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Edited Transcript of FRA.DE earnings conference call or presentation 19-Mar-19 1:00pm GMT

Full Year 2018 Fraport AG Frankfurt Airport Services Worldwide Earnings Call

Frankfurt Mar 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Fraport AG Frankfurt Airport Services Worldwide earnings conference call or presentation Tuesday, March 19, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christoph Hans Nanke

Fraport AG - Senior VP, Head of Finance & IR

* Matthias Zieschang

Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board

* Stefan Schulte

Fraport AG - Chairman of the Executive Board & CEO

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Conference Call Participants

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* Andrew Lobbenberg

HSBC, Research Division - Head of the European Transport Team

* Arthur David Truslove

Crédit Suisse AG, Research Division - Research Analyst

* Christian Cohrs

Warburg Research GmbH - Analyst

* Cristian Nedelcu

UBS Investment Bank, Research Division - Associate Director and Aerospace & Defence Analyst

* Elodie Rall

JP Morgan Chase & Co, Research Division - Research Analyst

* Jenny Ping

Citigroup Inc, Research Division - Director and Analyst

* Ruxandra Haradau-Doser

Kepler Cheuvreux, Research Division - Equity Research Analyst

* Stephanie Fabienne D'Ath

RBC Capital Markets, LLC, Research Division - Analyst

* Vittorio Carelli

Grupo Santander, Research Division - Equity Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. I'm Haley, your Chorus Call operator. Welcome and thank you for joining the conference call of Fraport AG. (Operator Instructions) May I now hand you over to your host today, Christoph Nanke, SVP, Head of Finance and IR. Please go ahead.

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Christoph Hans Nanke, Fraport AG - Senior VP, Head of Finance & IR [2]

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Thank you, Haley. Hello, everybody, and a warm welcome also from my side on Fraport's analyst call on the full year and fourth quarter 2018.

With me at the table, I have our CEO, Dr. Stefan Schulte; and our CFO, Dr. Matthias Zieschang. Stefan Schulte will guide you through the highlights and overall group's performance of 2018 and will also provide you an outlook for the current year. After that, Matthias Zieschang will dig deeper into the financials. Finally, there will be also sufficient time for question and answers.

Having said that, I'm handing over to our CEO.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [3]

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Yes. Thanks very much, and good afternoon, ladies and gentlemen, also from my side. I think you have the presentation in front of you, so let me start my presentation with an overview on our financial numbers we released this morning.

I'm on Page 4. In line with our guidance, the underlying revenue grew by more than EUR 200 million to a level of around EUR 3.1 billion. Key drivers of our higher revenues were our new operations in Brazil, heading around EUR 90 million; but also our businesses in Greece, Frankfurt and Lima developed fine and contributed well to the earnings growth.

Going more bottom line. Our EBITDA was around EUR 1.13 billion and clearly exceeded the previous year value of EUR 1 billion. So also, the adjusted EBITDA, so without the profits from Hanover disposal, slightly exceeded EUR 1.1 billion and making a new record for the group.

Comparatively strong development recorded for our group results. EUR 506 million was the highest result we have ever achieved, and also the figure of EUR 430 million, so without Hanover, was the top end of our guidance for the year.

What does it mean for our dividend? In line with our guided ranges of a payout of around 40% to 60% of our EPS, we lifted our dividend proposal by EUR 0.50 to a new level of EUR 2 per share. This proposal corresponds to a payout of around 47% of our underlying result.

Going to the terrific performance, I'm on Slide 6. The past year, I also discussed this in November, was certainly outstanding. At the end of the day, Frankfurt Airport grew by some 5 million passengers, or the size of a smaller regional airport. But also international activities showed tremendous increases. (inaudible), were Antalya, St. Petersburg, Bulgaria, but also our investment in Greece developed very fine. For the current year, we also guided for this year before. We expect certain normalization of the growth trend we saw on the previous year. Hence, we expect for Frankfurt a growth rate somewhere around 2% to 3%, while our international portfolio should experience a growth rate of around 5% on average. Surely, one or the other investment can turn out to perform better or somewhat below, but the broad picture looks for normalization of the overall traffic rate.

Key risks to our estimates. We are seeing from the ongoing consolidation of the European airline landscape but especially from the congested airspace, especially also in Germany, the shortness of air navigators and the lack of available aircraft. That's the main topics we expect for next year -- for this year.

If I go to business update, and let's start on the international side. I'm on Slide 8. Let me start with the 2 airports in Brazil. The past year in Brazil was very dynamic. We hired about 350 new employees to the group and started our new base in Porto Alegre but also in Fortaleza. The CapEx program we need to fulfill is up and running and showing good progress. The first phase of mandatory CapEx, we will have finished by autumn this year, so we're absolutely on plan and in budget on that side.

And thereafter, we expect further growth also on the non-aviation side of the 2 airports. Here, we expect some shops being closed in this year for use, of course, this year due to construction, which will have a negative impact on our financial performance in 2019 because of construction, as I mentioned.

On the other side, the regulatory framework is working properly. In line with the local CPI, we lifted our fees last October by around 4%.

In addition, also new political situation has proven to be a relief to the economical situation in Brazil. You can see this clearly with regard to the currency devaluation, which stopped since the elections and thus provided a more stable outlook for companies to invest into Brazil going forward. Traffic-wise, we expect further growth, mainly focusing on our effort in Fortaleza, but also Porto Alegre will continue to grow on a little bit slower rate.

Financially, we expect to see a twofold development this year. On the one side, we expect further traffic also and pricing upside; on the other side, a negative retail development, as I mentioned, due to the roughly 1/3 of the shops being closed. As a result, we expect EBITDA to remain broadly stable at a constant currency assumption. The negative impacts we expect, however, in the bottom line were largely due to a higher depreciation and cost to finance the CapEx this year.

Going forward, looking -- let's have a look on Lima, Slide 9. Lima showed another time a very impressive traffic growth in 2018, more than 22 million passengers who presented a plus of more than 7% and this is about 5x the passenger number we ended at the start of our concession. From a long-term cycle point of view on the concessions we launched in this year again because we had to construct a second runway we needed urgently and then also starting with the terminal construction.

From a financial point of view, we guided for around USD 1.5 billion to be invested over the next 6 to 7 years. The final amount here we'll provide you when the terminal construction contracts finally will be closed, most likely by year-end, so that you can also update your models with new numbers in future years.

