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EBITDA grows in Q1 2018 driven by efficiency increase in air traffic

Interim financial report at 31 March 2018 approved by Board of Directors
  • En-route and terminal traffic increased by 7.6% and 5.2% respectively, in terms of service units vs. Q1 2017
  • Consolidated net revenue at 175.5 million euro (-0.5% vs. Q1 2017). Revenue from operations up by 5.9% offset by negative balance
  • Consolidated EBITDA grows 4.3% YoY to 30 million euro
  • Consolidated net result at €-4.4 million substantially stable compared to Q1 2017, due to seasonality effect
Rome, 14 May 2018 – The Board of Directors of ENAV SpA held today under the chairmanship of Mr. Roberto Scaramella and approved the interim financial report at 31 March 2018.

The first quarter 2018 recorded a solid performance in terms of growth in air traffic with a positive impact on revenue from operations, despite the typical seasonality of traffic flows, which in this period of the year mark the lowest level of activity, while costs remain linear throughout the year.
En-route traffic in service units (a conventional weighted measurement unit which takes in to the aircraft weight at take-off and, in case of en-route traffic, the distance travelled in Italian airspace) delivered an increase of 7.6% over the same period of 2017. The growth in en-route traffic over Italian airspace involved both domestic and international traffic, and, in particular, over-flight traffic, which increased 11.7% in terms of service units. This performance is also attributable to the implementation of the Free Route procedure that allows all aircraft flying at an altitude above 11,000 metres, to cross national airspace following a direct route thus enabling airlines to plan the shortest trajectories with no restrictions and to save on fuel, lower operating costs and reduce CO2 emissions.
The positive trend in en-route traffic, despite the ongoing limitations of the Libyan airspace, is also attributable to the increase in medium and long-haul air traffic flows from Italy's neighbouring countries such as Turkey, Greece, Egypt and Tunisia, and to the increase in the average distance flown within Italian airspace.
Terminal traffic (i.e. takeoff and landing activities within a radius of 20 km from runway) grew 5.2% in terms of service units with a positive contribution from the majority of airports throughout the country. Also with regard to terminal traffic, the international component proved to be the most significant growth driver with an increase in service units of 6.3%.
Total consolidated net revenue at 31 March 2018 declined marginally by 0.5% vs. 2017 to 175.5 million euro driven by an increase in revenue from operations offset by negative balance.

Revenues from operations, grew 5.9% to 170.9 million euro, driven by en-route revenues (+8.1% at €120.5 million) and terminal revenues (+1.7% at €44.2 million).The non-regulated activities were substantially stable compared to the same period in 2017 and amounted to 3.1 million euro.

The balance in the first quarter of 2018 (i.e. the mechanism that allows ENAV to recover from, or return to carriers, the amounts resulting from the difference between the planned air traffic and the actual traffic, as well as the recovery of costs and traffic for services provided to Terminal Zone 3 airports – those with less than 70,000 movements per year) had a detrimental impact on revenues posting a negative amount of 4 million euro compared to a positive balance of 6.3 million euro recorded at 31 March 2017, due to lower en-route traffic balance - as a result of strong growth in traffic - and to the higher balance recorded in previous years reversed into the 2018 tariff.
In the first quarter of 2018 the ENAV Group continued to deliver on its efficiency plan by optimizing a number of cost items and by streamlining the processes between the Group companies. Operating costs were 1.5% lower than the previous year at 145.5 million euro. The personnel costs were substantially stable compared to the same period of 2017 (-0,1%).
External costs declined by 4.9% YoY to 34.4 million euro mainly driven by the decrease in utilities and telecommunications costs, the reduction in lease costs related to office buildings as well as lower external services costs thanks to the process of internalisation and productivity increase of the Group personnel.

The consolidated EBITDA as at 31 March 2018 grew by 4.3% compared with the same period of the previous year, and reached 30 million euro, with an EBITDA margin of 17.1% (16.3% in 1Q 2017).

The consolidated EBIT was negative for 1.7 million euro, with an improvement of 1.2 million euro compared to 1Q 2017.

Net results in the first quarter of 2018 was negative for 4.4 million euro, substantially in line with the result of the first quarter of 2017 (-4.2 million euro) as a result of the higher financial income recorded in the first quarter of 2017 related to the positive accounting effect of balance receivables actualization for 1.1 million euro.
It is worth noting that the first quarter of the year is typically affected by the negative seasonality effect in air traffic trends compared to the linearity of costs.

In Q1 2018, ENAV’s net financial debt stood at €83.3 million, with an improvement of €34.2 million compared to 31 December 2017, due to the positive cash flow generated from operations.
Guidance for 2018 confirmed
For 2018 the Company confirms the guidance communicated to the market in March with net revenue growth expected to be flat to ‘low-single digit’, as a result of the decrease in the performance plan regulated tariff of 2018 compensated by growth in traffic, and with an EBITDA margin around 32%, in-line with 2017. In terms of Capex, the Company plans to invest approximately 125 million euro, higher than the 115 million euro recorded in 2017. ENAV also confirms its guidance on the dividend for 2019 which is expected to increase by 4% over the dividend of 2018 approved by the AGM held on April 27, 2018, in line with our dividend policy of paying out no less than 80% of equity free cash flow.
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First quarter 2018