Fraport AG Frankfurt Airport Services Worldwide
XETRA:FRA
Earnings Call Analysis
Q3-2023 Analysis
Fraport AG Frankfurt Airport Services Worldwide
The company reported unprecedented high figures for revenues, EBITDA, and EPS, driven predominantly by the Aviation segment, which achieved its best ever EBITDA, and international airports whose performance surpassed pre-COVID levels. Ground Handling is showing improvement, and Retail & Real Estate remain resilient despite macroeconomic headwinds.
The company’s operating cash flow is nearing 2019 levels, resulting in a slightly reduced net debt from EUR 7.5 billion to EUR 7.4 billion and improved deleverage ratio from 6.8x to 6.4x. However, due to investments in the Frankfurt and Lima expansions, the company experienced a negative free cash flow in the first nine months. The company maintains a positive outlook with expected net debt between EUR 7.5 billion and EUR 7.75 billion by year-end and has accumulated an all-time high liquidity position. Plans to utilize cash and reduce absolute indebtedness are in motion, balancing the use of cash with necessary debt rollovers.
The company is anticipating an approximate 10% growth in traffic for the upcoming year, though actual numbers could fluctuate based on airline capacity constraints. For the year 2023, they are projecting a capital expenditure of up to EUR 600 million for Terminal 3, about EUR 450 million for Lima, and EUR 300 million for other areas, resulting in a total estimated CapEx of around EUR 1.3 to EUR 1.4 billion.
Despite a weaker than anticipated spend per passenger (pax) in Q3, the company expects improvement moving forward, attributed to increased advertising and the return of Chinese passengers, whose spending behavior is typically significantly higher. They estimate this to lead to a recovery in the spend per pax numbers. However, exact guidance figures were not disclosed in the analyzed text.
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Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the conference call of Fraport AG. [Operator Instructions]May I now hand over to your host today, Christoph Nanke, SVP, Head of Finance and IR. Please go ahead.
Thank you, Caio, and welcome also from my side to Fraport's third quarter analyst conference call for 2023. I have with me at the table, our CEO, Stefan Schulte; and our CFO, Matthias [Technical Difficulty], they will guide you through the presentation. And thereafter, there will be time for questions. Stefan has to leave at 3:00 p.m. CET, but certainly, we will continue also thereafter if there are any open questions. So I think let's start.
Yes, Christoph. Thanks very much. Good afternoon also from my side, ladies and gentlemen, here from Frankfurt.On my first slide, that's Slide #3, you see the key financial highlights of the past third quarter. Revenues, EBITDA and EPS achieved all-time high figures so far. So really a good development. Matthias will also talk about this in detail, but Frankfurt Aviation and our international airports were the key drivers of our financial performance with Aviation achieving the best ever EBITDA and our international airports being clearly above 2019, so pre-COVID level. In Frankfurt, we also recorded improving trends in our Ground Handling division, while Retail & Real Estate remained, let's say, this very robust despite macro headwinds, but more on the financial performance later. Besides the P&L development, we again achieved a clear positive free cash flow in the third quarter. So that's really a very good result award.Moving on Slide #4. Here, we have accumulated figures on the first 9 months, driven by the good performance in the third quarter, also our 9 months figures for revenues and EBITDA achieved all-time high marks, which is a really good development. As I mentioned already, bottom line, our earnings per share also -- have also clearly improved compared to the previous year. Compared to 2019, however, the financial headwind from our increased leverage becomes visible. Still, EUR 3.40 (sic) [ EUR 3.42 ] earnings per share is the best result of the first -- of the third quarter in our group history and led to a clear reduction in our net debt-to-EBITDA key leverage ratio. The operational performance at Frankfurt Airport, which contributed to the strong Q3 as shown on Slide #5. After a modest start into the year, we recorded an improving traffic trend at Frankfurt Airport over the second and third quarter. The traffic ramp-up was also positively impacted by market reopenings as you can see with China on the chart.During the third quarter, we also lifted the movement temporarily and are now in October back to the same number of slots per hour offered as pre-COVID and with a very stable operation improving punctuality. Consequently, October recorded our best recovery post COVID and reached about 88% of 2019. Besides the year-to-date performance, you also find our outlook on the winter flight schedule on the chart. At about 90%, we expect continued traffic momentum for the fourth quarter and for the first quarter of next year. As a result of the gradual traffic ramp-up this year, we expect that Frankfurt Airport will show a year-over-year traffic growth also in the next year.Moving on to our international portfolio on Slide 6. Let me start with the very positive message here. Our international portfolio is back, so traffic is back. During the third quarter, our international airports in total handled the same number of passengers as pre-COVID. The traffic recovery was especially driven by Fraport Greece and Fraport Antalya, which showed the strongest recovery, especially if you take Fraport Antalya knowing that a lot of Russian passengers couldn't go there, that's really a very, very positive result for Antalya. You also see single assets like Ljubljana Airport or Fraport Twin Star, they are still lagging behind, but thanks to our diversified international portfolio, we're able to balance the company and yes, we are right on our international strategy.We clearly benefit from our international diversification, which has become very evident since the breakout of the pandemic, and I'm also optimistic for the next years regarding Ljubljana or Fraport Twin Star because Ljubljana, we see a growth over growth over the years. The reduced numbers are due to the insolvency of Adria Airlines and they are coming -- the frequencies are taking up. But other airlines now and on Fraport Twin Star, we had good discussions with the Bulgarian state on further marketing initiatives by the Bulgarian state of their destination.Staying with our international portfolio for a moment, looking at Lima -- I'm on the next slide, as you are aware, we already completed the new second runway this year, with the first flight taken place already in April. Also, our second project onsite, the new midfield terminal is progressing very well. On the chart, you see the progress of the main hall and main pillar. The outer shell will soon be completed and will move with full speed into the interior. Thanks to the very rapid construction progress, we are confident to deliver the first phase of the new terminal already end of next year, so in December 2024. The second part of the new terminal then will follow in the second half of fiscal year 2025. So a very good progress in Lima, which is developing on time and on budget and also the traffic figures are going up because the political violence are coming down and getting more and more stable over there. Further steps, we have also taken at Frankfurt Airport.On Slide #8, you see the first images of how the new lounges in Terminal 3 may look like. Whether we stand in the process, we have meanwhile closed the data room for potential tenants. During this process, 13 parties, airlines and private operators showed interest. Currently, we are entering in discussions with possible