The big investment will also mean that we must go for a new project finance as our operating cash flow won't be enough to cover the investment amount needed. Moreover, to finance at a reasonable way, we are looking into strengthening the local equity base and might need also to inject some more cash from our balance sheet. All those topics will keep us busy this year, while we also expect further traffic growth in Lima and infrastructure, which is already well utilized.

Coming back to Europe with Greece on Chart 10. The progress within our Greek investment is moving ahead as planned. Following the completion of the mandatory CapEx in Chania, Zakynthos and Kavala, we handed in our application to raise our aeronautical charges by April as stipulated by the concession contract. The 3 airports will therefore see higher charges per departing passenger as of this year's summer season.

Regarding our other investments. Everything is in line with expectations, and we are confident to stay within the types that were set by the Greek state. You can ask me any way, we expect this year or start of next year to have completed another 5 to 6 airports. While in the course of the year 2020, the remaining 5 to 6 airports will be ready. All in all, we are pleased with the operational and financial performance of Greece, and we are looking forward to another good summer season.

Coming back to Frankfurt, we have an update on the summer season on Slide 11. Although the summer schedule has not been finalized yet, the indications point towards a year of modest growth, as mentioned, for the full year of around 2% to 3% passenger growth. And that's despite the lack of air staff capacity, despite the shortness of aircraft and so on. So that's the reason why we guided to market a little bit lower than you more probably would have expected.

Regarding the split between continental and intercontinental growth, which is also very important for our retail per pax key figure. Matthias will talk about this later. We expect to broadly even split of continental and intercontinental traffic or growth. So in other words, a little bit tailwind for our retail performance. Key growing airlines will again be Lufthansa but also intercont players like United, [India], Cathay and others.

Let me make some words also with regard to the processing side, especially regarding on Slide 12 regarding the security controls. The tests run for the new security equipment have meanwhile been successfully completed by the federal police, and we will get first numbers in a very few days, but it looks very promising. And new lanes in Frankfurt wherever it is possible from a space perspective and from a construction perspective, will be equipped with new technology, ensuring a high space and staff productivity. The first 7 new lanes, we will introduce with the new building next to Terminal 1, Concourse A, which we are currently constructing. Here we expect the completion most likely in summer this year, mid of summer this year. Despite this, we live in our most [backwards of pier]. We are, from a position point of view, still not there where we want to be. We are still asking for more responsibility at the end for higher throughput throughout all the terminal and not just on some lanes because we have to improve the situation in the interest of our passengers. The airlines, mainly Lufthansa, and the airports, are working together on this in discussions with the federal government. The federal government asked for audits on that, and I hope they will take a decision somewhere before summer. So we'll take some time -- it takes too much time, from our point of view, but we have to go through this because at the end, we need a political decision on the Berlin level and a change probably also on the legal system to get the responsibility aspect for the airports there because that's the way how other airports in Europe are organized on security controls.

Regarding Terminal 3, I'm now on Slide 13. Everything is on track. Construction of Pier G has been awarded, and we expect -- or due to the contracts, we are quite sure that Pier G will go on the market with the winter schedule 2021.

Pier H also has been awarded to construction and also the main hall. So just Pier G is outstanding and there negotiations are running. So construction is ongoing and the full term of this suite is on track.

The foundation ceremony will take place end of April. And as mentioned, first element you see here on the slide of Terminal 3, Pier G will be completed and will go on the market with the winter schedule 2021. The other piers have the full terminals then end of 2023.

We gave to the market an indication regarding the budget of somewhere in between the level of EUR 3.5 billion to EUR 4 billion. That's not really more than before, but we added also all the necessary infrastructure topics like a parking area. So not just a parking area, but a parking facility, so a house or whatever you call it, parking garage, pick one, up to 10,000...

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [4]

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Parking lot.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [5]

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Parking lots. Thank you very much. And yes, we also include some reserve in for additional cost. That's because the market is really very difficult on the side of the construction companies and the technical companies. It's really the shortness of companies on the one side; it's a very strong market on the other side, so I don't hope that we need to reserve, but we see that the market as everything else has been easy.

Regarding the CapEx volume, please bear in mind that we already invested a good EUR 600 million in the past.

Going ahead, let me make some comments on the outlook. So my final slide, I'm now on Page 15, outlook for the year 2019. I mentioned already that we are expecting a terrific growth in the range of 2% to 3%. Financially, revenues without the construction revenue will grow to a new level of roughly EUR 3.2 billion or 3% upside. Drivers here will be mainly Fraport Greece, but also Frankfurt is expected to see revenue growth. On the group EBITDA level, we also expect to see growth here in addition to the underlying performance we have to apply the new accounting standard IFRS 16. This time, it will contribute some EUR 40 million positively to our EBITDA, but also depreciation charge will grow in the same magnitude.

Despite this impact, we expect up to EUR 50 million, so 5-0, underlying EBITDA growth with the range mentioned over here, which will mainly result from Fraport Greece and from Frankfurt again.

With regard to our EBIT -- group EBIT, our guided range for 2019 now between EUR 685 million to EUR 725 million, which is an upside of up to EUR 20 million, also driven by the aforementioned sites.

Thanks to Antalya, our group result will see an even better performance, near the maximum upside amount to EUR 30 million or EUR 0.30 based on EPS.

For the dividend, this will mean that we can stay -- or will stay within the payout record of 40% to 60%, and we expect a stable development of the EUR 2 per share also for the year 2016 (sic) [2019] here, under the precondition that the guidance is going that way.

Matthias, you have more financials for us.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [6]

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Thank you, Stefan, and a warm welcome also from my side. Let me start my presentation with a more detailed view on our segment performances in 2018, starting with Aviation on Slide 17.

Aviation charges and revenue from security services performed in line with 9-month development, leading to a EUR 50 million revenue growth in the Aviation segment. The incremental Aviation charge post incentives amounted to around EUR 6 per passenger and was thus in line with our expectations for the full year. Despite higher staff costs, which were mainly attributable to our security business, EBITDA performed fine, growing by around EUR 28 million. This increase underpins that a great part of the higher Aviation charges were reflected in our EBITDA, leading to a solid increase in the segment margin.

For the current year 2019, we expect revenue to grow further by up to 3%, thanks to the continued traffic growth and higher revenue from our security business. While the outlook for EBITDA points to a slight growth of last result, the EBIT will continue to be burdened by higher depreciation charges. Here, we expect up to EUR 10 million higher burden as a result of shorter assumed lifetimes of individual assets.

