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CPH: Satisfactory Q1 performance

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Copenhagen Airports A/S (CPH) recorded a 0.7% decline in passenger numbers in Q1, affected by the leap day in 2012 and the early Easter this year. Excluding these factors, traffic performance showed growth, and both revenue and profit before tax improved.

The growth in revenue was partly due to continuing growth at the shopping centre and in the number of international and intercontinental passengers. CPH is expecting a busy summer season and retains its forecast for the full year.

Passenger numbers for the first three months of the year were down by 0.7% year on year. The number of passengers that travelled through Copenhagen Airport in Q1 2013 was just short of 5.1 million. Revenue grew by 2.4%, and profit before tax was up by 4.9% to DKK 202.6 million as a result of an increase in traffic revenue, greater revenue from the shopping centre and a focus on lower operating costs.

“The months of spring are always difficult to compare as the timing of the Danish public holidays differs from year to year and with them travel activity. Q1 traffic showed a growth, when adjusted for the early Easter this year, which resulted in low traffic volumes in late March, and for the leap day in February of last year. The underlying figures showed growth throughout the quarter, and the weeks leading up to Easter showed strong traffic growth, which bodes well for the coming period,” said Thomas Woldbye, CEO of Copenhagen Airports A/S.
 
Intercontinental traffic continued to grow with the number of passengers on long-haul overseas routes increasing by 1.1% in Q1. Overall, the number of international passengers was up by 1.5% in the first three months of the year.

Before its bankruptcy in May last year, Cimber Sterling accounted for 49% of all Danish domestic traffic, and therefore the absence of Cimber Sterling in 2013 contributed to a 20.1% year-on-year decline in domestic traffic in 2013. Capacity on international routes has been restored following the Cimber Sterling bankruptcy. Revenue from the aeronautical segment was up by 3.3%.

Growth continues at the shopping centre
Revenue from the non-aeronautical segment was up by 2.8%, which was driven by continuing growth at the shopping centre, increased parking revenue and growing hotel activity. The completion of the Hilton refurbishment project and a higher number of meetings and conferences resulted in a 10.2% increase in revenue from the hotel.

In Q1, revenue from the Copenhagen Airport shopping area continued the recent years’ growth. Better performing food and beverage outlets and a number of new, strong brands brands supported a 3.8% revenue improvement.

“In 2012, we focused on strengthening Copenhagen Airport’s range of restaurants, cafés and bars, including the MASH steak restaurant and the Le Sommelier Bistro & Bar. In 2013, we are offering even more extraordinary passenger experiences after we have finished a refurbishment and renovation of the duty- and tax-free shops and after the first Marc By Marc Jacobs shop at a European Airport has been opened. This is our way of meeting passenger wishes and demands even more, and it has a positive effect on their spend at the airport,” said Thomas Woldbye.

“While we focused on strengthening Copenhagen Airport’s range of restaurants, cafés and bars in 2012, including the MASH steak restaurant and the Le Sommelier Bistro & Bar, we finished a refurbishment and renovation of the duty- and tax-free shops in early 2013, further improving the extraordinary passenger experiences we offer. We also saw the opening of the first Marc By Marc Jacobs shop at a European airport during the period. This is our way of meeting passenger wishes and demands even more, and it has a positive effect on their spend at the airport,” said Thomas Woldbye.

Outlook for 2013
With the anticipated traffic programme for the rest of 2013, we expect to see an increase in the total number of passengers. A positive full-year effect in 2013 is expected due to the many new routes opened in 2012. In addition, traffic in 2013 is expected to be favourably affected by the full-year effect of the routes restored after the bankruptcy of Cimber Sterling in 2012.

Traffic in 2013 could, however, be adversely affected by continuing financial uncertainty in the Eurozone and by any closure of routes due to airline cutbacks.

The increase in passenger numbers is expected to have a favourable impact on revenue. Operating costs are also expected to be higher than in 2012, primarily due to the expected increase in passenger numbers and cost inflation. This will partly be offset by the continuing focus on operating cost efficiencies. Depreciation charges and financial costs are expected to be higher in 2013 than in 2012 as a result of the continuing very high investment level.

Overall, a slightly lower profit before tax is expected for 2013 compared to 2012, when excluding one-off items. Conversely, operating profit before depreciation is projected to be higher in 2013 than in 2012, when excluding one-off items.

Under the charges agreement, CPH must invest an average of DKK 500 million annually, but as in previous years, CPH expects to invest at a level significantly higher in 2013 than what we are committed to. However, the investment level is subject to continuing growth in total passenger numbers. CPH will also be investing in other commercial projects for the benefit of airlines and passengers.

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