tenants to clear remaining questions, either expect to take a decision on the new tenants most likely in the first quarter of the next year. But then our latest in the second quarter, we will also have visibility on the new retail tenants that will move into Terminal 3. Here, we also started the process for high-end luxury stores, fashion outlets, food and beverage operators and car rental. Further progress at the Frankfurt side, we are experiencing in Terminal 1. I'm on Slide 9. Here, we launched the Security Relocation in Concourse B.We also talked about this project in previous presentations. The new centralized security checks will connect the Schengen airside area of Concourse B with the Schengen airside area of Concourse A. In total, we discussed the implementation of 40 new technology, so CT security lines will replace 24 security lines with the current technology. So better and quicker process because the throughput is more or less 3x on a new one but with a much higher comfort for the passengers who don't have to take out any longer laptops or liquids. So it's very positive regarding process time, but it's also very positive regarding passenger comfort. In addition, the Security Relocation will turn about 5,000 square meters of land side retail space into more attractive airside areas. The relocation itself will take place in 2 phases.The first phase will be completed probably around end of 2025, the second phase, we expect to complete end of 2027. Besides the Security Relocation, we are also upgrading the remaining security control checks in Terminal 1 and 2. Here, we have meanwhile equipped 19 lanes with the new CT technology by spring next year, the number will grow to 40 CT scanners. So a clear acceleration of our services, which also means more time to shop and a better passenger comfort.And acceleration will also be visible regarding our ESG activities. We meanwhile completed the test ones for our new solar system, a vertical design to limit the impacts on the [Technical Difficulty]. After receiving the final permits, we will immediately start with the construction of our new solar park, which is along the take-off runway with the total length of 2.8 kilometers and with 90 meters wide, the solar park will be one of the largest parks in the landmine area. Simultaneously, we plan to construct another second solar park this time next to the new landing, Runway Northwest. The 2 solar parks will form the heart of our energy transitioning on site.In addition, also our wind park project, where we signed a power purchase agreement 2 years ago is moving ahead as planned. Here, the electrical connection will soon be implemented or the pillars for the windmills are being constructed too. Completion of the wind park is still scheduled to be in the second half of fiscal year 2026.Ladies and gentlemen, let me summarize our development in the first 9 months. Our international airports have fully recovered their pre-COVID passenger traffic, their financial development has even outperformed the 2019 benchmark. Frankfurt Airport has shown an improving traffic momentum too while our major construction projects are making good progress. Furthermore, we are staying highly focused to deliver an OpEx control measures. Consequently, we continue to target the upper area of our financial guidance for this year. With regard to the EBITDA, this will be about the level of 2019 or even slightly higher.So thank you, ladies and gentlemen. And now Matthias with more financials, please.
Yes. Thank you, Stefan, and a warm welcome also from my side. Let me start my presentation today with one of the most relevant topics these days, our cash flow and indebtedness situation on Slide #13. Overall, the operating cash flow and capital expenditure developed in line with our expectations. Reflecting the traffic increases and financial result performances, the operating cash flow was clearly up compared to the previous year. At EUR 732 million, the operating cash flow achieved about 92% of the 2019 level and was clearly sufficient to cover the maintenance CapEx needs on a group-wide basis of about EUR 240 million.Due to the continued growth investments in Frankfurt, so Terminal 3 and the Lima terminal construction, our 9 months free cash flow was negative again. Still at minus EUR 316 million, the free cash flow developed in line with our expectations. Reflecting the positive free cash flow in the third quarter, our group net debt decreased slightly from EUR 7.5 billion at the end of Q2 to EUR 7.4 billion at the end of Q3. Correspondingly, our net debt to last 12 months EBITDA deleverage ratio improved from 6.8x at the end of Q2 to 6.4x at the end of Q3. Looking ahead, we are confident with our full year CapEx and net debt outlook. Here, we continue to expect a net debt level of between EUR 7.5 billion to EUR 7.75 billion, and the brick-and-mortar CapEx range of about EUR 1.35 billion.Moving on to our updated repayment profile at the end of Q3 on Slide 14. Reflecting the positive free cash flow during the third quarter, our liquidity position grew to an all-time high figure of more than EUR 4 billion or more than at EUR 5.2 billion, including for unused project finance and committed credit lines. Simultaneously, our gross debt was up by close to EUR 300 million. The increase in our gross debt also reflects the project finance at Lima Airport, where we made use of more than EUR 100 million financed during the third quarter. Correspondingly, our average cost of debt was up from 2.6% at the end of Q2 to 2.8% at the end of Q3. On the other side, also our available funds reflected an increased profitability. While we started the year with an average yield of about 0.8%, we are now standing at an average yield of about 2.5% on our cash position.Looking ahead, we expect the yield to steadily increase to about 3% by end of H1 next year, which will help to further reduce our cost of carrier. For the remainder of the year, there are also just smaller maturities left which will -- which we will roll forward. As of next year, we will also make selectively use of our cash position, pay down some maturities instead of rolling all of them forward.Moving on to our segment development during the past quarter, starting with Aviation on Slide #15. While we just [ handled ] 86% of our pre-COVID passenger numbers, variation charges exceeded the pre-COVID level for the first time in a post-COVID world. Here, the fee increases which we implemented in the meantime became visible, so 4.3% last year and 4.9% this year. In addition, the segment EBITDA reflected the restructuring measures, which we carried out during the pandemic. When adjusting for the higher security revenues and OpEx, which basically come without a margin, our underlying OpEx, so excluding for security was some EUR 90 million below the level of 2019. The decrease in OpEx and the slight increase in airport charges led to an EBITDA of more than EUR 120 million in the third quarter, which was about EUR 18 million higher compared to 2019, an all-time high as Stefan already mentioned. [Technical Difficulty] EBITDA of EUR 247 million in the first 9 months, we are very comfortable with the full year guidance that we gave up of about EUR 300 million EBITDA this year.Coming now to our Retail & Real Estate segment on Slide 16. Segment revenues achieved the pre-COVID level of about EUR 130 million. The revenue recovery was once again driven by real estate and parking revenues, which reached an outperformed -- and outperformed the 2019 benchmark correspondingly. Regarding our retailing activities, the picture remains mixed. While shopping and services revenues were higher than 2019 on a per passenger basis, advertising revenues continued to underperform the 2019 level. We also show the relevant figures on Slide #17. Regarding advertisement, despite a negative year-to-date