ADP stock ended Tuesday among the main gains in the SBF 120 index, supported by the rise in UBS’s price target. If the Swiss design bureau remains neutral on value, it now values it at €150 per share versus €121 previously. Taking into account a faster than expected recovery in passenger traffic, the analyst raised its Ebitda forecasts by 28% for 2023 and 11% for 2024. They now exceed the consensus by 17% and 15% respectively.
AOF – MORE INFORMATION
– World number 1 in airport management with almost 300 million passengers;
– Turnover of 2.8 billion euros divided into 5 areas: aeronautical activities in the 3 Paris airports, shops and services, real estate activity in the terminals (ADP is one of the largest landowners in Ile-de-France), international activities and others ;
– Economic model with the aim of becoming a leader in the design, construction and operation of airports and relying on the 3 airports in Paris, the 27 airports managed in the world as well as agreements with airlines;
– Capital 50.6% owned by the French State, ahead of the Dutch company Shiphol (8%) and the Vinci group (8%), Augustin de Romanet, CEO, presiding over the 15-member board of directors;
– Tense financial situation, with debt of 8,000 million euros and a debt-to-equity ratio close to 200%, but cash of 2,400 million euros and debt guaranteed by the State.
– “Pioneers 2025” strategy: infrastructure: +80% departures on time, multimodal connections, concessions: average maturity stabilized at 30 years;
– Innovation strategy focused on telecommunications and mobility services through Hub One: global digital ecosystem focused on data, through 100 international routes and the intelligentization of airports, 120 experiments, including 30 industrialized;
– Carbon neutrality environmental strategy in 2030 for Paris airports: improvement of air quality, recovery of waste, use of 10% low-carbon energy and preservation of surfaces for biodiversity;
– Organizational review of Aéroports de Paris;
– Continuation of cost reductions, but resumption of investments at €1 billion per year until 2025, including €550-600 million for Paris in 2022.
– Strong correlation with variations in the pandemic and the financial health of airlines, in particular EasyJet and AirFrance-KLM, the 1st and 2nd operator in Paris;
– End of the HubLink industrial cooperation between Aéroports de Paris and the Dutch company Schiphol, leading to the end of cross-shareholdings, by May 2023 at the latest;
– Review of international activities;
– Outlook: 2022: After very strong Q1 (revenue up 79%), traffic recovery 60-80% vs. 2019, operating margin 30-35%, return to positive net income, and leverage of debt between 6 and 7 / 2023: traffic equal to 85-95% of that of 2019, margin at the same level as in 2022, minimum dividend of €1, that is, a payment rate of 60% / 2024: traffic equal at 85-95% of that of 2019, operating margin of 35 to 40% and minimum dividend of €3, that is, a rate of 60% / 2025: traffic
– Maintenance of the suspension of the dividend until 2022.
Results weaken again for European companies
With fuel accounting for up to 35% of their costs, professionals believe European airlines are unlikely to turn a profit again until 2023 or 2024 at the earliest. These players forecast that energy prices will remain high until at least 2023. The International Air Transport Association (IATA) has announced a cumulative loss forecast of $9.7 billion in 2022 for airlines around the world, there will still be to wait until 2023 to see the return of profits on a global scale, due in particular to rising oil costs and rising labor costs. On the positive side, travel demand seems to be resisting the uncertainties caused by the international economic and political situation. However, the uncertainties surrounding the Covid, the war in Ukraine, as well as the rise in prices are reinforcing last-minute bookings. According to Iata, only 8% of international bookings made at the end of May went beyond September.
The social climate deteriorates in low-cost companies
These companies are benefiting from a very strong recovery. They had already managed to monopolize 40% of air traffic in 2021, this proportion could even reach 50% this year. However, the strike movements have affected the activity of Volotea, EasyJet and Ryanair, with clashes over wages and working conditions. In general, the sector faces a shortage of personnel. After having drastically cut their workforce in 2020 and 2021, companies and airports must urgently contract to support the relaunch of activity.
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