Icelandair Group
Presentation of Q2 2016 Results
Highlights
Record results
in Q2 2016 with
EBITDA at
USD 52.4m
Equity ratio
at 39% and strong
cash flow from
operations
2
Outlook for the
year is good
despite negative
impact of external
factors on EBITDA
guidance
Financials
Bogi Nils Bogason, CFO
3
Record EBITDA of USD 52.4 million in Q2 2016
USD million
Q2 2016
Q2 2015
% Chg.
331.4
294.2
13%
Salaries and related expenses
92.0
71.4
29%
Aircraft fuel
61.1
67.1
-9%
5.5
6.4
-13%
Aircraft handling, landing and communication
29.2
21.9
34%
Aircraft maintenance expenses
20.3
20.3
0%
Other expenses
70.9
57.0
24%
279.0
243.9
14%
EBITDA
52.4
50.3
-
EBIT
29.2
28.4
-
EBT
32.8
27.9
-
Profit for the period
26.2
22.4
-
Operating Income
Aircraft and aircrew lease
Operating expenses
EBITDA and Profit | USD million
EBITDA
Profit
52.4
50.3
45.2
42.9
28.8
26.2
22.4
22.4
18.5
14.3
EBITDA ratio
EBITDAR
EBITDAR ratio
15.8%
17.1%
-1.3 ppt
61.0
59.1
-
18.4%
20.1%
-1.7 ppt
Q2 12
4
Q2 13
Q2 14
Q2 15
Q2 16
Overall growth in our businesses in Q2 2016
Year-on-year change in %
22
18
9
7
6
4
0
-2
3
2
-2
-5
Passengers
Route Network
ASK
Route Network
SLF (ppt)
Route Network
Passengers
ASK Domestic and
SLF (ppt)
Domestic and
Greenland flights
Domestic and
Greenland flights
Greenland flights
5
Fleet utilisation
Charter flights
Sold BH
Charter flights
FTK
Cargo
Available
HRN Hotels
Sold HRN Hotels
Utilisation (ppt)
HRN Hotels
Total number of passengers in the Route Network 18% higher than in Q2 2015
Passenger mix | number of passengers in thousands
Available seat km (ASK) per quarter | billions
+78%
+22%
972
823
3.7
1.9
34%
2.2
2.6
3.0
703
33%
608
34%
548
36%
36%
From
Q214
Q215
Q216
Load factor per quarter | 2012-2016
17%
47%
43%
To
15%
Q213
17%
21%
Q212
Q212
13%
Q213
Via
49%
Q214
52%
Q215
82.2%
82.1%
53%
Q216
Q212
6
79.5%
80.1%
Q213
Q214
Q215
80.8%
Q216
Record utilisation at our hotels in Q2 2016
Occupancy in the hotel operation | Q2 2012-Q2 2016
+8.1 ppt
80.1%
77.0%
76.1%
72.0%
Q212
71.3%
Q213
Q214
Q215
Q216
7
Increase in EBITDA and profit between years
USD million
6M 2016
6M 2015
% Chg.
Operating Income
543.2
480.3
13%
Salaries and related expenses
163.4
128.4
27%
Aircraft fuel
95.2
110.7
-14%
Aircraft and aircrew lease
11.0
12.1
-9%
Aircraft handling, landing and communication
48.8
36.7
33%
Aircraft maintenance expenses
41.2
38.0
8%
Other expenses
130.0
106.3
22%
Operating expenses
489.7
432.3
13%
53.5
48.0
-
EBIT
8.5
9.1
-
EBT
11.5
9.6
-
9.2
7.8
-
EBITDA
Profit for the period
EBITDA ratio
EBITDAR
EBITDAR ratio
9.8%
10.0%
-0.1 ppt
70.5
65.3
-
13.0%
13.6%
-0.6 ppt
EBITDA and profit/loss | USD million
EBITDA
Profit/loss
53.5
48.0
34.6
31.9
25.8
7.8
1.1
9.2
0.2
-4.3
6M 12
8
6M 13
6M 14
6M 15
6M 16
Average fuel price 389 USD/tonne in the first half of 2016
Average and effective fuel price per month | USD/tonne 2015-2016
800
750
700
650
600
550
509
500
450
Effective price
+31% higher
than
actual price
in 1H 2016
400
350
389
300
250
200
150
100
50
0
jan.-15
Average fuel price
Effective fuel price
feb.-15 mar.-15
apr.-15
maí-15
jún.-15
júl.-15
ágú.-15 sep.-15 okt.-15
nóv.-15 des.-15
9
jan.-16
feb.-16 mar.-16
apr.-16
maí-16
jún.-16
júl.-16
ágú.-16
sep.-16 okt.-16
nóv.-16 des.-16
56% of estimated usage for the next 12 months has been hedged
Period
Jul 16
Aug 16
Sep 16
Oct 16
Nov 16
Dec 16
Jan 17
Feb 17
Mar 17
Apr 17
May 17
Jun 17
12 months
Jul 17
Aug 17
Sep 17
Oct 17
Nov 17
Dec 17
13-18 months
* weighted average price
Estimated
usage (tons)
43,760
44,106
38,707
31,192
23,915
23,354
24,727
21,251
24,722
27,174
32,618
43,192
378,719
45,869
45,927
40,756
32,984
25,499
24,871
215,906