performance, we are confident that latest as of next year, we will catch up again. Here, we expect the improved passenger mix and increased visibility on passenger numbers to have a positive result.Simultaneously, we expect Q4 to see an improving retail trend as well. Hence, we remain confident to catch up to 2019 on a full year basis. With regard to the segment EBITDA, we are still confronted with headwinds from elevated cost items such as energy costs compared to 2019. Consequently, EBITDA was mildly down against 2019, while it was up against previous year level.Turning the page to our Ground Handling segment on Slide #18. Let me start with a very positive message here. First, after 14 quarters of negative EBITDA of 3.5 years, Ground Handling has recorded its first positive EBITDA since the pandemic. While this is certainly good news, we are having a clear view on the full picture. An accumulated loss of EUR 24 million, the EBITDA of the Ground Handling segment has by far not been good in the first 9 months. Moreover, Q3 is our high season quarter with more than 17 million passengers handled. This equally means the highest number of volume-related revenues with a sufficient cost coverage. And a lower absolute number of passengers in the fourth quarter, it is likely that Ground Handling will record losses again or be at best breakeven in Q4. Having said this, Q3 was the first positive sign, but we have to continue with our efficiency measures in order to improve the segment profitability on a sustainable basis. We will keep you updated on the progress here.Moving on to our final segment, International Activities & Services on Slide #19. As you can see on the chart, our International segment continued its outperformance against 2019. Revenues and EBITDA stood once again well above the pre-crisis level during the third quarter. Here, especially Fraport Greece performed strongly compared to Q3 2019. While revenues, excluding for IFRIC 12 grew by some EUR 108 million in Greece, EBITDA was up by about EUR 44 million. Besides Fraport Greece, also Fraport Brazil and Fraport U.S. showed good earnings momentum with Fraport U.S. being additionally compensated for the termination of the Pittsburgh lease agreement. At an EBITDA of EUR 245 million, our International Activities segment was once again the biggest contributor on a group-wide basis with an EBITDA share of more than 50%.Having said this, ladies and gentlemen, I'd like to thank you for your attention, and we can start the Q&A session now.
[Operator Instructions] Our first question comes from Cristian Nedelcu with UBS.
The first one regarding the corporate travel recovery next year. I mean, Lufthansa talked about corporate travel moving towards 70% of '19 levels by the end of next year. Can you comment a little bit how will that impact your overall expectations for 2024 traffic in Frankfurt? Secondly, implied on your guidance and my calculations for Q4, it looks like you're going to burn around EUR 450 million to EUR 500 million of free cash flow for the full year 2023. Could you help us a bit with your views into '24 on the free cash flow or at least some comments on the CapEx and the other moving parts there in the free cash flow calculation? And the last one, if I may, I know it's early, but you open Terminal 3 in a few years. You have incremental space in retail and a couple of other potential tailwinds there. Could you help us a little bit how we should think about retail spend per pax once Terminal 3 is open? Can we see EUR 1, EUR 1.5 higher spend per pax in Frankfurt once Terminal 3 is open?
Cristian, thanks very much for your questions. Let me start with the first one on corporate travel, due to the numbers we have, due to the information we get from the market, we are probably a little bit higher on corporate travel, and Lufthansa mentioned, it's around 5% points, which means that Lufthansa hasn't given you any Frankfurt number, but just a general number on their different airlines. And that's probably the reason that we are a little bit higher. So at the normal, we are around 65%, which increased by 5% to 10% points over the recent 12 months. So it's difficult, of course, to predict exactly what does that mean. The 70%, 75%, that's probably something we would expect over the next 12 months also there.So further increase on that side, and information we get from the market, as we discussed with airlines shows that we should expect another growth on traffic in general also next year. From today's point of view, you are probably somewhere around 10%, could also be a little bit more, could be a little bit less. It depends also which -- how far -- how long or how far airlines have aircraft in place because there's a lot of change on that side due to engine -- engines which have to go out of service. I would say around 10% is from today's point of view a good best estimate. It's too early for our guidance. That's absolutely clear. And we have to see also how the geopolitical situation is going ahead, the macroeconomic situation is going ahead. But up to now, the pre-bookings are quite strong.On Terminal 3, yes, we expect a higher spend per passenger in total by [ EUR 1, EUR 1.5 ], it's for sure too high, if I take the total number for Frankfurt, but it's also too early because we had just opened up the tenders for the 65 different locations on retail, on food and beverage in total, but the number should go up because there we have a very big central marketplace with a higher luxury level than we have it here in Frankfurt up to now. And we have the high spending customers who are moving from Terminal 2 to Terminal 3 and there they have this much better marketplace.So the spend per passenger for sure will go up. And I hope that we can give you a first estimate what our estimation at least is over the next 12 months if we are through the tender process and knowing who is going in there and which airline on detail is going in there. Free cash flow, CapEx, you have, [ I don't know ], probably Matthias.
Yes. Free cash flow, first of all, it's a little bit too early to give you a guidance regarding next year. So just to show you the key drivers for the possible outcome of the free cash flow. You have always the EBITDA on one side. So this is the income side, cash income side. And on the other side, you have the interest, the net interest expenses, including taxes, and of course, the CapEx. So you have to play with 3 variables. And if -- it is just if and when, if you as a working hypothesis would assume an EBITDA of about EUR 1.3 billion. On the other side, you have about EUR 300 million cash out for interest interest payments, and then you have the cash out for CapEx, if you would assume a CapEx range, EUR 1.3 billion to EUR 1.4 billion. So it's an easy calculation saying that in this scenario, the negative free cash flow next year would be about minus EUR 400 million. But again, this is not a guidance, it's just showing 3 variables and some flavor how the ranges could be.
Our next question comes from Ruxandra Haradau-Doser with HSBC.
First, could you please talk about tariffs in Lima once the CapEx will be finalized? Second, Lufthansa CEO mentioned in the 9 months conference call that once Terminal 3 will be finalized, T2 will be refurbished, and this will give them the opportunity to refurbish T1 for Lufthansa. Could you please give us some details on the current discussions with airlines on the future of T1 and T2? Third, now that Chinese traffic is recovering, could you please talk about shopping patterns of these passengers, are the revenues per passenger similar to pre-COVID levels? And the fourth question on the U.S. business, if I may, could you please give us an update on the concessions in Baltimore and Cleveland? And considering the new concessions in Washington, how shall we think about the EBITDA of the U.S. business next year?