Our retail and real estate segment is shown on Slide 18. The positive news first. We successfully stopped negative retail trend. Q4 2018 marked the first quarter since Q2 '16 where we experienced an improved spend per passenger again.

Key drivers for this turnaround are also shown on the next slide. Besides the obvious traffic mix and currency effects, those also included our retail measures initiated last year. We successfully stimulated shopping and advertising revenue with our new program for the remaining revenue streams of the segment. We also expect parking revenue to grow slightly on the back of the higher passenger numbers, but we also expect some negative impacts due to closing down of premium parking lot for the new building for the security lanes next to Terminal 1 Concourse A to increase the number of security lanes.

While we expect the underlying real estate revenue to be flat, the divestment of our energy supply subsidiary taking place in January this year will result in a EUR 20 million drop in real estate revenue. On the other side, the divestment will lead to an extra income of around EUR 12 million, which we already recorded in the first quarter results. In total, we expect the revenue of the segment to slightly go down, while the EBITDA, based on the special effect in 2018 and '19, will be broadly flat. Higher D&A due to shorter assumed lifetimes will let or will lead to a drag on the segment's EBIT, which we expect to be slightly below the value of 2018.

As promised, some more insight on our retail development on Slide 19. On the right-hand, we exchanged accumulated retail numbers by a snapshot on the fourth quarter stand-alone. During the fourth quarter, we recorded the following obvious effects. On the one side, there was only one major retail destination that recorded a visible reduction in passenger numbers. And while 3 destinations remained more or less at the same level as in Q4 2017, 6 out of 10 main destinations were showing passenger growth again.

Next to the average spend per passenger development, this volume increase was certainly having a lever on our retail sales. While the drop in average spend per passenger to Turkey and Russia was mainly connected to the devaluation impact of the local currencies, the increase to Korea and Vietnam was without any currency impact as Vietnam dong and South Korean won were flat compared to the past year's quarter.

Going a bit ahead, as of the first 2 months of 2019, we are showing a continued retail recovery and a corresponding improvement in spend per passengers within the low single digits, i.e. plus 13% per passenger or plus 4%.

Positive impacts were recorded from the evenly split traffic mix and the relative weakness of the euro compared to the previous year. For the current year, we further expect some new shops being opened in Frankfurt, like a brand-new and really big Hermès store but also a new HUGO BOSS store. All those developments provide us confidence for the current year to further stabilize the spend per passenger and recover our retail performance.

Our ground handling segment is shown on Slide 20 in the presentation. The fourth quarter of '18 performed more or less in line with the 9-month period. Despite the revenue growth, EBITDA and EBIT went down due to higher staff cost to maintain and improve quality levels in Frankfurt. For the current year, we expect further revenue growth and will steer against the OpEx inflation. Here we will reduce cost for extra shifts. We will further optimize the staff mix and we'll improve the productivity again. Our target here is to stop OpEx growth so that we expect revenue growth to impact the segment's EBITDA and EBIT, leading to a strong recovery of the segment in 2019.

Our final segment, International Activity & Services, is shown on Slide 21. Key drivers for the financial growth in Q4 '18 were Fraport Brazil, Greece and also the divestment of our Hanover subsidiary, which was recorded in the fourth quarter.

For the current year '19, we continue to expect earnings growth in Greece on the back of the positive volume outlook and the fee increase Stefan just mentioned. While Fraport Brazil should remain broadly flat, we expect Lima at constant currencies to grow again despite a negative X factor impact due to the local regulation. Here, the regulator set the X factor at minus 3.2%, leading to a slight reduction in Aviation charges in Lima by 0.3%, and crediting the X factor against the U.S. RPI, so the U.S. retail price inflation. Moreover, for the segment, we will see a sharp EBITDA increase in Fraport U.S.A. due to the new IFRS 16 accounting standards. IFRS 16 will increase EBITDA by around 14 -- or, EUR 40 million, sorry, 4-0 million euro, while also D&A will go up by more or less the same amount. In total, we expect revenue and EBITDA to grow, while EBIT should remain broadly the same due to the absence of the Hanover one-off. Adjusted for the Hanover disposal for the EBIT, we also expect to exceed the level that we had in 2018.

Coming to my last topic for today, our cash flow profile and indebtedness. Slide 22 shows you that our free cash flow last year was broadly breakeven and that the disposal of Hanover was almost enough to offset the dividend payout. As a result, our group net debt figure remain more or less stable, leading to an improvement in our financial leverage ratios.

For the current year 2019, we will, however, see a negative free cash flow based on the CapEx outlook we provided on Slide 23. On this slide, you can see how our CapEx outlook is made up. Due to the progressing investment in Terminal 3, we expect CapEx in Frankfurt to grow to a level of around EUR 60 million (sic) [EUR 600 million] to EUR 650 million. This investment amount, we are seeing more or less evenly spread between growth and maintenance CapEx. For Fraport Brazil, for Greece and Lima, we also expect volumes to pick up.

With regard to Lima, the final investment amount for 2019 will also depend on the construction awarding progress. Hence, possible down payments have the ability to increase or decrease the CapEx paid in Lima. The estimate for net debt by year-end '19 is at some EUR 4 billion without considering further M&A activities or divestments. Based on our earnings outlook, this will mean that net debt-to-EBITDA will remain below 3.5x, including the higher dividend payout.

So thank you very much for your attention. And now we can go over to the Q&A session.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Elodie Rall of JPMorgan.

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Elodie Rall, JP Morgan Chase & Co, Research Division - Research Analyst [2]

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I have a couple. If I can start with capital allocation. What drove the decision to increase dividend per share by 33% when you are expecting a deterioration in your cash flow profile and an increase in net debt for 2019? And how do you allocate -- how do you think about capital allocation between the dividend and M&A? And I know there hasn't been anything on the Brazilian airport privatization, but do you have any other potential transaction in sight? Or are you contemplating anything in particular at the moment? Or should we expect nothing much on the M&A front for 2019 given the net debt? And then if I can ask another question on tariffs and an update on negotiation with the alliance. What should we expect for tariffs in the next few years, especially in light of the increasing CapEx expectation for Terminal 3? That would be great.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [3]

