Zurich Airport (FHZN) posts record H1 - CHF161.3m profit (+6%) and 56% EBITDA margin, but CHF423m capex pushes FCF to -CHF117.1m

Zurich Airport Group (SIX: FHZN) posted its strongest first half on record, driven by a rebound in passenger traffic that lifted revenue, EBITDA and consolidated profit compared with the same period last year.

Consolidated profit climbed to CHF 161.3 million, up 6% from CHF 151.8 million a year earlier. Aviation-related income was the main engine: flight operation charges rose by CHF 11.7 million to CHF 281.0 million, while aviation fees and other aviation revenue increased to CHF 46.2 million (up CHF 2 million). Total aviation revenue reached CHF 327.3 million, a 4% bump from CHF 313.5 million, helped by stronger local passenger volumes - those travelers pay higher fees than transfer passengers.

Non-aviation receipts painted a mixed picture. Commercial and parking income slipped 1% to CHF 132.2 million, largely because construction has cut available retail space in landside areas. Real estate revenue held steady at about CHF 98.4 million as higher rental and leasing offset lower energy and utility allocations. Services revenue was flat at CHF 25.2 million. On the international side, revenue tied to construction fell (CHF 60.6m to CHF 57.6m), but strip out that project work and international operations actually rose by CHF 7.1 million, a 14% increase.

Overall, total non-aviation revenue dipped 1% to CHF 313.4 million; adjusted for construction project timing, non-aviation was up roughly 2% (CHF 5.9 million).

Costs were contained. Operating expenses edged down 1% to CHF 281.8 million, though when you exclude construction-project accounting, adjusted operating costs rose about 3% versus H1 2024. Payroll was the standout increase - personnel expenses jumped 11% to CHF 131.6 million, reflecting inflation, activity-driven pay adjustments and the January 1, 2025 takeover of services for passengers with reduced mobility. Police and security outlays rose 3% to CHF 65.6 million, while energy and waste costs fell 13% to CHF 18.5 million thanks to cheaper electricity sourcing.

EBITDA improved by CHF 12 million to CHF 358.8 million, a 3% rise, leaving an EBITDA margin near 56%. Depreciation and amortisation climbed 4% to CHF 149.7 million. The finance line also improved slightly - the net finance result moved by CHF 1.5 million to negative CHF 7.1 million, helped by higher interest income.

Cash flow tells a different chapter. Operating cash flow was CHF 305.8 million, but heavy investment left free cash flow at negative CHF 117.1 million for the half, versus negative CHF 1.5 million a year earlier. Capex and project spending came in at CHF 422.9 million, covering property, plant and equipment and airport operator projects.

Management's operational outlook for 2025 targets roughly 32 million passengers, about 2.5% growth versus the prior year. The company expects aviation revenue to move broadly in line with that traffic growth. Non-aviation revenue is penciled in to be slightly higher overall: parking should get a lift from more travellers while commercial revenue will likely be constrained by temporary retail closures for construction. Real estate rental and leasing revenue is forecast up a touch, with lower energy recharges trimming that line. International business revenue is anticipated to increase.

Cost pressures are expected to persist: higher volumes, inflation and employer-related measures will push operating costs up, with personnel expenses rising faster than other lines because of the mobility services integration. Zurich Airport projects EBITDA to be a bit above 2024's level and consolidated profit to be roughly in line with last year.

On the investment front, the group plans about CHF 500 million of spending at the Zurich site - that figure includes the Radisson Blu acquisition - plus around CHF 250 million at overseas subsidiaries, mainly to finish construction at Noida Airport. Free cash flow was negative CHF 117.1 million in H1 after CHF 422.9 million of investment. Plenty of runway for debate among analysts.