Regarding the -- thanks for your question. Regarding the tariff in Lima, [ Matthias, if you want ], I don't know. The tariff in Lima, it's very important that we finalize the first phase of the total expansion in the year 2024. So that's the reason, and we are very confident there that we will take up the new terminal first phase by end of next year, in next year because then it's going into the calculation for the next tax regime on the fees. So I think it's another time of 4 years or 5 years period. And yes, then we have to see the details, of course, but that's a normal process as you know it over the time, but the capital expenditure for this first phase is completely going into that calculation and that's positive. Again, this is the productivity factor, but that's a normal thing.Regarding airlines, Lufthansa CEO, you mentioned, I think we have been quite open there that with the inauguration of Terminal 3 beginning of 2026, and we have to move, of course or then we will move the airlines during the summer of 2026, details are under -- working in progress at the moment, will be moved to Terminal 3. And later on, end of 2026, something like this, we will take out of operation Terminal 2 because that's more than 30 years old, and we have to bring a new Technik. It's especially around Technik.There's also some discussion there, first discussions with airlines, especially Lufthansa Star Alliance, that we will also bring in a centralized security area for Terminal 2, which helps very much for future hub traffic in between Terminal 1 and Terminal 2. So you can see then in the long run, after we have done the Technik renovation work, which probably takes 2 years or 3 years. 3 years, I would best estimate, 2027, 2028 and 2029. Then we have the infrastructure in Terminal 1 and Terminal 2, which is completely linked and interlinked on hub traffic because those are then on centralized security lanes, and you can then transfer on the airside, you can transfer on the land side, which is helping very much for hub traffic.So we see a lot of capacity, of course, with the Terminal 3 for other airlines, non-Star Alliance and the Star Alliance, especially Lufthansa then can grow in the next phase completely into the Terminal 1 or even up to the Terminal 2. And that's the logic behind. We do also renovations in Terminal 1 to keep it really on a top level, and you'll see with all the measurements, centralized security, then also relocation of the security area in Concourse B or the biometric projects we are doing over there, the CT technology and a lot of other topics. So that's really a top terminal also from the process side for the future.Regarding U.S. -- the U.S. concessions, Baltimore, we are still in. There will be a new tender over the next 6 months, probably something like this. I would expect that we are interested, but let's see the final documentation. On Cleveland, it's Pittsburgh [indiscernible]. On Cleveland, we're at a legal fight because it took us out of operations there. They stopped the concession. But as we have now been through the court cases, it's absolutely clear that this was without any count. So we had finally a financial deal with them, a financial solution. And that's the reason that Pittsburgh is now done. We are out there.
And then there was a further question regarding the EBITDA contribution of the new business in Washington. This will be a low single-digit EBITDA contribution. And you also had a question regarding the spend, the new spend per pax quality of Chinese passengers. So what we are measuring in the moment is that their spending behavior is still the same as before, this means before the pandemic.
Our next question comes from Elodie Rall with JPMorgan.
The first one is on CapEx. So you gave us slides looking at progress at Terminal 1, Terminal 3 and Lima. Could you actually remind us the CapEx that we should have in our models for each of these assets for this year, next year, '25? That would be very helpful to have an update. Second quick one on '24 tariff, the 9.5%. Is this all approved or what are the next steps? Any news on that? And last question on a bit of a topical question. We've seen in France and in Spain, government pushing for bans on short-haul or domestic traffic that can be avoided through -- when you have a train journey that is possible under [ 2.5 ] hours. Is this something that you think could happen in Germany?
Probably I'll start with the final question. Thanks a lot for that one and for the others also. Sorry. On domestic traffic, you know that in Germany, due to the decentralized organization of Germany with different cities, we have high-speed train network and a lot of the domestic traffic went on the high-speed train network system during corona. If you take Frankfurt Airport, we just had in total of our traffic, less than 10% domestic traffic or 90% Continental European and Intercontinental traffic. So for us, it was never ever such an important topic.So 10%, of course, have been reduced, at the moment around 6%. So we are back on domestic traffic on a level of around 60% compared to pre-COVID that compared to other German airports are already a very good number because smaller airports, decentralized cities, they are back on -- or they are still on a level of 30% to 40% because there the floods have not been taken up. But what we see is a change due to the much higher punctuality, the better stability of the aviation product compared to the high-speed train product, and they have a lot of construction sites in these days or these years, you see that more and more demand is also coming up on the domestic traffic. If I take, for example, Frankfurt, Hamburg, if I take Frankfurt, Munich, they are more or less already on the frequencies as before pre-COVID.If I take Frankfurt, Berlin, that's already on a level of 50% to 60%, but the demand is going up even from the smaller cities to connect them to the hubs because that's really important and the market wants to go this way. So we don't see any governmental restrictions on that side. Governments would like to put this more on the high-speed train system, and they increased the charges, the aviation tax and so on to be that we have a disadvantage, but the market is reacting in another way. But that's also a topic because the train product is a little bit poor these days or these years. On the tariff increase, your second question, we started the application, that's waning. We expect over the next years -- sorry, over the next weeks, the approval should be due from the 1st of January. And it's structured in a way, it depends on the discounts, on the volume growth and so on, that the increase will be in between a level of 5% to 9%, that's depending how strong the growth is. Let's first await the approval and then we can give you more details there, but you should calculate something in the first year of plus 5%, plus 6%. That's roughly the level we expect there.
Yes. So then I take over the question regarding [ capital ]. First of all, focus on the year 2023, you know in our presentation on Slide 36, we have the guidance which we already gave you in the beginning of the year. And today, we can actualize these numbers. So regarding T3, we expect for the full year '23 up to EUR 600 million as an expression that this construction site runs very well, absolutely on time and on budget.Regarding Lima, we expect for the full year, also based on the full speed, which the colleagues gave at the side about EUR 450 million. And for the rest, so for maintenance CapEx as well as very low CapEx numbers outside Frankfurt, about EUR 300 million. So if you take these 3 items together, we would end up at EUR 1.35 billion. So this is the best guess as of today. Looking forward to '24, and again, this is not a guidance, just today's estimate, I would say that we expect more or less the same range. So between EUR 1.3 billion and EUR 1.4 billion for the full group CapEx and again, driven by the 2 main elements, Lima on one side and Terminal 3 on the other side.
Can I just come back to the question on tariffs. Did you say that -- I didn't understand your answer. I thought the 9.5% tariff increase for next year was what we should have in our model, but you said something about 5% to 6%. Can you just come back on that answer, please?