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Yes. Thanks very much. On the dividend, you know that we have a payout ratio guided always that keeps dividend in the range of 40% to 60% of net result, and that at the end also is the reason that we propose and the Supervisory Board proposes a dividend of EUR 2 because the payout ratio was then 47%. We see it also as a strong signal how we see the future as a company. And we would never assume to reduce the dividend just because of an in-between negative free cash flow, and that's only because we invest in the future. That's probably the best answer I can give you on that. So it's more a strong signal for the future that we see. Also in the future, we will have a good chance at least to keep the dividend stable or to believe in our future. Regarding capital allocation, M&A, there are no big M&A transactions in front of us. We, of course, are able to look on the market. But if you see Brazil, I think we have a really close look. We have a clear understanding from Fortaleza, from Porto Alegre how the Brazilian market is working, what the cost per unit are, the operational cost, the CapEx, what the potential is. That's the reason that we stayed to our offer, okay. We lost. We have to accept this. If somebody else is much more optimistic or has another view on that, that's fine. We accept it. We have to accept it, of course. It's probably well known that we will have a close look on Sofia. Sofia is coming on the market. There's no other big deal at the moment in front of us. Regarding tariffs, there's no final decision, but the main cost of our terminals, we will incur with the inauguration of Terminal 3, so that even though it's mentioned that we are not going for a fee increase in the near future, so for sure, not for the year 2020, there's no final decision whether we go for a new application or whether we continue with the actual fee system. But we will see it over the next months. The discussions we have with airlines, you probably mean Lufthansa, yes, we have a lot of discussions on that. I think we have a common view that we would like to work closer together, that we have a common view on a lot of strategic topics. We agree to disagree for the time being, at least on commercials. I can't tell you and I won't tell you out of confidential negotiations. But you can be sure that we know what we are doing there. And whatever is possible, whatever makes sense for the company, yes, we would go that way because, of course, they're our main customer and we stay in contact, in negotiations. We have a big interest to go together with Lufthansa. But there's also point where we have to say that we, for the moment at least, disagree on those topics.

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Operator [4]

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The next question is from the line of Stephanie D'Ath of RBC.

The next question is from the line of Vittorio Carelli of Santander.

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Vittorio Carelli, Grupo Santander, Research Division - Equity Analyst [5]

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I have 3 questions on my side. I will do them one by one to facilitate the answers. So the first one is related to the discussion you have with Lufthansa. So my question is, which is the work you are discussing for the next tariff for next year or the following one, assuming also that the Terminal 1 is collapsing? And then the EUR 500 million more, I think, with Terminal 3, will they go to the WACC or they will stay -- we will stay upside?

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [6]

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Probably there's a misunderstanding because I was not precise enough. We don't have bilateral discussions with one or the other airline, so also not with Lufthansa on tariffs for the next regime, which will start then in the year 2020. So I can't answer you anything on the WACC there because there is no bilateral discussion on WACC or something like this. We have to decide whether we start an official...

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [7]

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Application.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [8]

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Application for the next year regime or whether we continue with the actual one, that's the topic behind. With Lufthansa, we of course have discussions. We have discussions regarding closer cooperation. We have discussions regarding the question on how the terminal usage will be organized, especially after Terminal 3 is going into operation. What are the plans of Lufthansa? Of course, there are also commercial discussions behind on synergies and also on fees, and of course, on the cost side. But as mentioned, I think we have really good common and outstanding strategic points with data on the commercial side. But please understand that I'm not giving all of confidential negotiations, any detail there. We'll see how we go ahead. We both know that we have a very close cooperation. We have a very common business. So there's a big interest, if possible, to bridge, but there's also a limit for such a bridge. On the EUR 500 million, you probably mean the Terminal 3. We guided that we expect the number EUR 3.5 billion up to EUR 4 billion. That's not just Terminal 3 and the [crossings], but it's also including Pier G. It's including the highway exit. It's including all infrastructure like parking slots and so on. So some of those stuff have not been in the number before. So it's not really an additional EUR 500 million because it's not altogether. It's a passenger capacity on this number of around 21 million passengers. So it's not entirely comparable with a number of EUR 3 billion to EUR 3.5 billion in the past. But as I mentioned, yes, there's also reserve in because we see that the construction market is very hard, and it's not very easy with all the construction doing in Germany and especially in this region. Of course, the number would go into the WACC.

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Vittorio Carelli, Grupo Santander, Research Division - Equity Analyst [9]

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Okay, okay, I understood. On international, regarding the auction in Brazil. Your price was half the price that Aena paid. Is there or was there any tricky elements that may produce in the auction this difference in prices?

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [10]

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In our opinion, we have not found any tricky element. So what you probably mean is something like you are obliged in 5 years from now and 10 years from now to construct a second runway or something like this. We have seen in the past that some bidders took this into account. Others thought no, up to the 5 or 10 years, we'll overcome such a regulation. Now that's a tricky element if you mean this was not in. So probably Aena has done a better calculation of their turn. That said, more neutral than their calculation. We have done our calculation, and we'll stay with our calculation.

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Vittorio Carelli, Grupo Santander, Research Division - Equity Analyst [11]

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I see. On retailer, so we are looking for 2.5%, 2% growth in spending per pax. Can you give us more color about the business lines that could contribute the most in this growth?

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [12]

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As we told you, in the first 3 quarters in 2018, we had the reduction minus EUR 0.50 in Q1, minus EUR 0.40 in Q2, minus EUR 0.20 in Q3. Then hope the expectation that we could achieve the, let me say, the bottom in Q4. And then we have to say we have been positively surprised by the increase of about EUR 0.10 in Q4 compared to previous year. Reasons are, as already mentioned, yes, let me say, that we draw the strength of other currencies, which help us on the other side, the change between -- this tectonic change between the significantly higher growth on the continent versus lower growth on intercontinental destinations stopped. Now we have, we can say, an equal growth in the continental as well as on the intercontinental traffic and also some measures, which we initiated helped us all in all. Let me say we had some tailwind, and also advertising went up. So everything was really positive in Q4. And now we have in mind also the experience of the first months of 2019, January and February. In these 2 months, spend per pax increased by EUR 0.13 per passenger compared to the previous year. So now we can say we have 5 months in a row where we showed positive increase, and this gives us a lot of confidence that this is now a stable and robust trend in 2019. So in other words, we are relatively optimistic now to recover now in this segment. And that's the reason why we see a minimum flat but perhaps up to 10% increase per passenger -- EUR 0.10, not 10%. So EUR 0.10 increase per passenger in 2019.

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Vittorio Carelli, Grupo Santander, Research Division - Equity Analyst [13]

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So these are external elements. This is not around -- this is not because of an internal shape of the offer?

