Emirates Group saw mixed results for the period running Apr. 1 to Sept 30, 2019, with declines in revenue but increases in net profits across its overall Group, airline and dnata arms. Emirates Airlines saw an 8% decrease in volumes to 1.2 million tonnes of cargo, while overall capacity for the first six months of the financial year also declined by 7% to 29.7 billion available tonne kilometers (ATKM).
Cargo volume declines stemmed not only from a runway closure and reduction in fleet during the period, but also reflect downward pressures from trade tension and uncertainty onto the global air freight business.
Net profit for the airline was up 282% y-o-y for the first six months 2019, to US$235 million. Revenue was $12.9 billion, down 3% compared to the same period last year. Operating costs and capacity for the carrier decreased by 8% and 7%, respectively.
The Group’s ground handling subsidiary, dnata, saw revenue growth of 5% over the first six months of 2019 to $2.0 billion. Overall profit for dnata, however, was down 64% to $85 million for the period compared to last year’s result. Across its operations, dnata handled 1.5 million tonnes of cargo, 6% less tonnage than in the same period the year prior.
According to the Group, organic growth across dnata’s international ground handling business key contract wins across US locations, and improved performance in markets such as Italy, Singapore, Switzerland and Iraq, helped drive dnata’s revenue and compensate for the negative currency impact of approximately $23.4 million. dnata also acquired full ownership of UAE-based freight forwarding company, Dubai Express, which bolstered its revenues in the first half year of 2019-20, and helped soften the impact of losses due to the 45-day runway closure at Dubai International Airport (DXB).
Emirates Group reported overall revenue was down 2% to $14.5 billion for the first half of its 2019-2020 financial year. Meanwhile, half-year net profit was up 8% to US $320 million.
The Group attributed the slight revenue decline to planned capacity reductions during the 45-day closure of the southern runway at DXB, as well as unfavorable currency fluctuations in Europe, Australia, South Africa, India and Pakistan. Profit improvement was due to a decline in fuel prices of 9% compared to the same period last year, though this gain from lower fuel costs was partially offset by negative currency movements.
“The lower fuel cost was a welcome respite as we saw our fuel bill drop by AED 2.0 billion compared to the same period last year,” explained His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group. “However, unfavorable currency movements wiped off approximately AED 1.2 billion from our profits.”
During the first six months of 2019-20, Emirates received three Airbus A380s, with three more new aircraft scheduled to be delivered before the end of the 2019-20 financial year. The carrier also retired six older aircraft with a further wo to be returned by 31 March 2020.
dnata made an $87.4 million one-off gain from the divestment of its 22% stake in travel management company Hogg Robinson Group. dnata’s half–year profit for 2019-20 was further impacted by the Thomas Cook bankruptcy, which had been one of its major UK customers, resulting in an impairment loss on trade receivables and intangible assets of $22.8 million.
dnata’s travel and flight catering divisions saw increases of 7% and 54% during the period to $488 million and $479 million, respectively. The significant growth in these divisions was due to several acquisitions and the expansion of dnata’s own business at several locations.
Moving forward, the Group anticipates continued “headwinds with stiff competition adding downward pressure on margins” over the next six months. Emirates Group said it will remain focused on developing its business and investing in new capabilities despite these challenges.