3Q 2013 Result - Finnair/media/Files/F/Finnair-IR/... · 2016. 11. 24. · reach a profitable operational result in 2013. Previous financial guidance: Due to the negative effect of

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3Q 2013 Result

Finnair 3Q 2013 Result, 25 October 2013

Unit costs continued to decline in Q3, topline hit by the weaker Yen

• Disappointing operational result 38.4 M€ (-23.7%) in seasonally strongest quarter despite 6.2% decline in CASK excl. fuel

• Euro denominated turnover 636.9 M€ (-2.1%) hit by the depreciation of Japanese Yen

• Full implementation of structural change and cost reduction programs absolutely essential for future

• Equally, focus on improving unit revenues by commercial strategy revision is vital


Market Environment remains challenging

• European network carriers continued to implement structural change and cost reduction programs to improve competitiveness in the prevailing tight competitive situation

• The market for traffic between HEL and Finnair’s European destinations, measured by passenger volume, grew by 4.0% whilethe market between Asian and European destinations grew by 3.8%. Finnair increased market share in both markets.

• Air Freight Volumes continued to recover, but yield environment remains weak

• Growth in the BRICS economies, including China, is slowing– Fx head wind depressing yields in the Asian traffic– Growth in passenger traffic driven by leisure travel

• Oil prices remain high



Restructuring and cost savings program is yielding results

Revenue and profit hit by weak yen, cost efficiency improved

• Turnover declined by 2.1% – Q3 Turnover 636.9 M€– Operational EBIT 38.4 M€ (50.4 M€)– Euro-denominated revenue impacted by the weakening of Yen

• Weaker yield partly offset by strong load factors – Unit revenue per available seat kilometre (RASK) -7.1%, passenger unit

revenue at constant currency -0.2% – passenger load factor (PLF) 84.4% (+3.0%-p) – yield per revenue passenger kilometre (RPK yield, -10.7%)

• Sound financial position– Equity ratio 32.9%– Gearing 9.9%– Adjusted gearing 63.0%– 557.4 M€ short-term cash and cash equivalents as per 30 September 2013


Turnover & EBIT hit by weaker yen

Quarterly turnover, € million

6 Finnair 3Q 2013 Result, 25 October 2013

Quarterly Operational EBIT, € million

-60

-40

-20

0

20

40

60

2009 2010 2011 2012 2013

Q1 Q2 Q3 Q4

0

100

200

300

400

500

600

700

2009 2010 2011 2012 2013

Q1 Q2 Q3 Q4

*Operational result (EBIT), 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

Load factors at a healthy level

North America

ASK -0,4 %

RPK 4,9 %

PLF 4,5 %-p

Traffic revenue* 1,4 %

Leisure traffic

ASK -2,1 %

RPK -2,3 %

PLF -0,2 %-p

Traffic revenue* -11,2 %

Europe

ASK 13,8 %

RPK 17,1 %

PLF 2,3 %-p


Total Traffic

ASK 6,0 %

RPK 9,9 %

PLF 3,0 %-p


Asia

ASK 4,2 %

RPK 9,3 %

PLF 4,1 %-p


Domestic

ASK -3,2 %

RPK 1,6 %

PLF 3,1 %-p


Cargo

ATK 32,6 %

RTK 17,6 %

OLF -9,2 %-p

Traffic revenue 11,9 %

Asian share 51.5% of the total capacity

* passenger revenue

7Finnair 3Q 2013 Result, 25 October 2013

Passenger revenue split

48%35%

6%6%

5%

Asia

Europe

Domestic

Charter

North Atlantic

*Passenger revenue

Cost savings focus in labour productivity improvement


136

4

Other

Pilots

Cabin

Maintenance & ground service

10

17

18

8

Phase I140 M€

7

TOTAL 150

Phase II60 M€

50

Achieved To Target

Finnair’s subsidiaries SMT and Area are planning to merge, creating single largest Finnish business travel agency

• The aim is to create more opportunities to provide customized services to Finnish companies and organizations

• Opportunity to achieve economies of scale, as well as significant cost savings by reducing overlapping functions

Finnair Q3 2013 tulos, 25.10.20139

Finnair lowers its guidance for 2013 due to the weakening unit revenue development

New financial guidance:

Due to the continuing negative effect of the weak yen on unit revenue in Japanese sales, and the deterioration of cargo and leisure traffic revenues, Finnair expects its turnover in 2013 to be below the 2012 level. Unit costs excluding fuel (CASK excl. fuel) are expected to decrease compared to 2012. If the strong deterioration of unit revenues continues in the last quarter of the year, it is possible that Finnair will not reach a profitable operational result in 2013.

Previous financial guidance:

Due to the negative effect of the weak yen on unit revenue in Japanese sales, Finnair expects its turnover in 2013 to be largely unchanged from 2012. Unit costs excluding fuel (CASK excl. fuel) are expected to decrease compared to 2012. Finnair estimates that its operational result will show a profit in 2013.



Financials

Q3 Key figures

Key Figures Jul-Sep2013Jul-Sep 2012

Change %

Jan-Sep 2013

Jan-Sep 2012

Change %

Turnover and result

Turnover EUR million 636.9 650.3 -2.1 1,839.8 1, 836.5 0.2

Operational result, EBIT EUR million 38.4 50.4 -23.7 26.9 43.1 -37.7

Operational result, % turnover % 6.0 7.7 -1.7%-p. 1.5 2.3 -0.9%-p.