Yes. If I'm correct, and I'll just look at my colleagues over here, it's 9.5%. That's right. With a discount factor in depending on the growth, and it will be the full volume then from 2025 onwards. And in 2024, it depends somewhere on the growth of the airlines. And that's the reason I gave you the best estimate from today's point of view of roughly 6%, which would be the net figure. But we have to calculate this maybe another time, maybe 6.5% or 7%, but that depends on the growth of the airlines. So the official number is 9.5%. So it's absolutely right.
Our next question comes from Sathish Sivakumar with Citi.
I got 2 questions here. On the retail spend, especially on the shopping and services, obviously, year-on-year, that is a step down. It is still half versus 2019, but year-on-year, there's a step down. Given that there is inflation coming through, just help me understand what is actually driving that year-on-year step down? And the second one is around the cargo. Obviously, now you have lifted the restrictions for Chinese airlines to come to Frankfurt and that you do see more belly capacity driven cargo coming in, are you like seeing that shift where you're seeing more and more belly cargo coming in versus the dedicated freighters? Again, any color around that, how that is shaping up would be helpful.
Yes. On retail, you're absolutely right that development, we have to have a closer look at. Matthias gave you already one explanation, that's on advertising. That's for sure. The main explanation on that one there, we see a positive trend now getting up because the market is coming up. We just closed a good deal with a big company on that side. So we hope that despite the macroeconomic development, also the advertising market will ramp up now. But you're also right, we have to have a closer look on the shopping and services passenger. It's up year-on-year, but it's very small up if I take the 9 months numbers.And that's probably due to the different structure of traffic, but there we have to have a closer look and keep you informed over the next quarters because that's really -- compare the complete picture of numbers, I think we have a very good development over the first 9 months also, especially in the third quarter, but not really though on that level on retail, especially on shopping and services. On cargo belly, question was -- the freighters are coming back, so that's okay. We see a generally weak market on that side. So that's continuing the signals of a strong fourth quarter, strong Christmas business not coming in. So it's more or less flat, very, very small growth, but I think that's not just Frankfurt, that's industrial base in principle, we'll get the same signals from other companies. So we are -- that's due to the weak macroeconomic development, especially in Far East. And hopefully, over the next 3 months or 6 months, some growth is coming in there.
And have you seen like the belly cargo ramp-up since Chinese -- like lifting of restrictions for Chinese airlines?
No, absolutely not, because in general, cargo is finding always a way, and that's not directly linked to this opening up of the regime. That's more on the passenger base. It's now going different ways, the Chinese cargo, but the Chinese cargo in principle is weak.
Okay. Got it. Maybe just one follow-up, quick follow-up on the retail spend. Obviously, EUR 2.89 in the current quarter. How does that evolve during the quarter? Is it like consistently flat or you're seeing good August and September or any color on that?
You have to see when you go on Slide 17, you see the details regarding our retail spend. And first of all, again, when you compare shopping and services, services stands for food and beverage primarily. So you can see with EUR 2.61 in the first 9 months, we are above last year in total and also clearly above 2019. So this is an exploration that especially food and beverage is running very well and retail is more or less on the same level as in 2019. If you go one line down, you can see where we see or where we have the problems. This is advertising.And here, we had in per spend advertising per passenger, we had EUR 0.57 in 2019. We had last year [ EUR 0.45 ] and now [ EUR 0.43 ]. So this is expression of the weakness. But what Stefan mentioned, now we see signals. Now we have last couple of days. We signed a contract with a large Southeast Asian bank for advertisement at the bridges and so on. So we see now the recovery of these customers. And that's the reason why we are confident that this spend per pax regarding advertising will improve. So this is the first statement.Second, we have now the phenomenon that when you look on the recovery of the Chinese passengers, especially in November and December, we expect up to 80% of the passenger numbers, which we had in 2019. So again, a relatively strong recovery of the Chinese ones, and we said already that based on the numbers which we have the spend per pax behavior of the Chinese is the same as before. So COVID didn't change anything. And here, we are talking about 8x, 9x of the additional spending, and this means with each and every Chinese guy coming to our airport, this number must improve. So to make the long story short, up from now, we expand an improvement of the spend per passenger numbers, again, driven by advertisement going up, and second, also the positive influence coming from the recovery of Chinese passengers.
Our next question comes from Andrew Lobbenberg with Barclays.
Can I just ask about the Ground Handling business? I mean, obviously, you'll go back to negative territory in Q4. But I think at the half year, you were talking about a midterm plan to have to shrink the business and allow the market share to move across to your competitor. Have you made any progress down that line? Have there been any tenders that have come up? And then otherwise, just on Lima, I think, again, at the half year, you were hoping that the traffic trends would brighten and that tourism would pick up. Is that playing out as you had hoped?
Regarding Lima, we see that the international tourism is picking up. So that's absolutely fine. That's the right trend. It takes some time, but it's going the right way. Regarding Ground Handling, yes, we are on the way, but it's a midterm plan as we mentioned. It's important to industrialize a lot of processes over there, bringing in AI, for example, to be much more efficient on the Ground Handling processes itself, on the disposition of people, on the qualification of people. That's one of the topics, but that's a program over the next 2 years to have those big new IT systems in place there on that side because that's a software issue.And the other topic is that we are weighing down external companies who are providing people for us, which is more expensive than to hire directly. So we changed more and more from indirect hiring via external companies to direct hiring, not to a level of 0, of course, because we need some flexibility in there, but there we have with direct hiring, we have lower fluctuation. We have lower cost on that side, but we see strong speed up, it was necessary also to take external companies for that. So in principle, the journey is on track. We achieved also good improvements on price increases due to the airlines, due to the topic that the cost increases are very strong. And so the wage increases, which I would assume will also stay, I'm looking forward. So we have to have to increase the prices, which is working if a contract is expiring. We have some contracts which are running another 2 years or 3 years, that's where we're very difficult, but we are also working on that one. So in principle, we are on track with that program.
Our next question comes from Manish Beria with Fraport (sic) [ Societe Generale ].
Yes. So my first question is that you have this EUR 3.8 billion of debt maturity at the Frankfurt level in the next 4 years, FY '23 to '26. But then again, you have this EUR 3.3 billion of cash at the Frankfurt level. So I understand you talked about like you want to use this cash instead of rolling forward the debt. So just sort of trying to understand like how much of this cash could be used for debt repayment, I mean, so essentially, I mean, out of this EUR 3.3 billion, how much you really required to run your operation and how much is just extra cash, let's say, that can be paid for that? The second was like what is the interest that you earn on this cash right now?
