OREANDA-NEWS. Passenger numbers at Copenhagen Airports A/S (CPH) rose by 2.2% in the first six months of 2013 with particular growth in a strong second quarter. Growth also continued in the non-aeronautical part of the business due to new food and beverage outlets. These factors had a positive impact on both revenue and pre-tax profit. CPH retains its full-year forecast.

A total of 11,514,594 passengers travelled through Copenhagen Airport in the first six months of 2013, representing an improvement of 2.2%. As a result of the rise in passenger numbers and a continued revenue increase in the shopping centre, parking and hotel operations, revenue increased by 3.4% and the pre-tax profit rose by 1.9% to DKK 544.2 million.

”The airlines' strong summer programme is the driving force behind the growth in passenger numbers. Following a minor fall in passenger numbers in Q1, in which the performance was affected by 2012 being a leap year and by the timing of Easter, a particularly strong Q2 led to the improved performance. Most of the growth was generated by the low-cost airlines Norwegian, easyJet and Vueling. In addition it was encouraging to note that SAS' new route to San Francisco was off to a flying start with good load factors,” said Thomas Woldbye, CEO of Copenhagen Airports A/S.

Strong performance by Hilton

Revenue rose by 1.7% in the non-aeronautical part of the business. Hilton in particular enjoyed a strong first half after the completion of its refurbishment with increased conference activity combined with a consistently high room occupancy rate. Overall, Hilton revenue increased by 9.9%.

Parking revenue was up by 3.0% as a result of higher average parking prices due to continued effective yield management.

The shopping centre revenue rose by 0.9% with specialty shops, restaurants and bars performing very well as a result of our upgrades of the shop offering over the past few years, and at the beginning of the year we refurbished the six tax-free shops to improve the passenger experience,” explained Thomas Woldbye.

International acclaim

During the first half, Copenhagen Airport won two international trade awards. In April it was announced that 12.1 million passengers rating 395 airports worldwide found that Copenhagen Airport's security processing was “the world's best security process”, and in June Copenhagen was rated the most efficient airport in Europe for the eighth time in ten years by Air Transport Research Society, a research group that analyses and evaluates efficiency at airports worldwide.

”It is important for us to deliver efficient processes for the benefit of passengers, airlines, concessionaires and other business partners, and both awards are a clear indication that we are continually improving in these areas. The award of “the world's best security process” is particularly appreciated, as we ranked above a number of airports with a strong reputation within this field and it is encouraging as we continue to execute on our World Class Hub strategy. So this award is not least a well-merited recognition of the employees of the Security Department,” said Thomas Woldbye.

Refinancing

CPH's US Private Placement from 2003 of USD 100 million matures in August 2013, and therefore the Company decided to take advantage of the current positive market conditions by issuing US bonds for the third time.

The amount issued was fixed at USD 160 million with a ten year maturity. The new loan is USD 60 million higher than the maturing loan as CPH felt it was prudent to take advantage of the strong market conditions in advance of its future refinancing requirements.

The bond issue was significantly oversubscribed, affirming CPH's position as an internationally recognised and reliable infrastructure company. The debt ensures CPH stable, long-term financing on satisfactory terms and conditions.

Rating

In 2012, CPH added Moody's and Fitch as rating agencies in addition to Standard & Poor's, and since then the Company has been rated by three agencies. At the beginning of June 2013, CPH decided that two ratings were sufficient and, consequently, no longer maintains a rating by Standard & Poor's. CPH's ratings from Moody's and Fitch are Baa2 and BBB+, respectively. Both are investment grade.

Investment in the airport of the future

CPH maintains its high investment levels, having invested DKK 464.9 million at the end of the first half, compared with DKK 403.6 million in 2012. These major investments are made for the benefit of passengers, airlines, concessionaires and other customers of the airport. The investment level is considerably higher than what CPH is committed to investing under the charges agreement. The major investments include an upgrade of the baggage system, refurbishment of Terminal 2, renewal and renovation of the tax-free area, renewal of aircraft stands, and electricity and ventilation projects.

Outlook

With the anticipated traffic programme for the rest of 2013, we expect to see an increase in the total number of passengers. A positive full-year effect in 2013 is expected of the many new routes opened in 2012. In addition, traffic in 2013 is expected to be favourably affected by the full-year effect of the routes restored after the bankruptcy of Cimber Sterling in 2012. Traffic in 2013 could, however, be adversely affected by continuing financial uncertainty in the Eurozone and by any closure of routes due to airline cutbacks.

The increase in passenger numbers is expected to have a favourable impact on revenue. Operating costs are also expected to be higher than in 2012, primarily due to the expected increase in passenger numbers and cost inflation. This will be partially offset by the continuing focus on operating cost efficiencies. Depreciation charges and financing costs are expected to be higher in 2013 than in 2012 as a result of the continuing very high investment level.

Overall, a slightly lower profit before tax is expected for 2013 compared to 2012, when excluding one-off items. Conversely, operating profit before depreciation is projected to be higher in 2013 than in 2012, when excluding one-off items.

Under the charges agreement, CPH must invest an average of DKK 500 million annually but, as in previous years, CPH expects to invest at a level significantly higher in 2013 than what we are committed to. However, the investment level is subject to continuing growth in total passenger numbers. CPH will also be investing in other commercial projects for the benefit of airlines and passengers.