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [14]

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Let me say, first of all, all these macroeconomic data are now in favor of us. Plus now the first, let me say, impact of our program over the next 3 years, where we start now, and as we mentioned, we are going to open a new Hermès shop. We are going to open new HUGO BOSS shop. So some things will come in 2019 and will also give us some tailwind in this year.

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Operator [15]

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The next question is from the line of Ruxandra Haradau-Doser of Kepler Cheuvreux.

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Ruxandra Haradau-Doser, Kepler Cheuvreux, Research Division - Equity Research Analyst [16]

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Four questions, please. First, how high is the CapEx for the new parking area of Terminal 3? Second, could you please remind us what was the rationale for prolonging the incentive scheme at Frankfurt Airport last year, particularly in the context of temporary terminal capacity constraints? And how shall we think about the incentive scheme medium term and also in 2020? Third, could you please give some details on Eurowings? Will Eurowings operate from the same terminal as Lufthansa? And will it be considered as a stand-alone airline? Or will it be included in the capacity growth of Lufthansa airline? And finally, Antalya, if I remember correctly, you indicated last year a net result for Antalya above EUR 90 million in 2018. Has there been some one-offs in Q4?

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [17]

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So let me start with the number I have in mind of the parking lot area. It's up to 8,500 lots or up to 10,000, somewhere in that range. It would be depending how much business and eco we do there, so small and bigger lots. It will be a number somewhere in the range of EUR 100 million to EUR 150 million, something like this, if I'm not completely wrong, but I think that's the number I have somewhere in mind. To justify, if you have such a premium product, Terminal 3, with top intercontinental carriers, I think the market expects this, and I think it will also be justified from the profit and loss side and from the return side. Yes, of course, but it's also that you have to have something like this whatever the reason was that we first planned another way solely for that. Regarding the incentive scheme, I think you have seen that also on the competitive landscape, it was very important that we achieve those levels as we achieved. It was roughly 70 million passengers that we have seen such a strong growth of Lufthansa, but also a lot of other carriers, especially on the competition with Munich with other airports that we keep our share on that side so that both really absolutely correct that way to go ahead. We have seen, just to give you 1 example, that we achieved best connectivity back. We lost it in the meantime some years ago to Amsterdam, now we are back on best connectivity, which is really important for us. There is no decision at the moment. That depends a little bit with which way we go ahead, whether we continue with that incentive scheme or whether we will have another way out -- of incentive scheme. That depends a little bit on the application, which we have to start somewhere in the next 2 months. And we would see which way we go ahead on detail. Eurowings, I think it's a great decision that Lufthansa is also starting with Eurowings on the intercontinental side, especially on the tourist segment. Incentives linked to this depends on the intercontinental side. It depends very much on whether they -- which destinations they'll fly. As far as I'm informed, they are flying destinations we have already, so that's the reason they are not incentivized. But that's not a principal decision. It depends a little bit destination by destination. Antalya, Matthias has the answer.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [18]

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I can take over the answer. In Antalya, we are -- with regards to passenger number, we are in line with our guidance, also with regards to EBITDA. I think your question comes when you look on the net income. This is lower as expected and as guided. And this has to do, yes, with the one-off, and the one-off comes from the Turkish lira, where there's a significant depreciation and some translation losses. And these translation losses had a total effect of about EUR 16 million. If you take now the official net income plus EUR 16 million, then you are back on this what we guided during the year.

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Ruxandra Haradau-Doser, Kepler Cheuvreux, Research Division - Equity Research Analyst [19]

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Could you please give us a guidance for Antalya also for 2019?

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [20]

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Guidance with regard to passenger growth or what?

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Ruxandra Haradau-Doser, Kepler Cheuvreux, Research Division - Equity Research Analyst [21]

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On the net income.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [22]

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Yes. Normally, we have some matrix that one passenger drives about EUR 8 in net income increase. So based on an expectation that the number of passengers should go up to 3% to 5%, let's assume -- we started with 32 million passengers in 2018. So if you assume 5%, so 1.6 million passengers times 8, you will see the positive impact from the increase, plus the recovery of those translation losses. We do not -- yes, it depends what will happen with the Turkish lira in '19. So this is an open issue. But let me say, in '18, the depreciation was really significant.

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Operator [23]

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The next question is from the line of Cristian Nedelcu of Nedelcu (sic) [UBS].

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Cristian Nedelcu, UBS Investment Bank, Research Division - Associate Director and Aerospace & Defence Analyst [24]

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Three from my side, please. First of all, in terms of retail spend per passenger, can you provide a bit more of color on the developments over the next quarters? We know that the comps are somewhat easier in the first half. But then again, some of the initiatives that you are bringing, we will see the benefits in the second half of the year. So any comments on how that evolution will be? Secondly, on your international business, you made a reference to the Brazilian EBITDA development in 2019. Could you also give us some color on the EBITDA in 2020 in Brazil? I assume there will be some incremental air sites, retail space there that should help growth. And equally so, on Greece and on Lima for 2019 EBITDA, if you can provide a bit more granularity on what range you're expecting there. The last one, if I may, on tariffs for Fraport -- for Frankfurt. Is my understanding correct that the regulator is looking to potentially adding back the incentives to the aviation EBIT when calculated the regulated return? If you could provide any color there, please.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [25]

