In the 2017 financial year, Flughafen Zürich AGʼs revenue grew CHF 24.3 million to CHF 1,037.1 million (+2.4%). In particular, higher commercial and parking revenue contributed to this growth. After deducting operating expenses amounting to CHF 453.5 million and depreciation of CHF 243.7 million, earnings before interest and tax (EBIT) came to CHF 339.9 million (2016: CHF 337.4 million). Profit for the financial year just ended amounts to CHF 285.5 million, up CHF 37.5 million from the prior-year period. The result was positively impacted in particular by the sale of the remaining 5% stake in Bangalore International Airport Ltd. which contributed a post-tax gain of CHF 31.4 million. After adjusting for all one-off effects, profit increased by CHF 10.8 million (4.5%).
In the financial year just ended, aviation revenue grew from CHF 620.4 million to CHF 624.2 million (+0.6%), accounting for around 60% of total revenue. Despite the airport operator lowering flight operations charges in September 2016, due to strong passenger growth, however, revenue climbed by CHF 3.8 million year-on-year. The slight decrease in passenger-related flight operations charges attributable to lower passenger charges (–0.4%) was more than offset by higher revenue from other flight operations charges (+3.5%). Income from aviation fees also rose by CHF 1.8 million (+2.6%).
Overall, non-aviation revenue increased by CHF 20.5 million to CHF 412.9 million (+5.2%). Total commercial and parking revenue grew by CHF 13.5 million to CHF 234.2 million, an increase of 6.1%. In particular, this was due to the higher revenues achieved from retail, tax & duty free plus food & beverage of CHF 6.5 million (+5.7%), despite the building alteration work carried out in the central duty free stores during the second half of 2017. In addition, parking revenue also rose by CHF 4.0 million (+5.4%), thanks in particular to the positive trend in income from public parking which was successfully boosted by marketing campaigns targeting long-stay parking.
The decline of CHF 3.6 million in revenue from facility management was attributable to rate adjustments for energy and utility costs (which are always cost-based) and lower revenue from services, as fewer construction projects were carried out for third parties.
Revenue from international business is stated as a separate item for the first time in 2017; in addition to revenue from international consulting activities, it now also includes revenue from the companyʼs consolidated subsidiaries in Chile and Brazil. This amounts to a total of CHF 17.3 million for the 2017 financial year.
Operating expenses in the year under review increased by CHF 19.5 million to CHF 453.5 million (+4.5%). As in the previous year, operating expenses were influenced by one-off effects that reduced expenditure. While both a payment of CHF 3.5 million in connection with the liquidation of Swissair in debt restructuring proceedings and the additional purchase price payment of CHF 7.3 million for land for THE CIRCLE influenced operating expenses in the prior year, a second payment of CHF 4.8 million from the bankruptcy assets of the former Swissair reduced operating expenses during the year under review. After adjusting for these one-off effects, operating expenses rose by CHF 13.5 million (+3.0%). This increase includes CHF 7.0 million from the newly consolidated subsidiaries in Chile and Brazil.
Personnel expenses rose by CHF 4.8 million to CHF 201.5 million (+2.5%). As well as a higher headcount and a general pay rise, this is due to consolidating the personnel costs of the international holdings. Despite much higher passenger volumes (+6.3%), the costs for police and security rose by only 1.2%. The CHF 2.8 million rise in the cost of maintenance and materials is primarily attributable to the effect of consolidation and the revaluation of spare parts held in storage. In addition to the newly consolidated holdings, various non-capitalised project costs contributed to the rise in administrative expenses of CHF 3.6 million.
Operating result and profit
Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to CHF 583.6 million (+0.8%). After adjusting for the aforementioned one-off effects, EBITDA was CHF 578.8 million, up 1.9% on the adjusted figure for the previous year.
