Financial commentary

A total of 31.5 million passengers passed through Zurich Airport in the 2019 financial year, an increase of 1.3%. Over this period, Flughafen Zürich AG generated revenue of CHF 1,210.1 million, representing a year-on-year increase of 5.0%. Consolidated profit for the financial year just ended amounted to CHF 309.1 million, up CHF 71.3 million from the prior-year period. Additional provisions for sound insulation measures in 2018 had depressed the result of the previous year. When adjusted to take account of this one-off effect, profit was lifted year on year by CHF 25.5 million or 9.0%.

REVENUE

As a result of passenger growth, aviation revenue grew from CHF 656.7 million to CHF 661.5 million (+0.7%) in the financial year just ended, accounting for around 55% of Flughafen Zürich AGʼs total revenue. Flight operations charges increased by CHF 3.8 million to CHF 584.5 million (+0.7%). Total income from aviation fees and other aviation revenue rose by CHF 1.0 million overall to CHF 76.9 million (+1.3%).

Overall, non-aviation revenue, which accounted for approximately 45% of total revenue, increased by CHF 52.4 million to CHF 548.6 million (+10.6%). Total commercial and parking revenue increased year on year by CHF 4.4 million (+1.8%) to CHF 252.7 million. In commercial operations, our partners lifted revenue by CHF 7.6 million to CHF 601.4 million last year, which translated into commercial revenue of CHF 134.3 million for Flughafen Zürich AG (+3.1%). The increase of CHF 3.9 million in earnings from facility management was mainly driven by higher revenue from rental agreements and higher revenue from energy and utility charges. Revenue from services remained virtually unchanged at CHF 44.1 million (2018: CHF 43.7 million). The increase in revenue from international airport business of CHF 43.7 million to CHF 126.5 million is due in particular to higher revenue from construction projects (concession accounting). In Brazil, the expansion and opening of the terminal at the airport in Florianópolis in October 2019 meant that the infrastructure measures stipulated in the operating licence were completed.

OPERATING EXPENSES

Operating expenses fell year on year by CHF 13.7 million to CHF 568.3 million, following the hike of CHF 57.6 million (before taxes) in last yearʼs cost basis due to extension of the sound insulation programme. After adjusting for this one-off item, operating expenses rose by 8.4%, mainly as a result of expansion of the infrastructure in Florianópolis. Operating expenses in Zurich fell by 0.4%.

Owing to a higher headcount and a general pay rise, personnel expenses for the reporting year rose by CHF 4.8 million to CHF 216.3 million (+2.3%). The higher costs of CHF 1.1 million (+0.9%) for police and security was in line with the generated passenger growth. The decrease in other operating expenses by CHF 4.0 million to CHF 50.8 million was primarily due to the initial application of IFRS 16 (Leases), which resulted in rental costs being reclassified as depreciation charges on right-of-use assets.

OPERATING RESULT AND CONSOLIDATED PROFIT

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by CHF 70.9 million to CHF 641.8 million (+12.4%). Factoring out the one-off effect in the prior-year period (increased provision for sound insulation measures), EBITDA improved by 2.1%, making the EBITDA margin 53.0%.

Despite the initial application of IFRS 16 and the new depreciation charges on right-of-use assets arising as a result, depreciation and amortisation were down year on year from CHF 244.5 million to CHF 238.7 million. This was due in particular to some buildings reaching the end of their operating life. At CHF –14.0 million, the net finance result improved by CHF 9.1 million compared with the previous year thanks to gains on the financial assets of the Airport of Zurich Noise Fund. The share in the result of associates in the amount of CHF –2.5 million (2018: CHF –4.3 million) reflects the companyʼs share in the profit/loss of the Belo Horizonte airport operator.

Consolidated profit for the financial year just ended amounted to CHF 309.1 million, up CHF 71.3 million from the previous year. The above-mentioned additional provisions (CHF 45.8 million after taxes) for sound insulation measures had depressed the result of the prior-year period. When adjusted to take account of this one-off effect, profit was lifted year on year by 9.0% to CHF 25.5 million.

INVESTMENTS

In the year under review, Flughafen Zürich AG invested CHF 359.7 million in ongoing projects at its Zurich base (2018: CHF 290.1 million). Investments in THE CIRCLE, which were higher than the previous year owing to the progress on this building project, contributed in large part to this figure. Further significant investments included the overhauling and expansion of the baggage sorting system plus projects for upgrading the airfield power supply systems and runway 28/10.

ASSETS AND FINANCIAL POSITION

As at the end of 2019, invested capital amounted to CHF 3.8 billion and the return on invested capital (ROIC) was 8.8% (2018: 7.4%). At the reporting date, equity was at CHF 2.5 billion, resulting in a healthy equity ratio of 53.8% (2018: 55.3%). Due to investments in property, plant and equipment, ongoing projects and international holdings, net debt increased to CHF 728.6 million at the reporting date (2018: CHF 146.4 million).

Starting with an operative cash flow of CHF 511.7 million and year- on-year significantly higher investments of CHF 773.2 million in property, plant and equipment, projects in progress and airport operator projects, the companyʼs free cash flow for the reporting period was negative at CHF –261.5 million (2018: CHF 154.9 million).

OUTLOOK

The coronavirus, which is currently spreading, will have a negative effect on the earnings of Flughafen Zürich AG. As it is not possible to estimate the impact any more closely, no financial outlook for the 2020 financial year can be provided at this time.