Record accounts for Lufthansa which closed 2023 with the third best balance sheet ever. Despite this, in Frankfurt the title slips into red (-1,6%), weighed down by the drop in estimates for the first quarter of 2024 due to strikes.
Lufthansa: profit boom in 2023, revenues also grow
Lufthansa with a Net income of 1,67 billion euros, up 112% in one year. The result, slightly lower than Factset estimates of 1,82 billion euros, was also supported by the results of Lufthansa Technology (profit of 628 million euros), the subsidiary that deals with maintenance and the strong recovery in travel that all companies recorded last year.
Instead, it beats the consensus (equal to 2,5 billion)operating profit, which rose to 2,7 billion euros. Also growing revenues, which recorded an increase of 15% to 35,4 billion euros thanks to double-digit growth in passenger, which rose to 123 million (+ 20%) and increasingly closer to the record of 145 million passengers dating back to the pre-Covid era, in 2019. On the contrary, on the freight transport, demand, which had surged during Covid, helping to keep the group afloat, "has largely normalized in 2023", the group says. Last year the cargo business generated an operating profit of 219 million euros.
They increase by 6% i ticket prices, which allowed the German company to generate a global operating margin of 7,6% compared to 4,9% last year.
La profitability of invested capital (adjusted ROCE) increased by 5,5% to 13,1% from the previous 7,6%, with ROCE surpassing the 10% target announced for 2024 a year early.
The company also announced 4,5 billion investments for the purchase of new aircraft. “As part of the largest fleet modernization in our history, we expect to take delivery of at least 30 new aircraft this year, including around 20 long-range jets for Lufthansa, another record.”
Overall, the company generated a free cash floww adjusted by 1,8 billion euros, which it brought down net borrowing to 5,7 billion euros from 6,9 billion euros in 2022, bringing it to around 1 billion euros below the pre-crisis level.
The strikes weigh on the first quarter of 2024
The negative note, however, comes in 2024. In the first three months of the year, in fact, due to the strikes, estimates are decreasing. “In the first quarter – explains Lufthansa – the loss of adjusted EBIT expected to be higher than in the previous year, due to the impact of the strikes on profits and a decline in profits in the Logistics division, which in the first quarter of the previous year nevertheless benefited significantly from the exceptionally strong development of the logistics market air cargo transport in relation to the coronavirus pandemic”. For the full year 2024, the group expects that i revenues from passenger activities will remain stable or decrease slightly due to normalization of demand.
Lufthansa returns to dividend
For the first time since 2019, Lufthansa will return to distribution dividend: at the meeting on May 7th a dividend of € 0,30 per share. The coupon corresponds to a yield of approximately 4% on the average share price at the end of 2023, the payout proposed follows the policy of distributing between 20 and 40% of the profit to shareholders. “The Lufthansa Group has regained its financial strength. This success benefits everyone. We want to pay a dividend to our shareholders for the first time since 2019,” said the CEO Carsten Spohr.
On Ita: “We await the approval within the year”
Lufthansa”awaits approval from the European Commission for an investment in the Italian airline Ita Airways later this year. The group is working on close contact and constructively with the European Commission to obtain a rapid conclusion and subsequent implementation of the transaction", the German group announced, adding that "with the planned investment in Ita Airways, the Lufthansa group is taking forwardi the internationalization of the company in order to better exploit the interesting growth opportunities abroad".