Operating result, EBIT EUR million 35.2 72.6 -51.5 9.7 37.3 -74.1

EBITDAR EUR million 82.4 99.3 -17.0 162.0 191.4 -15.3

Result before taxes EUR million 31.3 68.8 -54.5 33.9 20.1 68.6

Net result EUR million 23.5 51.9 -54.7 24.7 14.0 76.9

Balance sheet and cash flow

Capital expenditure, CAPEX EUR million 3.6 7.4 -51.2 30.6 17.7 72,9

Net cash flow from operating activities EUR million 29.7 44.5 -33.3 108.3 136.8 -20.9

Share

Share price at end of quarter EUR 3.12 2.07 50.7 3.12 2.07 50.7Earnings per share, from the result of the period* EUR 0.18 0.41 -54.9 0.19 0.11 78.5

Earnings per share EUR 0.16 0.39 -58.8 0.12 0.06 107.3

12 Finnair 3Q 2013 Result, 25 October 2013* Before Hybrid Bond interest

Operational EBIT build-up in Q3 2013


Mill. Eur

50,438,4

-2,8

12,8 -7,4

-1,80,6 -2,0-5,5

-0,7

9,6

-12,2

-2,6

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

Airline business: RASK & CASK development Q3 2013

-7,1 %

-4,6 %

-6,2 %

-1,5 %

-7,1 %

-9,5 %

-6,6 %

-10,2 %

-11,0 %

0,5 %

1,1 %

-15% -10% -5% 0% 5%

RASK, unit revenue

CASK, unit cost

CASK, excl. Fuel

Fuel cost

Personnel

Depreciation & leasing

Traffic charges

Maintenance

Ground handling

Catering

Other costs

Change, y-o-y, %


• Unit cost excluding fuel (CASK, excl. fuel) down by 6.2%• Unit revenue (RASK) at constant currency -0.2%

Aviation services operational result has been transferred from other expenses to maintenance, catering and ground handling expenses starting from Q1 2013. 2012 comparison figures were changed respectively.

Significant cumulative unit cost* decrease achieved


*Excl. fuel, adjusted for 2010 ash and industrial action

-7,6 %

-11,3 %-14,4 %

-16,0 %

-14,0 %

-12,0 %

-10,0 %

-8,0 %

-6,0 %

-4,0 %

-2,0 %

0,0 %2011 2012 2013Q3

Operational costs grew less than capacity

Operational costs

620,2 615,8

584,6 608

602 603,9

621,9

0

500

1000

1500

2000

2500

3000

2012 2013Q1 Q2 Q3 Q4

2,428.7

Mill. Eur

167,6 169,4157,9 171,5179,6 185,1165,2

0

500

1000

2012 2013Q1 Q2 Q3 Q4

670.3

+3.1%

Mill. Eur

+0.3%

* Hedging taken into account

Share of fuel costs was 30.7%


Fuel and personnel biggest cost items in Operational costs Q3 2013, total of 603.9 M€


Change, y-o-y, %

-14,4 %

-11,2 %

17,1 %

-7,9 %

43,7 %

5,1 %

-1,1 %

4,2 %

-10,6 %

-10,0 %

3,1 %

0,3 %

-40% -20% 0% 20% 40%

Aircraft leasing

Sales and marketing

Tour operations

Depreciation

Other rental payments

Maintenance

Traffic charges

Ground handling and catering

Other costs

Staff

Fuel

Total30,7 %

14,3 %

10,9 %

10,1 %

7,9 %

6,6 %

6,2 %

5,0 %3,3 %

2,8 % 2,3 %

Fuel Staff costs

Ground handling and catering Traffic charges

Other costs Other rental payments

Maintenance Depreciation

Tour operations Sales and marketing

Aircraft leasing

Strong financial position supports business development and future investments

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 Q3

Strong balance sheet

Equity ratio Gearing Adjusted gearing

%


-150

0

150

300

450

600

750

2009 2010 2011 2012 Jan-Sep2013

Good cash position over years despite significant investments

Net cash flow from operations

Investment, gross

Short term cash and cash equivalents

M€

Finnair is the first European carrier to receive next generation Airbus 350 XWB’s

Competitive advantage:• Up to 18% more capacity: from 270 seats to 310-320 seats• Estimated seat cost -30% compared to Airbus 340• Improved revenue position with superior product• 11 orders and 8 options


Fuel, spot-price development



Hedges are wearing off:Hedging loss of 2,6 M€ in Q3

*2012 Incl. Hedging profit of 6,9 Mill. EUR

**2013 Incl. Hedging loss of 2,6 Mill. EUR

Rolling hedging policy

Hedging positions, 30 September 2013Hedge ratio 2013: 75%


• Finnair hedges jet fuel positions 24 months ahead within the limits defined in the hedging policy

• Finnair is 75% hedged for the second half and 57% for first half of 2014

• The company protects itself against the risks of currency, interest rate and jet fuel positions by using different derivative instruments, such as forward contracts, swaps and options0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

hedge ratio

upper

lower

23

Thank you


Documents

3Q 2013 Result - Finnair/media/Files/F/Finnair-IR/... · 2016. 11. 24. · reach a profitable operational result in 2013. Previous financial guidance: Due to the negative effect of