Swap
volume
23,800
24,700
22,600
18,500
12,500
13,500
14,250
10,250
12,250
15,250
19,250
24,000
210,850
8,000
8,000
8,000
4,000
3,000
3,000
34,000
%
hedged
54%
56%
58%
59%
52%
58%
58%
48%
50%
56%
59%
56%
56%
17%
17%
20%
12%
12%
12%
16%
Av. Swap
price USD
592
536
521
514
499
470
423
399
444
476
489
493
499*
458
482
489
531
512
523
490*
10
12m
weighted
swap price
USD 499
13-18m
weighted
swap price
USD 490
ISK deficit increases between years
Operating income and expenses by currency | Q2 2015
Operating income and expenses by currency | Q2 2016
Income
Income
Expenses
Expenses
51%
48% 48%
45%
34%
31%
22%
20%
17%
16%
13%
5%
4%
1%
ISK
USD
CAD
EUR
3%
GBP
6%
5%
1%
5%
1%
Other*
ISK
|
The policy is to hedge up to 80% of the currency exposure 12 months ahead
|
Profit or loss of realized contracts posted through Net Finance Income, not EBITDA
|
Net realized gain in Q2 was 1.6 million USD and 2.4 million USD for January – June
|
Unrealized gain at the end of June of contracts that will be realized in 2016 amounts to 4.2 million USD
Other* mainly the Scandinavian currencies
13%
11
USD
CAD
EUR
7%
2%
GBP
2%
Other*
Strong underlying cash flow in Q2 2016
Net cash from operations and as % of income | USD million
Changes in cash 1H 2016 | USD million
120
106
-158.1
268.4
84
-31.8
1.3
274.4
87
72
194.6
Cash 01.01.16
Net cash from
operating
activities
Net cash used
in investing
activities
Net cash used
in financing
activities
Currency effect Cash 30.06.16
% of
income
12
Q212
Q213
Q214
Q215
Q216
31%
40%
28%
29%
36%
Investments in aircraft and aircraft components in 1H 2016 totalling
USD 89 million
36.0
157.0
Other
investments
Total CAPEX 1H 2016
8.4
23.6
89.0
Aircraft and aircraft components
Overhaul
owned aircraft
Overhaul
leased aircraft
13
Equity ratio 39% and increases compared to the same period last year
USD million
30.06 16
31.12 15
30.06 15
Assets
USD million
30.06 16
31.12 15
30.06 15
470.6
456.5
373.2
Equity and liabilities
Operating Assets
521.5
419.1
336.8
Stockholders equity
Intangible assets
173.4
172.7
174.0
Loans and borrowings non-current
51.0
55.4
66.1
60.6
45.8
22.9
Other non-current liabilities
54.5
44.1
38.2
Total non-current assets
755.4
637.6
533.8
Total non-current liabilities
105.5
99.5
104.3
Other current-assets
174.7
120.3
153.4
Loans and borrowings current
10.5
10.1
12.4
13.2
19.5
36.3
Trade and other payables
280.8
219.7
237.2
Cash and cash equivalents
274.4
194.6
314.9
Deferred income
350.4
186.1
311.3
Total current assets
462.3
334.4
504.6
Total current liabilities
641.7
415.9
560.9
1,217.7
972.0
1,038.4
1,217.7
972.0
1,038.4
Equity ratio
39%
47%
36%
Current ratio
0.72
0.80
0.90
226.1
148.6
272.7
61.5
65.5
78.5
Other non-current assets
Short term investments
Total assets
Interest
bearing debt
USD 61.5m
Net cash
USD
226.1m
Total equity and liabilities
Net cash*
Interest bearing debt
* Net cash = cash and cash equivalents + short term investments – interest bearing debt
14
Outlook
Björgólfur Jóhannsson, President and CEO
External factors leading to lowering of EBITDA guidance for 2016 from
USD 235-245 million to USD 210-220 million
EBITDA development 2012-2016 | USD millions
219
210-220
Repeated terrorist
attacks in Europe
154
Brexit and devaluation of
the GBP
144
Decline in air fares
110
Higher fuel prices for the
latter half of the year
ISK strengthening
against USD
2012
2013
2014
2015
Guidance 2016
16
Yield pressure and higher fuel prices have leading effects on the lowering of the
EBITDA guidance
235-245
-14.2
-8.1
2.9
210-220
Other
New guidance
July 2016
-3.2
-2.5
Guidance published
April 2016
All figures in USD million.