Yes. Good question. So first of all, we have EUR 4 billion cash in the moment, so which is a strong position. We also, on the other side, we have this big repayment numbers, which we have to manage. And given the high cash position, we are so far in a very flexible position that we can act very opportunistically. So with other words, we are looking if and when we have to roll over whether to go again into the market with higher interest rates or to use the cash position to pay back the maturities. And in our presentation, you see the average cost of debt, which on a weighted average is 2.8%. So on the balance sheet of the [ AG ], it's a little bit lower, on the project finance side, it's, of course, a little bit higher.So if today, we go into the market with a maturity of 8 years to 10 years, our spread is about 180 basis points on top of Euribor. So all-in costs are about 5%. So with other words, if there is a rollover of an existing debt with, let's assume 2%, we have to pay now in the future, 5%. So the incremental cost increase is about 3% per EUR 1 billion. So with other words, if you roll over in '24 as well as in '25 in each year, EUR 1 billion, we have an additional interest expense increase of 2x EUR 30 million, if we are going to roll over EUR 2 billion in 2 years.And as I mentioned, at the end of the day, this will be a mixture. So of course, perhaps we are not going to roll over EUR 1 billion, perhaps even a little bit less. And therefore, we can use the existing cash position to melt it down, and from a opportunistic point of view to use what is the best for us to roll over and/or reducing the cash position. But with other words, looking for -- our financial plan or our expectation is that the current interest rate level continues for the next 2 years. I think this is a conservative approach. And up from '26 interest rates, so the interest rate curve will go down again. I think most of the guys say it will be before, but I think this is a good conservative working hypothesis, and this means in this very conservative approach, our interest expenses will increase 2x EUR 30 million, very conservative with upside potential that it will be lower at the end of the day. And then we are again benefiting from low interest rates. And again, looking forward, we are not definitely not continuing this EUR 4 billion cash position. So we will bring it down over the time, that's for sure.
Okay. And the second one, just on this retail spending, so last time, I mean, probably you gave a guidance that probably we can do like EUR 3.4 per pax for the full year this year that is higher than 2019. So I think it has been much weaker in the 3Q. So probably that guidance is not holding true, right? I mean, this EUR 3.4.
No. No. As of today, I would stick to the EUR 3.40. You're absolutely true. So Q3 was a little bit disappointing, yes. We expected more. But as of today, I gave you the positive signals that first of all, now we have new contracts on the advertising side. And now what we are measuring is the Chinese are coming back. So we have this strong recovery. So based on the first, so to say, tickets in the shops, their spending behavior has not changed compared to the pre-COVID time. That's the reason why we still expect a strong Q4. And again, we had in last year for the full year, we had EUR 3.33. And whether it's EUR 3.40 or EUR 3.38 or I don't know what, but as of today, a better spend per pax than 2022. This is today's expectation.
Our next question comes from Dario Maglione with BNP Paribas.
Congratulation for the good results. Frankfurt OpEx, if I look at the 3 segments was actually down compared to Q2 despite, of course, passenger traffic up 14%. Is there any one-offs that can explain this good performance? Second question, Frankfurt OpEx in 2024, how will evolve compared to 2023? And last question on capital allocation. When will you consider more international M&A in case you will consider?
Yes. First of all, everything was true what you're saying. So first of all, cost base is very stable, especially in Q3. This has -- we are on the level of 2019 despite the fact that in the meantime, we had 3 -- more than 3 years inflation and skyrocketing wages, and as an expression of a reduced workforce, again, no one-off. Then looking forward, looking forward means 2024, the OpEx will go up, wage [ down ]. So we have these very expensive wage agreements with Verdi. So this union for all the civil servants in Germany. And this means another 8% wage increase in '24. And this is a burden which we have to compensate by revenues driven volume-wise and price-wise.Capital allocation. And so in the moment, it's a clear focus to use the available funds, when the free cash flow is positive to reduce, also the absolute indebtedness, we have to bring it down. And we always said this is the highest priority. But on the other side, if you look on the CapEx side, assuming a linear ramp-up of the EBITDA numbers, which is very likely in the next couple of years. This means we have a permanent higher inflow from the operational business on one side. And we have the 2 step downs on the CapEx side, the first step down when Lima is ready, and the second significant one when T3 will be inaugurated. And then we have this huge difference between high EBITDA numbers on one side, relatively stable interest expenses on the other side and a significantly reduced CapEx level. So this means up from [ '25 ] free cash flow breakeven, up from [ '26 ], a clear and growing free cash flow position, which we will use to bring down the indebtedness, which we are going to use for dividends, to pay again dividends and, of course, then when the 5x net debt-to-EBITDA is achieved at that point of time, when we are below, we are regaining headroom for M&A activities, especially regarding the international business.
Our next question comes from Johannes Braun with Fraport (sic) [ Stifel ].
Yes. I have 2 as well. And firstly, I need to come back to the -- to retail. So you said the main explanation for the year-over-year decline was due to advertising. I guess it's true if you look at the 9-month figure, but looking at Q3, it looks like it was the other way around, right? So advertising was actually up, meaning that the pure retail and shopping revenue per passenger was down even more than the headline figure would suggest. So I'm struggling to understand this because your peers usually report a constant increase in that number.The recovery of the Chinese shareholders in Frankfurt is actually outperforming, for example, the one in Paris. And you also said their spending behavior is unchanged. So this should all be positive for retail, and despite this Q3 is down. So any additional explanation why this number is down would be appreciated. And then secondly, coming back on what you said on the fees, the 9.5% headline fee increase versus the round about 6% net increase. Can you just remind us how this exactly works? So how the 9.5% translate into any net figure, which is obviously the ultimate number we need to use for our model?
Yes, starting with the second question. So at the end of the day is relatively simple. We have a nominal increase of 9.5%. So for each -- for all passengers, the airlines have to pay 9.5% more in '24 compared to '23. And there is a threshold at a level of about [ 646 ] million passengers around. So if the final passenger number in Frankfurt is or would be above 6.4 billion around this threshold, then let me say, the exceeding revenues generated by growth about this threshold, this is divided between or shared with -- between us and the airlines. Just in this year, this is a growth incentive. And now it depends what is your opinion about the growth as long as you are below 64 million in next year, the full price effect in this year is 9.5%.If you, for example, from the airline side, if you assume the final passenger number outcome would be 6.7%, then you have from this year, 6.8 million passenger -- 5.8 million passengers this year to 64 million next year, you have 9.5%, and then you share the additional revenue of 50-50. This means in this year, then you would have a relatively lower price increase. But it depends from what passenger growth you are, so to say, starting. So to make the long story short, as long as the traffic number next year is below 64 million, the price increase is 9.5%.