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We will start with Retail. I can't give you at the moment a more detailed split quarter-by-quarter. But it should -- it depends a little bit also on the external factors. But there is not a specific backloading or something like this. Yes, of course, Hermès and those things that are coming more in the second half. That's right, but I think middle of the year, they should come to something like this. But from today's perspective, we want to expect that we have a continuation of growth, like Matthias mentioned quarter by quarter. But as mentioned, it depends a little bit whether there's a compensating effect or even a supporting effect or some external effects. So no specific allocation quarter by quarter. On tariffs, no, I can't confirm that the regulator want to go that way or that way because the discussions with the regulator haven't started for the next review, and that's too early. The regulator want to have one thing, but that's more a political statement than a regulator statement. They would like to see some additional charges or higher charges, especially for landings after 10:00 p.m. and especially for landings after 11 p.m. We are not really in favor of that because in our opinion, that's not a planned delayed flight. It's just because of the congestions in the European airspace, some other congested airports. But not really because it would be too cheap. The fees, landing fees, passenger fees after 10:00 p.m. or after 11 p.m. are already now very high. So we have plus 200%, plus 400%, something like this. So just to add more is not helping there. But the discussion will be in front of us and other things I can't comment at the moment because it's too early. The second part of your question, performance of our international assets in '19. Let's start with Greece. Here, we have some simple matrix in the way that whenever we have an increase of passengers, we, let's say, 3% now when we talk about 0.9 million passengers. And in average, we receive about EUR 6, EUR 6.50 per additional passenger as starting in landing fees. So we talk -- in the case of 3%, we are talking about EUR 6 million more passenger fees, plus also the fee increase impact of the already fixed airports in Zakynthos, Kavala and Chania. Whenever we have fixed an airport, we can increase the fees from per departing passenger from EUR 13 to EUR 18.50. So -- and we did 3 airports, we make about 5 million passengers. So departing number is 50% of this 2.5 million. And if you then multiply 2.5 million to EUR 5.50 fee increase, we are talking about EUR 19 million, EUR 20 million. So we have about EUR 25 million revenue increase on the other side. We have some also cost items, which will inflation-driven go up. And that will be the net EBITDA impact of Greece, at about EUR 15 million, perhaps even a little bit more, in '19. In the case of Brazil, it's so that on the one side, we see an ongoing positive operational performance. So number of passengers will go up. Also, the revenue from the passenger fees will increase. But on the other side, we are now, let me say, constructing maintenance CapEx, doing it in both terminals where we have to close down some of these retail areas so that, on one side, we have the positive impact for more traffic. We have a temporarily reduction of Retail revenues. This is more or less, at the end of the day, a balance. So that in '19, we do expect a flat situation but then up from '20, benefiting again from the Retail business because then all shops and also new shops are opened and are reopened. And on the other side, we see a continuation of the good passenger flows. And also to give you some metric in Brazil, we -- around on the fee side per average passenger, it's close to EUR 4, depending, of course, on the exchange rate, plus EUR 1 for Retail business. And it's a simple calculation based on the assumption what you expect for passenger growth in Brazil, which will be the positive impact then in 2020. Yes, in Lima, we had -- last year, we gained EUR 10 million -- not in last year, in 2018, we gained EUR 10 million revenue increase. But euro -- but U.S. dollar and our problem of rate was that we had about 10% depreciation of the U.S. dollar, so a fully compensation of the good operational performance by the currency. And now in '19, we are more bullish with regards to the currency. We do not expect a further depreciation of the U.S. dollar so that we had the full operational leverage from passenger growth. So that's EUR 5 million -- about EUR 5 million EBITDA increase in Lima. That's so far the numbers.

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Operator [26]

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The next question is from the line of Andrew Lobbenberg of HSBC.

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Andrew Lobbenberg, HSBC, Research Division - Head of the European Transport Team [27]

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Can I ask about your thinking on potential disposals? Because obviously, managing the portfolio is the crucial part of it. And we have seen a bit of Saint Pete go, and we've seen Hanover go. How do you think about the process going forward? Is it simply opportunistic? Or do you have a strategy? Then can I come back to the security issue? And it's great to see a slide on here. It's incredibly frustrating using your facility, but I'm sure it's incredibly frustrating running it, too. Why is the experience of going through Frankfurt worse than it is going through other German airports? I get that you have union challenges and government challenges, but it's harder going through your facility than other German airports. Can you explain that to me? And then on the proposed improvement to Ground Handling from labor issues, how confident are you that, that can be done smoothly with the industrial relations?

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [28]

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Let me start -- thanks very much for those questions. Let me start with the disposal -- we have a strategy. We mentioned and what we gave as an indication to the market is that sooner or later, we would go out of those participations where we don't have really strategic influence on. So on the long run, it could be the one or the other minority if we don't have the sufficient management influence, and of course, if we would not see any further potential, we could wait. We have not been clear on that. And please understand that we are not giving more details on that before more concrete, more detailed discussions are starting on that. But the one or the other idea we have over the next years. Regarding security, it's, of course, frustrating. But nevertheless, we have to work on that. But I don't agree with you. Maybe it's your experience. I can't agree with you if I know all the different numbers that it's more frustrating in Frankfurt than in other Germanys -- on other German airports. It may depend a little bit on the day or the other day, it depends on the timing issue, whether there's a lot of traffic or less traffic. But the numbers I know are more or less the same also on other German airports. So the principal problem we have in Germany was the organizational security controls, and that's not with us, not with the airport. That's a very difficult allocation of responsibilities, mainly by the federal government but on different units on the federal government with different service providers. And that's the topic behind where we have to come to another organization of responsibility. So clear overall responsibility, but also a more flexible process on that. The third question, I haven't got. I'm sorry very much.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [29]

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The third question was with regards to Ground Handling. Yes, let me say 2018 was not a good year. So if you suffered from, I can say, from the traffic, we've put in a lot of resources. We had to run extra shifts. We recruited a lot of new people with low productivity, and this spoiled EBITDA and EBIT in 2018. But now we are looking forward in 2019. Let me say we can say the good thing that -- is that the passenger growth is now between 2% and 3%, not as much pressure from last year. And now we can have a strong focus on productivity again to bring back the business on the original productivity level to avoid additional shifts, et cetera, to have the learning curve effects with the new employees. And back on this, we are absolutely convinced to bring back this business on the old productivity level. And that's the reason why we gave a strong commitment that EBITDA and EBIT in Ground Handling will improve in '19 compared to '18.

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Operator [30]

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The next question is from the line of Christian Cohrs of Warburg Research.

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Christian Cohrs, Warburg Research GmbH - Analyst [31]

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Just coming back to Ground Handling first. You said that you hope to bring productivity back to old levels. But is there any chance that in the midterm, this division will earn a sufficient return on Fraport assets? I mean, the ROFRA is continuously below WACC. And the same applies also to Aviation and here, my -- that is my second question. The 4.8% ROFRA in the Aviation division, isn't this a very strong argument for higher fees? And could you also maybe remind us what is the amount of -- the absolute amount of rebates you have actually given to the new airlines? And I think someone asked already whether this amount isn't something we should add back to the EBIT figure in order to come to the ROFRA consideration, which the regulator might also adopt. And another question maybe on staff costs. You experienced high -- pronounced staff cost increase in 2018. Could you maybe remind us what is -- what are your expectations with regards to this staff cost trend for Frankfurt -- for your Frankfurt divisions in the current year? And lastly, a technical question. If I'm not mistaken, in your segment report, the Aviation business recorded a EUR 21 million higher other income in 2018. I was just wondering what this is and maybe you can shed some more light on that.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [32]

