their entirety, the
Board of Directors' Report and other final accounts referred to in the Limited
Liability Companies Act will be available on the company's website on 6 March
2013 at the latest. Finnair Plc's Annual General Meeting will be held on 27
March 2013 at 3:00 p.m. in Helsinki.
Corporate Governance Statement
Finnair Plc's Corporate Governance Statement will be published as a document
separate from the Board of Directors' Report as part of the company's financial
report for 2012 during week 10, and it will also be available on the company's
website.
FINNAIR PLC
Board of Directors
Briefings
Finnair will hold a press conference on 8 February 2013 at 11:00 a.m. and an
analyst briefing at 12:30 p.m. at Helsinki-Vantaa Airport's World Trade Center,
located at Lentäjäntie 3. An English-language telephone conference will begin
at 3:30 p.m. Finnish time. The conference may be attended by dialling your
local access number +358 800 770 306 and using the PIN code: 255856#.
Finnair Plc.
Communications
8 February 2013
For further information, please contact:
Erno Hilden
Chief Financial Officer
Tel. +358 9 818 8550
erno.hilden@finnair.com
Mari Reponen
Financial Communications and Investor Relations Director
Tel. +358 9 818 4054
mari.reponen@finnair.com
Kati Kaksonen, IRO
Financial Communications and Investor Relations
Tel. +358 9 818 2780
kati.kaksonen@finnair.com, investor.relations@finnair.com
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