So for every additional passenger above 64 million, there's a 50% discount?
Exactly just in this year, although we -- average is about [ EUR 13 ]. And with other words, EUR 6.5 goes to the airlines regarding their market share, [ 6.5% ] to us, but just in this year. Yes. The same procedure is in the current year.
Right.
And first question, all your calculations are absolutely correct. Q3 regarding the spend per pax was relatively weak and it was also a little bit weaker than this what we expected. But now we are looking forward. And again, I told you the 2 trends which we see now stronger, especially in Q4, strong the jump of passenger numbers in Q4 and remaining and constant spending behavior always compared to 2019, an increase in advertising, and that's the reason why from today's perspective, we think that this is what we said in the beginning, the guidance at the end of the day will be the outcome.
Our next question comes from Marcin Wojtal with Bank of America.
Yes. I have a couple of questions. The first one is on your capital allocation. So considering the outlook for the business, do you believe you will be in the position to pay a dividend for the financial year 2024, and what are the key metrics that you are monitoring when making that decision? And question number two, if I can ask you about Terminal 2, which I understand will be temporarily shut down for upgrades and refurbishment once you have Terminal 3 in operation. So could you confirm for how many years Terminal 2 will be ongoing these upgrades? We have seen some headlines earlier today, I think it will be until 2030. So are you -- why so long? And are you suggesting there will not be perhaps enough demand before 2030 to have all 3 terminals in operation?
First of all, capital allocation and dividends. So in '24, we are definitely not paying dividends for '23. That's for sure. And whether we pay in '25 for '24, as of today, I don't think so, because we're always saying we have to come very close to 5x net debt-to-EBITDA. At the end of the day, we have to look what is the final key ratio, but I think make it more clear, in '26, we are paying for '25. That's also for sure. And one thing is today not clear whether we are paying in '25 or '24. And this depends how close we are coming to the 5x net debt-to-EBITDA number, which is for us a clear threshold.And Terminal 2, the story is very simple. So we -- in '26 and summer '26, all the airlines from Terminal 2 are going into Terminal 3. So all of them are reallocated. So then T2 is empty and it must be empty to go for the refurbishment because we have to go into the -- really to the inner of the terminal. So it's a full refurbishment because it's more than 30 years old and all these technical devices are at the end of the life cycle. So we have to replace and to rechange each and everything of these terminals. And to do this under a running operation is, first of all, difficult.And second, the cost per unit under an ongoing operation would be twice as much as we are doing this when it is closed. So it makes sense to reduce the refurbishment, the maintenance CapEx. Second, it also makes sense because all of the airlines are into T3. And then we have, of course, the OpEx from T3, and it doesn't make sense to run simultaneously 3 terminals when the passenger numbers are, let me say, between [ 17 million and 18 million ]. There is no need to reopen T3. So we are using the time. And based on today's expectation, we have 3 years, this means '27, '28, '29 to do not all, but the most relevant items of these necessary maintenance activities and to reopen Terminal 2 in 2030. And so far, we think this is a perfect timing because we know obviously, we are in close communication with Lufthansa about our plans regarding Terminal 2, because Lufthansa and Star Alliance, their intention is to show further growth.And in -- latest in '29 based on their expectations, then the capacity of Terminal 1 is fully exhausted. And for further growth, the Star Alliance, they have to go into Terminal 2, otherwise, they cannot realize their intended growth. And in the meantime, we have a clear basis for the maintenance to have a very efficient maintenance process. And second, afterwards, we have, so to say, a new terminal for another period of 30 years, 35 years. And second, we are doing some functional improvements. Stefan Schulte mentioned this. First of all, we are changing the security that we have just one centralized security for Schengen and non-Schengen passengers.And second, we are going to install a vertical combination between Schengen and non-Schengen that Star Alliance and especially Lufthansa can also make very smart transfer processes inside Terminal 2, minimal -- minimally invasive investments. And yes, then up from 2030, we have T1 and T2 as the main infrastructure for the Star Alliance for further growth.
Our next question comes from Graham Hunt with Jefferies.
Just 2 quick questions from me. First, on tariffs. How do you think about this a little bit longer term? I mean given the cost pressures that we're seeing, particularly on the airlines, do you have a sense or an outlook beyond 2024, what's realistic? Can you realistically keep pushing through mid- to high single-digit tariff increases, even if -- even given your regulated returns are well below the regulated limit? And then second question, just coming back again on retail. You sounded quite positive of what you've seen so far in Q4. So I don't know if you can confirm are you seeing spend per pax running ahead year-on-year so far in Q4 versus 2022, which I think was quite a high level already or will that still be down year-over-year, but maybe just a little bit less than in Q3?
Yes. Starting with your last question, retail, you mentioned the EUR 4.23 in Q4 last year, this is exactly what we expect for this year. So again, a very strong last quarter and driven especially by Chinese and recovery of advertising. Regarding fees escalation in the future, we -- since the last 2 years, when the inflation came into the world or especially in the Eurozone, we always said, it's a new area, it's a new regime, and we have to react in a way that the primarily driver in a negative way are the wage increases. And we have to look what is the outcome of this wage agreement with the unions. And this is what we -- where we are exposed to this, we have to push and transfer through to our customers. And this is a fair deal. So when the wage increase is low, the fee increase will be low and vice versa. So we are flexible.We are looking what is the outcome. And the 9.5%, they are a reflection of the significant wage increase, which happens here. And looking forward, again, now '24 is a given with the 9.5%. And we have now to see how the wage escalation will be in Germany, especially for, so to say, low-scale jobs, whether this extraordinary increase will continue or not, and this is then will be the best predictor for future fee increases at Frankfurt Airport.
Our next question comes from Nicolas Mora with Morgan Stanley.