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Let me start on Ground Handling. Yes, of course, you are right. There are some restructuring plans also on the agenda, but it would take some years with different measurements. Some measurements on cost-cutting. measurements on productivity increase, all the measurements where we have to have negotiations with the unions or the Worker's Council over here. That's something, of course, also a macro trend implies. So it's a combination of different topics that were not achieved over the next 2 or 3 years, which is more something from year to year on a cycle of 5 to 7 to 8 years. The earlier, the better. But Ground Handling will never be a segment where we will earn a lot of money. And you have not asked for this, but where we want to be back at some time in the future, really, on ROFRA and WACC, on the WACC level.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [33]

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Yes. Then there was a question with regards to Aviation. When you look on the Slide # -- just a minute, 17, you can see this other income plus EUR 21 million. On the other side, you see other OpEx. At the end of the day, there was a bunch of provisions on one side, which we had to lease small amounts. On the other side, we had to build new provisions. So the release of provisions or some part of this, you'll find on the other income. The building of new provisions, you will find under other OpEx. All in all, if you match all the positive and negative effects, the delta is about minus EUR 2 million. So we released provisions in an amount of EUR 2 million more than we build on the other side.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [34]

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Regarding Aviation, regarding the volume of incentives, we have not given any further details beyond the market. So I apologize, I'm not giving you a detailed number. But it's something in the small or double-digit million figure. Of course, plans, we want to -- we have to add additional staff, especially on security business.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [35]

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Which is neutral -- this is neutral on the P&L.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [36]

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Which is P&L-neutral. Yes, that's absolutely right. More or less, last year, we had to add even additional staff on our own expense to stabilize our operation. But for this year, whatever we hire at the moment, whatever we're required to hire because the market and everything else isn't easy, it would go -- put through, it's neutral that side. On Ground Handling, it would just be a replacement because of fluctuation. As Matthias mentioned already, yes, of course, we have to keep quality on the one side on that level because of punctuality and so on to shorten delays. But on the other side, there's clearly also a focus on productivity. And we have to balance those 2 angles.

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Christian Cohrs, Warburg Research GmbH - Analyst [37]

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And any impact from wage hikes, something like that? Anything agreed with the unions, Worker's Council, et cetera?

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [38]

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I'm seeing it's around 2.5% to 3% increase, something on that level.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [39]

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It's about 3% on one side. So let me say, a little bit higher than normally in the past. On the other side, we had some positive impacts from our restructuring program 2 years ago. That's the reason why when we carve out the gross cost increase in security business, which is P&L-neutral because it's more or less 100% financed by the federal police. So we focus on these, let me say, personnel cost items, which could hit us. And here, we assume about -- including the negative and the positive effects, we assume, despite the fact that it's 3% or even a little bit more and tariff increase, but the net effect is about EUR 20 million for our P&L in 2019 as a negative impact.

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Christian Cohrs, Warburg Research GmbH - Analyst [40]

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Okay. That's clear. Very helpful. And if I may, just one brief follow-up. I think you are just refinancing or you are about to refinance EUR 1.3 billion in your maturity profile this year. Should we expect or pencil in any release on the interest side? Do you expect that you can refinance this EUR 1.3 billion at better terms?

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [41]

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Sure, yes. And this -- behind this EUR 1.3 billion, we have EUR 800 million, our Eurobond 10 years ago. And now 9.5 years ago, which will be -- have to be paid back in October 2019. And here, we have a coupon of 5.25%, which is part of our overall interest burden. So the overall cost of interest is a little bit more than 3%, which you can see on the slides. And now when we take out EUR 800 million in this 5.25% and substitute this by another 10-year bond or promissory -- not bond, but promissory note or anything else by letter alone. So in the moment, we are clearly below 2%. So this will have a significant positive impact on the average interest burden in our balance sheet. And already, we have all the talks with the banks and so on. So more or less, everything of this EUR 1.3 billion is already managed.

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Operator [42]

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The next question is from the line of Arthur Truslove of Crédit Suisse.

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Arthur David Truslove, Crédit Suisse AG, Research Division - Research Analyst [43]

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There's just a couple from me. First and foremost, if you could just talk in a little bit more detail about the measures that you've actually taken to improve your Retail business. Are there particular product lines, type of store that you focused on, maybe on the food and beverages side as well? And are there any particular projects kind of going forward that you think are likely to have an improving impact over the next couple of years? And secondly, on the disposal of the energy business in the Retail & Real Estate segment, just to confirm that, that business is very low margin, and therefore, impact on EBITDA is very low.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [44]

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We'll perhaps start with this energy topic. So we sold the company. Purchase price is more or less extraordinary EBITDA income of plus EUR 12 million, which you will see in Q1 2019. So as you mentioned, it's a low-margin business. So we take out or we have to carve out less than EUR 1 million EBITDA per year. So you can see the EBITDA multiple is very good for us, and that's the reason why we sold this business. So no impact on the running P&L. On the other side, EUR 12 million extraordinary income. With regards to Retail, yes, I think we already in Q3 numbers and so on, we told you about what we are doing. We have a 3-year program. We are going to refurbish the shops to increase units, reduce the number but increase the units. One example now will be the new Hermès store with a triple or a quadruple much more space than in the past, a new HUGO BOSS store. So we continue with all the refurbishment of more or less all the shops. We are also going to remodel and redesign our food courts, especially in T1 and the B concourse because despite this Retail performance in the past, food and beverage is always running very well. So this is a positive trend, which you can see everywhere, and we have to go into this trend. And we'll do a lot of things to improve here to start up with fancy restaurants and so on. So also, with regarding to more luxury goods, to take out commodities and have a stronger focus on new products with higher margins to be more flexible on the price side, also together with our joint venture partner, Heinemann Brothers, so more pricing flexibility. So all in all, it's a bunch of a lot of big and small measures.

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Operator [45]

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The next question is from the line of Stephanie D'Ath of RBC.

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Stephanie Fabienne D'Ath, RBC Capital Markets, LLC, Research Division - Analyst [46]

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I'm sorry you couldn't hear me the first time. A few questions from me, please. The first one is when do you expect your free cash flow to turn positive again? Second question is on the Retail spend ahead. Between 2015 and 2018, the number came down about mid-teens. You just mentioned a 3-year program to refurbish Retail. Are you hoping to reach the 2015 Retail spend perhaps figure back? Or might it take longer than that? And the third question, could you please let us know by how much Lufthansa volume growth was in 2018 and maybe their market served, '17 versus '18? And then finally, is the congestion in the German airspace potentially becoming a problem for your volume growth?

