CEO Stefan Schulte’s Speech for Fraport Annual General Meeting

Dear shareholders, ladies and gentlemen, I warmly welcome you to Fraport AG's annual general meeting, both in Frankfurt and internationally. An extremely dynamic year with strong demand for air travel lies behind us. Growth was clearly in the double-digit percentage range, and we're pleased that this trend is continuing in the current business year. Following the rapid recovery at the airports in our international portfolio, we are now generating more than half of our operating income outside Frankfurt. This shows how we have transitioned over the past 20 years from being the operator of Germany's largest aviation hub to one of the leading global airport companies. We are currently active at 28 airports on four continents. Before I take a more detailed look ahead, please allow me to outline how we have steered your company through the third year of the COVID-19 pandemic. Over the past financial year, we have put a particular emphasis on positioning ourselves for continued growth and on advancing major future-focused projects. Review of the 2022 financial year: The year 2022 marked the long-awaited end of the pandemic, with travel restrictions being largely lifted. Demand from leisure travelers in particular rose sharply from March last year, while monthly growth rates of up to 300% pushed us to our operational limits in Frankfurt. For the full year 2022, passenger numbers in Frankfurt surged by 97.2% year-on-year, corresponding to a total of 48.9 million passengers. Even if growth was still largely driven by leisure travelers, we did see a noticeable pickup in business travel in the second half of the year. This trend is continuing into the new year. Another pleasing aspect: despite difficult conditions for air freight, Frankfurt remained Europe's leading cargo hub in 2022. Our mainly leisure-dominated group airports worldwide continued to recover more rapidly than the Frankfurt hub. The Greek airports in particular performed well in 2022, welcoming around 4% more passengers than in pre-crisis 2019, a new all-time high. Antalya Airport in Turkey and our gateways in South America also made a significant recovery. At this point, please allow me to offer a big thank you to all of our employees across the entire Fraport group. Their commitment to pitch in and work together makes me confident that we will soon be able to offer the quality again that you, our shareholders, expect from Frankfurt Airport. We've already done a lot to make this happen, and we were able to maintain operations noticeably more stable over the recent Easter travel peak and long weekends. Last year's strong traffic growth also provided a major boost to our financial results. Group revenue rose by 49% year-on-year to 3.19 billion euros. The operating result increased at a slower pace, rising by 36%, dampened by the non-recurrence of positive special effects including pandemic compensation payments received in 2021 and by increased energy costs and higher operational expenses driven by hiring new staff. More than 57% of the operating result (EBITDA) was generated by Fraport's international business, equating to impressive growth of 40% over the previous year. Our group result, or net profit, surged by 81.5% year-on-year to 166.6 million euros in 2022, exceeding our forecast despite the write-off of a shareholder loan in connection with our investment at Pulkovo Airport in St. Petersburg, Russia. We also greatly improved our net debt to EBITDA ratio to 6.9 from 8.4. We're also pleased that we have been able to reduce our carbon footprint under Scope 1 and Scope 2 by 6.5% across the group against the backdrop of strong traffic growth. Later I will go into more detail about our climate strategy. As I mentioned, more than half of our group EBITDA was generated outside Frankfurt in 2022. We are active at 28 aviation gateways on four continents, covering various business segments. Of particular interest to us are projects in which we can best put our extensive know-how to work in the operations, management, and development of airports. We have successfully focused on investments in emerging and developing markets. The benefits of transforming Fraport into a globally active airport company became particularly evident in the wake of the pandemic. While Frankfurt has been emerging more slowly from the crisis due to its complexity and greater reliance on business travel, our leisure-dominated group airports worldwide are recovering significantly faster. Let me give you some examples: Our 14 Greek airports concluded 2022 with a 4% passenger increase, surpassing the 2019 record. We are now reaping the benefits from comprehensive modernization and expansion measures. In the first four months of 2023, the Greek airports achieved cumulative passenger growth of 29%. Our Brazilian airports in Fortaleza and Porto Alegre continue to recover. In Porto Alegre, we successfully completed the last major infrastructure measure with the opening of the extended runway in 2022. At Lima Airport in Peru, expansion work is in full swing; the first phase has been concluded, and construction of the new passenger terminal is progressing well, to be opened as scheduled in early 2025. Our Turkish group airport in Antalya recovered to 92% of 2019 passenger numbers in 2022, and the aim is to reach pre-crisis figures again this year. The airport was an important hub for humanitarian aid transports after the terrible earthquake. Summing up, even if we are not currently planning any major acquisitions, the organic growth of our international portfolio still offers plenty of potential. Now let's look at Frankfurt Airport. We're making great progress. We took over the management of security checkpoints from the German federal police at the start of 2023, giving us more flexibility to modernize security technology. We now have seven modern CT scanners in use, with four more being installed and four more to follow in July. We are clearly ahead of all other German airports in this regard. We plan to have 40 CT scanners by the first half of next year. Since March, passengers can book a time slot for security checkpoints. We are also adding 20 new hybrid check-in counters and 40 baggage drop-off points in Concourse B of Terminal 1, with biometric ID capabilities. These form part of the first completed stage of the Transforming Terminal One project. The second stage involves rearranging and centralizing security checkpoints. Construction work on Terminal 3 is significantly more advanced; the glass facade is finished, and the focus is now on installing technical fittings. Climate protection is another top priority. With our decarbonization master plan agreed upon at the start of 2023, we have specified numerous measures to be carbon-free by no later than 2045. We will make faster progress than previously calculated: the current target is for the group to generate only 95,000 metric tons of CO2 emissions by 2030 instead of 120,000, and in Frankfurt only 50,000 instead of 75,000. By 2030, we will be emitting less than 25% of 1990 levels. Looking ahead to the busy summer travel period of 2023, we increased staff numbers by over 1,000 last year and plan to keep up this hiring pace. We have expanded training capacities and introduced HR Neo, the biggest employment program in recent years, to remain an attractive employer. The new collective wage agreement will have an immediate impact. We expect passenger numbers during this year's summer to increase by 15 to 25% compared to 2022, with leisure travelers as the main growth driver. Available seat capacity will increase to around 85% of 2019 levels. During the summer holidays, passenger numbers are expected to reach peaks of up to 200,000 travelers daily. I am cautiously optimistic about the peak summer travel period. For the current business year, we project group EBITDA to further advance to a range between approximately 1.04 billion and 1.2 billion euros, with the upper end reaching 2019 levels. We expect the group result to increase significantly to a range between around 300 million and 420 million euros. Due to our high debt levels, we are not proposing any dividend payments for 2023. Only once your company comes closer to a net debt to EBITDA ratio of five do we plan to resume dividend payments. Let me close with a medium-term forecast. Our growth trends are intact. We expect passenger numbers at our international subsidiaries to recover to pre-crisis levels during this financial year, and you will see the same rebound in Frankfurt in 2025 or 2026 at the latest. When the new Terminal 3 becomes operational as scheduled in 2026, we will be well equipped for further substantial organic growth, providing a major competitive advantage. The German Federal Ministry of Transport expects aviation growth of 67% by 2051 from 2019 levels. Your company will be well equipped to handle this increase. This is a positive outlook for you as our shareholders and for all of our employees. Thank you for the confidence you place in us.