* ATC = Air Traffic Control personnel
Lower airfares
Fuel net of hedging
Currency
17
ATC* wage
dispute Iceland
Turbulence in the market
18
Airfares have been trending downwards and further decrease is expected in the
coming months
Passenger revenues / total available seat kilometres (ASK) per US Cent
-10%
8.9
-10%
8.0
7.8
6.7
7.0
6.5
6.4
6.0
Q214
Q314
Q414
Q115
Q215
19
Q315
Q415
Q116
6.3
Q216
Strong capacity growth on the Transatlantic in 2016. Will that continue?
+5%
+8%
+6%
95
+6%
+1%
88
83
Growth in available seats - data source: SES Analyzer
Absolute figures in millions
20
77
78
2012
2013
2014
2015
Forecast 2016
Icelandair Group has systematically strengthened its financial position
Interest bearing debt and cash and short term investment
Interest bearing debt/EBITDAR
+182
1.4 x
288
1.2 x
-140
0.9 x
201
0.6 x
106
0.3 x
61
31.12 2010
Interest bearing debt
All figures in USD million
30.06 2016
2010
Cash and short term investments
21
2011
2012
2013
2014
0.3 x
0.2 x
2015
LTM
Q216
Favourable comparison with European peers
50
45
40
Equity ratio %
35
30
25
20
15
10
5
0
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
Net interest bearing liabilities as % of revenues
22
45
50
55
60
65
70
75
80
210-220
219
154
Outlook for the year
is good despite negative
impact of external
factors on EBITDA
guidance
144
111
110
66
56
44
EBITDA
Net Profit
2012
All figures in USD million.
23
2013
2014
2015
Guidance
2016
Disclaimer
|
This material has been prepared by Icelandair Group hf. It may include confidential information about Icelandair Group hf. unless stated otherwise all information is
sourced by Icelandair Group hf.
|
The circulation of the information contained within this document may be restricted in some jurisdictions. It is the responsibility of the individual to comply with any
such jurisdictional restrictions.
|
Forecasts, by their very nature, are subject to uncertainty and contingencies, many of which are outside the control of Icelandair Group. Past performance should
not be viewed as a guide to future performance. Where amounts involve a foreign currency, they may be subject to fluctuations in value due to movements in
exchange rates.
|
Icelandair Group cannot guarantee that the information contained herein is without fault or entirely accurate. The information in this material is based on sources
that Icelandair Group believes to be reliable. Neither Icelandair Group nor any of its directors or employees can however warrant that all information is correct.
Furthermore, information and opinions may change without notice. Icelandair Group is under no obligation to make amendments or changes to this presentation if
errors are found or opinions or information change. Icelandair Group accepts no responsibility for the accuracy of its sources or information provided herein and
therefore can neither Icelandair Group nor any of its directors or employees be held responsible in any way for the contents of this document.
|
This document must not be construed as investment advice or an offer to invest.
|
Icelandair Group is the owner of all works of authorship including, but not limited to, all design, test, sound recordings, images and trademarks in this material
unless otherwise explicitly stated. The use of Icelandair Group´s material, works or trademarks is forbidden without written consent except where otherwise
expressly stated.
|
Furthermore, it is prohibited to publish, copy, reproduce or distribute further the material made or gathered by Icelandair Group without the company‘s explicit
written consent.
24
Icelandair Group
Reykjavík Airport
101 Reykjavík Iceland
Tel: +354 50 50 300
[email protected]
Copyright © Icelandair Group
All rights reserved.