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Fraport Raises Forecasts for 2010

EBITDA Developing Better Than Expected – Frankfurt Airport Expects 3 to 4 Percent Passenger Growth

FRA/th> The Fraport Group looks back on a successful first half of fiscal year 2010, with approximately €1.02 billion in sales revenue. Despite a multi-day standstill of flight operations at its Frankfurt Airport (FRA) home base due to the volcanic ash cloud from Iceland, Fraport achieved a year-on-year increase in Group revenue of €52.9 million or 5.5 percent. EBITDA (earnings before interest, tax, depreciation and amortization) climbed by 15.8 percent to €304.6 million. "By year end we should achieve an operating result of €670 million to €680 million – between €35 million and €45 million more than expected," explained Fraport AG executive board chairman Dr. Stefan Schulte.

Because of this positive development Group results will exceed the previous year's level by year end. However, with €52 million for the year to date, results still fell 21.9 percent short of the previous year. This was not only due to a jump in interest expenses for capital expenditures on airport expansion in the reporting period resulting from reserve financing, but also to a positive extraordinary effect in the previous year. Basic earnings per share, i.e., the profit per outstanding share, slipped from €0.72 to €0.55.

In the six-month period from January to June 2010, Fraport registered approximately 24.5 million passengers at Frankfurt Airport, an increase of 1.4 percent on the first six months of 2009. The Fraport Group's five majority-owned airports welcomed nearly 38.6 million passengers. Cargo throughput (airfreight and airmail tonnage) jumped 30 percent to a total of 1.22 million metric tons. Aircraft movements for the Group rose by 4.2 percent to almost 350,000 takeoffs and landings.

"Passenger volume at our FRA home base continued to increase throughout July. The first vacation month of the summer brought another rise in passenger traffic for Fraport, with passenger figures exceeding the previous year's level by nearly 8 percent," Schulte said with satisfaction regarding the latest traffic development. "Unlike three months ago, the trend of strongly improving full-year growth is stabilizing. FRA will achieve a total passenger increase of 3 to 4 percent by the end of the year," Schulte said optimistically. Cargo tonnage at FRA will continue to rise at strong double-figure rates until the end of the year due to the noticeable recovery of the global economy.

Fraport Group revenue reached €1,015.4 million in the first half of 2010. After adjusting for the disposition of shares in Hahn Airport in the previous year, revenue was up by €58.7 million (6.1 percent) in the reporting period. In addition to traffic growth at Frankfurt Airport, the major revenue driver was the extremely positive development of Fraport's investments in Antalya Airport (AYT), Turkey, and Lima Airport (LIM), Peru.  Especially Antalya benefited from a strong rise in holiday travel demand.

"In the first half of 2010, our business segments contributed consistently to improving EBITDA," Schulte stated. Achieving nearly 20 percent of its revenue and almost 30 percent of the EBITDA in the External Activities segment during the first six months of the year, Fraport benefited from global air traffic growth. Rising demand also gave impetus to the Ground handling segment at Frankfurt Airport. "It is worth noting that our FRA home base for the first time generated net retail revenue per passenger of more than three euros despite continuing difficult economic times," explained Fraport's CEO. Segment results prove that the Group is strategically in an excellent position and, therefore, could well offset the previous year's economic difficulties. Thus, the Group will continue to profit from further economic recovery in the coming months.

With €753million, operating expenses of the Fraport Group increased merely 1.4 percent on the previous year's level. Adjusted for the consolidation effects from the sale of Hahn Airport, operating expenses rose by €18.2 million or 2.5 percent.

Personnel expenses grew by €15.2 million or 3.5 percent year-on-year to €448.4 million in the first six months of 2010. Major reasons included higher manpower requirements in aviation ground services due to growing traffic volume as well as additions to reserve accounts for personnel. Adjusted for the divestiture of Hahn Airport, personnel expenditures grew by 4.2 percent (€18.1 million).

Non-staff costs dropped 1.6 percent year-on-year to €304.6 million in the reporting period. After adjusting for the expenses of Hahn Airport, the increase in non-staff costs was a slight €0.1 million. The overall moderate development of non-staff costs was due to lower expenses for third-party personnel in the security business and changes in the billing for aircraft cabin cleaning.

Because of considerable revenue growth and overall moderate cost development, Group EBITDA improved by 15.8 percent to €304.6 million in the reporting period. Adjusted for the special effects from the sale of Hahn Airport, EBITDA has increased by €45.7 million or 17.7 percent during the first six months of 2010. The EBITDA margin improved from 27.3 percent to 30 percent – or from 27.1 percent to 30 percent on an adjusted basis. The financial result markedly deteriorated compared to the previous year, falling from -€40 million to -€92.6 million. The main reason for this deterioration was a significant rise in net debt resulting from the financing of the airport expansion program. As mentioned before, the previous year's financial result was positively affected by non-recurring extra income.

"Overall, we are very satisfied with the development of our global business in the past few weeks and months," Schulte stated."The global economic crisis had its repercussions on us. However, traffic at our 13 airports worldwide has developed very positively."