Depreciation and amortisation were up slightly on the prior-year figure of CHF 241.5 million to CHF 243.7 million. The net finance result was CHF –18.3 million, CHF 0.9 million less than the prior year. The share in the result of associates in the amount of CHF –3.1 million (2016: CHF –5.3 million) is based primarily on the companyʼs share in the profit/loss of the operator of the airport in Belo Horizonte. In addition, the sale of the remaining 5% stake in Bangalore International Airport Ltd. resulted in a pre-tax gain of CHF 36.3 million.
Profit for the financial year just ended amounted to CHF 285.5 million, up CHF 37.5 million (15.1%) from the prior-year period. When adjusted to take account of one-off effects (including disposal of the stake in Bangalore Airport), profit totalled CHF 250.3 million, CHF 10.8 million higher (+4.5%) than the adjusted profit for the previous year.
During the year under review, revenue from third parties for the regulated business segment rose from CHF 608.7 million to CHF 612.6 million. In the same period, earnings before interest and tax (EBIT) for regulated business, which comprises the “Aviation”, “PRM”, “User fees”, “Air security” and “Access fees” segments, improved by CHF 5.5 million to CHF 140.6 million. The improvement is primarily due to higher passenger volumes, including a higher percentage of local passengers, and to lower depreciation for the baggage sorting system in the “User fees” segment. On the other hand, the result of the “Air security” segment was lower, owing to the charge adjustments that took effect from 1 September 2016 and which more than offset the high growth in passenger volumes. Compared with the previous year, capital invested for regulated business remained virtually unchanged at CHF 1.9 billion, of which CHF 1.5 billion is associated with the “Aviation” segment. In addition to the usual airport infrastructure, invested capital also includes proportionate costs from mixed-use buildings, in particular the terminals. ROIC for regulated business is 5.9% (2016: 5.7%).
Revenue in the “Noise” segment (CHF 11.6 million) was on a par with the previous year. The improvement in the result is due entirely to slightly lower depreciation, as a result of which EBIT also marginally improved from CHF 2.6 million to CHF 2.8 million. The capital invested in the “Noise” segment amounted to CHF 157.5 million on the reporting date, and current ROIC is 1.4%.
In the year under review, EBIT for the non-regulated business segment declined by CHF 3.2 million to CHF 196.4 million. This decrease is primarily due to the one-off effect from the sale of a portion of the building land for THE CIRCLE and the transfer of the project to the joint ownership company. At CHF 1.4 billion, invested capital was CHF 0.2 billion higher than the previous year. This is due to the investments in THE CIRCLE and to the full consolidation of subsidiaries for the first time.
In 2017, Flughafen Zürich AG invested CHF 239.0 million in ongoing projects. In particular this included a close to 100% rise in investment in THE CIRCLE to CHF 92.1 million in 2017 as a result of the progress made on this building project, representing more than a third of total investments. Further significant investment projects included the upgrade and extension of the baggage sorting system in Zone A plus projects for expanding the aircraft stands on the western and southern sides of the airport.
Assets and financial position
In May, Flughafen Zürich AG successfully obtained refinancing. A debenture for CHF 250.0 million matured on 5 May 2017 (coupon of 2.25%). Three days later, the company issued a 12-year debenture for CHF 350.0 million, consequently benefiting from the prevailing low interest rates. The new debenture has a coupon of 0.625%. This refinancing will therefore have a positive impact on interest costs.
As at the end of 2017, invested capital amounted to CHF 3.5 billion and the return on invested capital (ROIC) was 8.1%. Equity increased by CHF 0.1 billion to CHF 2.4 billion, resulting in a healthy equity ratio of 55.9% (2016: 55.6%). Despite investments in ongoing projects and international holdings, net debt was further reduced, amounting to CHF 46.2 million at the reporting date (2016: CHF 102.0 million).
Starting with an operative cash flow of CHF 529.7 million and year-on-year higher investments of CHF 275.0 million in property, plant and equipment, projects in progress and airport operator projects, the companyʼs free cash flow fell during the reporting period by CHF 30.0 million to CHF 254.7 million.