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [47]

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Thanks very much for those questions, and sorry that we couldn't hear you the first time. The German airspace, this is getting to a problem. I hope that we solve the issue. And German navigation company, DFS, is underway, whatever they can do on that side regarding hiring additional air navigators, regarding reorganization of airspace here in Germany. EUROCONTROL is supporting on the European level with other flight latitudes, with other flight around -- hot topics. But at the end, in the long run, that's all in between measurements. In the long run, you need a more efficient European airspace organization that the airspace is used in a better way. And politicians and navigation companies are working on this, so it takes some time. So it would not be served yet. In the long run, it could be a bottleneck. That's the reason it has to be solved because all the projections we know are saying that people would like to fly more, that goes with what I expected in Europe to stay around 3% to 4% over the next years' passenger growth. So that means 1% to 2% volume growth on movement. That means we have to get progress and then to get -- yes, progress on those topics. On volume growth, 2018 per airline, we don't give detailed numbers. But you can assume that it's half -- it was half with Lufthansa because their shares also here, in Frankfurt Airport, are around 60%, and they kept really market share. So they grew by -- on the level of their market share.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [48]

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With free -- First of all, free cash flow question, when we are positive again. So based on the current CapEx projections, this will happen in 2024 after the inauguration of Terminal 3 because then CapEx went down or will go down significantly. And with regards to spend per passenger, so 2018 now we have the bottom line with EUR 3.12 per passenger. You mentioned the EUR 3.62 in 2015. So I can promise you that we are not going to achieve this in 2019. But again, when -- it will be EUR 0.10 more in '19, I think we are happy. And then you have to see in 2021, you will see the impact from our program. And then there, of course, there's room for further increase to recover and perhaps to catch up to this EUR 3.60.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [49]

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You cannot compare those 2 numbers to be solely on -- because it's completely different traffic structure behind with a much stronger European market than in the past and more continental passengers spending less per passenger. So these 2 numbers to compare makes no sense, to be quite honest.

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Operator [50]

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(Operator Instructions) The next question comes from the line of Jenny Ping of Citi.

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Jenny Ping, Citigroup Inc, Research Division - Director and Analyst [51]

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Three questions from me. Firstly, just a clarification. On Lima, you mentioned about additional -- the need for potential additional cash injection. Can you give us a sense of the volume of that cash injection? And just to clarify whether it's in excess of the planned CapEx that's been talked about? Secondly, on Antalya, just looking down the list of your international assets, that is the next one that's coming up for renewal towards the end of 2024. Have you had any discussion with your partners at ADP or the Turkish government about the renewal of this contract? And then very lastly, just on the ongoing EU directors -- Aviation Directors Review. Is that very much dead in the waters before the European elections? Or do you expect there to be further announcements from the EU on that point? So any update there would be greatly received.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [52]

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We'll start on the final point, Aviation Directive. No, we don't expect any implication before European Parliament or European Commission on Elections. So if at all it would go into the next regime, and then we have to see which way it goes into the next regime, whether they pick it up or -- and if they pick it up or which way they pick it up, so that's too early. But nothing for the near term. On Antalya, if we were to have discussions, I would not tell it to you. Sorry very much, but that's confidential. 2024, that's absolutely why, but that means another 5 years to go. Cash injection on Lima, that's just an internal topic. Nothing on additional CapEx or something like this. It's just a question. If you want to finance, Lima airports tend to loan on a project, financed on a bond or something like this, you need to have, of course, sufficient equity. It's only an internal topic in between Fraport mother company to Fraport daughter company and not affecting any issuance at group level. It's consolidated out on the group level. It could be -- of course, it's too early, but it could be EUR 100 million, it could be EUR 200 million because if you finance 1.5 a U.S. dollar project, yes, you would have to risk -- deduct some operational cash flow and so on. We can go through more in detail year-end if the setup of terminal, what we have to construct as a terminal is more clear and we know what is the total volume. And then we can go through the financing. We can share the finance with you. It was just the first figure, which is not really so important for you because it's just an internal transaction, nothing else.

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Operator [53]

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We have a follow-up question from the line of Vittorio Carelli of Santander.

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Vittorio Carelli, Grupo Santander, Research Division - Equity Analyst [54]

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Apologies for this follow-up, but consider this question coming from my most frustrated analyst soul. So regarding again the next tariff in 2020 and going forward, I mean, my perception is that you are investing -- how should the market cap in the Terminal 4 saw a huge amount of money? The regulated OpEx are basically increasing. And I would say, we have a slowing down in traffic. So for me, it's important to receive from you a clear message that you will base all the discussion on the current regulatory framework, which I would say is based on a WACC, on a return on this CapEx and on a return on euro-by-euro on the regulated OpEx. So far, probably you mentioned other elements of the discussion so far, probably political influences, discussion with Lufthansa. But I would like to receive from you that you will fight for a decent return on this huge amount of CapEx. That's only my question.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [55]

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Yes, you're absolutely right. But Terminal 3 is absolute focus for us at the moment or this year, it's to construct Terminal 3. It's not focused so much on the regulated asset base because it will really affect regulator asset base from the timing or duration it's starting so 2024. And there's a clear confirmation on that. You have 2 ways then from the year 2024. The one way, you can increase charges, or the other way is -- and this I would always prefer, to bring additional slots to the market to have additional growth. And then it depends on the goals. It's probably a mixture of additional charges and growth on that side. It's clear that a new terminal with a capacity of 21 million passengers will never be utilized since the first full year. That's clear. But as a principle, it's exactly what you mentioned. We have to earn our own WACC, and that's the way we will go ahead. You can earn your WACC by growth, or you can earn it just by price increases. Just by price increase, you have to be a little bit careful that you don't price yourself out of some markets or it will be a mix of something. But it's more from 2024 onwards. It's not 2020. That's not the topic.

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Operator [56]

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(Operator Instructions)

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [57]

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So thanks very much.

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Operator [58]

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And there are no further questions at this time. I hand back to the presenters for closing comments.

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Christoph Hans Nanke, Fraport AG - Senior VP, Head of Finance & IR [59]

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So thanks, everybody, for attending this call. If you have any further questions, you can contact us later in IR. And let me say that I wish everybody a good afternoon. Thank you.

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Stefan Schulte, Fraport AG - Chairman of the Executive Board & CEO [60]

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Thank you.

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Matthias Zieschang, Fraport AG - Executive Director of Finance & Controlling, CFO and Member of the Executive Board [61]

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Bye-bye.

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Operator [62]

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Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.