Lufthansa Technik: Result creates foundation for restructuring and growth

Lufthansa Technik Group’s 1.9% decline in revenue in 2012 to 4.0
billion euros was characterized by a drop in business with other
companies in the Lufthansa Group, but also by an increase in revenue
with external customers, whose share of the total revenue rose by 5
percentage points to reach 61%. The operating result climbed by 24%
to 318 million euros, with an operating margin of 8.9%.

“The measures we have taken as part of the SCORE program have already
had a positive influence on the fiscal year 2012 result,” said Dr.
Peter Jansen, Chief Executive Finance of Lufthansa Technik AG, on
March 19 in Hamburg. “However, we are dealing with rising personnel
and material expenses as well as high price and cost pressures in the
maintenance, repair and overhaul (MRO) market. Our business risks
also include an economic situation in Europe that continues to be
difficult, and overcapacity in the MRO market. But with this good
result, we have created a financial foundation for the further
restructuring and growth of the Lufthansa Technik Group, with the
foremost objective of continuing to improve our competitiveness.”

Jansen described the key financial figures at the Lufthansa Technik
Group, with its 23 consolidated companies, as continuing to be solid
and stable. Both the equity ratio at 29.4% and the debt-to-equity
ratio at 24.5% were unchanged from the previous year’s levels.

The level of investment sank slightly year on year to 130 million
euros. Important investments included the purchase of reserve engines
at Lufthansa Technik Airmotive Ireland Leasing for the expansion of
the Group fleet, and infrastructure projects.

Total operating expenses dropped to EUR 3.9 billion (- 3.7%). The
cost of materials sank markedly by 7.4% to EUR 2.0 billion, a decline
largely attributable to the lower volume of modifications and reduced
engine capacity utilization, which both resulted in decreased
requirements for material and external services.

At EUR 101 million, depreciation, amortization and impairment losses
in 2012 were EUR 11 million higher than the previous year. Other
operating expenses slid by 19.1% to EUR 615 million, especially owing
to prior-year provisions for long-running contracts.

The basis of consolidation was expanded at the turn of the year by
two companies, and some temporary employees were taken on
permanently, resulting in an average 2.8% increase in employee
numbers in 2012 to 20,386. In contrast, staff levels were reduced at
those locations that are currently conducting restructuring programs
or were recently closed. Through wage increases, increased expenses
for pension provisions and the expansion of the company’s
semi-retirement offer, personnel costs climbed 13% to 1.2 billion
euros.