Yes. I'm not going to bother you on retail anymore, but just on a couple of things. Just on Ground Handling, are you still confident you're going to hit breakeven in 2024 at the EBITDA level? That would be the first one. Number two, on wages. I know you signed the agreements, collective agreements worth until late 2024, but is there any risk given random that negotiations are reopen as we've seen this year in spring in light of inflation? And last point on Lima, can you just remind us what the capacity of the terminal will be once the new terminal opens? And if I may, the very last one, on long-term free cash flow, if I'm correct, you said you expect breakeven in '25. So no EUR 200 million to EUR 400 million free cash, which should have been the expectations 18 months ago. So we'll continue to cut back on expectations on big inflation in cash flow.
Thank you for the questions. Starting with the wage topic, so we have now an existing binding wage agreement for '23 as well as for '24. So this is a given now and it was a very comfortable outcome for the unions and for the workers. So with other words, there is no positive or no negative surprise in '24. This is more or less 8% to 9% increase in '24 compared to '23 based on the wage agreement with Verdi as a union. Lima capacity is about [ 40 million ]. So when the construction is through, there's huge headroom for further growth in the next couple of years.And your third question, cash flow. I don't know whether I understand you correctly. So again, the free cash flow breakeven will be in '25, and this is unchanged. So this is always what we said since, I would say, 2 years and a clear positive free cash flow generation then up from 2026, so nothing has changed.
Our next question comes from Jose Arroyas with Santander.
Yes. Just a couple. Can you quantify the CapEx for the renovation of Terminal 2? And can you say when the final payments for Terminal 3 will happen? And my other question is on the winter season. I want to clarify the October 25 press release. I think back then, you said the flight capacity for the winter season would be similar to the 2019, 2020, but today, you are saying it's going to be more like 90%. Can you explain why this downgrade versus this press release from a couple of weeks ago?
Yes. First of all, Terminal 2 CapEx, so for the -- first of all, I have to give you an indication of the length of the maintenance activity. So let me say there's a concentration, as I said in the years '27, '28, '29, then we are through with the so-called course of the terminals, so that we can use it again, but other things will be refurbished in the following years. So the total CapEx phase is up to 10 years when everything is through. But of course, a strong focus in the first 3 years.So everything of this maintenance CapEx, what we are going or what we have to do is already included in our maintenance CapEx budget for the next 10 years. So this is not an add-on. This is part we always said that after the expansion program in Lima and in Frankfurt, we have a group -- total group CapEx of up to EUR 400 million per annum. And these refurbishments things in Terminal 2, they are embedded in these numbers. If you look on the whole length, it's a high 3-digit million amount, but again allocated over a period of 10 years. So T3, was it correct? CapEx phasing? So we have...
Yes.
Yes, we have in our visual fact book, we have this CapEx phasing and also no change. We have in this year, as I mentioned, in '23, up to EUR 600 million. For Terminal 3, the same -- more or less the same amount we'll realize next year in '24. And up from '25, it's significantly going down because technically, the construction itself ended more or less in '25. But you know there's always a delay between the billing, so to say, then you have always a lot of discussions about the correct level and change requests from the construction companies. So at the end of the day, I don't know, perhaps the last bill will be paid 3 years after finalization of the construction. But again, '23, '24, about EUR 600 million and '25, it's a linear function going down, I think perhaps last payment in '28. I think I covered all your questions.
Our next question comes from Cristian Nedelcu with UBS.
Thank you very much for allowing me to ask another question. Just on the OpEx of Terminal 2 versus Terminal 3, if you can give us a ballpark estimate? If I understood well, I think you mentioned earlier, there will be a period when both terminals would be open as you transfer the airlines from Terminal 2 to Terminal 3, roughly, we're talking about a few months or half a year, could you please clarify?
First of all, the OpEx for T3 will be a little bit higher than for T2. You have to see on one side, it's a more efficient terminal, heating, cooling, et cetera, energy efficient, but on the other side, it's huge and significantly larger than Terminal 2. So net effect is negative. So OpEx of T3 is higher than Terminal 2. And there will be a very small overlap in summer 2026 when we are reallocating all the airlines, so soft opening to T3. So it's not 1 day where there is a Friday where they are flying from T2 and on a Monday, they're flying from T3. So it's over a period, let's assume 4 weeks where we have, let's say, utilization of both terminals and then Terminal 2 will be closed and the OpEx of T2 went down.And let me say, the parallelity of OpEx, we will see up from -- as of today's perspective, up from beginning of 2030. And we are going to reopen Terminal 2, then of course, we have again the full OpEx of Terminal 2 from 2030.
Our next question comes from Andrew Lobbenberg with Barclays.
Sorry again. Can I just come back on the issue of the tariff because I'm just struggling to understand the math of it. I think you said up to 64 million passengers, [ H1 ] is a 9.5% increase on the previous year. Then for every passenger above 64 million, that revenue is split 50-50 between yourselves and the airline. So that means if we're thinking of a base case of, let's say, a 10% tariff increase that 55% of the -- 55% of previous year goes to you and 55% to the airlines or that's a 45% tariff reduction.But if I'm to get to, say, 6.5 million -- sorry, 6.5% increase that you suggested, then we need to have about 68 million passengers. Is that the sort of thing you're thinking of or have I got that -- or have I misunderstood the logic?
Again, the official prices of fees, they will be increased by 9.5% as of the 1st of January '24. So each and every airline has to pay 9.5% more per passenger. And now we are calculating the number of passengers. And if we end up at 63.4 million passengers in 31st of December '24, nothing will happen. If, for example, the number of passengers would be 65 million, and the calculation is relatively simple, we have about 1 million additional passengers, I think on average, it's about [ EUR 13.x ]. So it's simple. We have an surplus revenue of -- in this example, of EUR 13 million to EUR 14 million. And then 50% of this amount would be paid back to the airlines based on their final market share in the year '24 as a one-off.
And if I may add for your calculation, not to forget, the effects coming from '23, where we also shared the 4.9% will share when we will end up over the threshold, which we slightly will do. So what we shared in -- will share into full year '23 will not be shared anymore in '24. So this is another factor you have to consider.
And again, the prices per passenger are 9.5% higher. We are talking about a revenue kick back as a one-off at the end of the year if and when the number of passengers would exceed this threshold amount.
There are no further...
But again, it's the same as to the last 2 years, no change.
There are no further questions at this time. So I hand back to Christoph Nanke for closing comments.
So first of all, thank you very much for your questions, for participating in this call. Please give us a call later on. And I -- if you have any further questions, if you have to clarify anything, we are ready, of course, to continue to ask your questions and continue with the talks. So thank you so much for now, and have a good rest of the day.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.