Fraport bids to further international expansion

St Petersburg
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International airport investments and activities accounted for an increased share of Fraport's business last year, and the operator of Germany's main hub Frankfurt is pursuing opportunities to grow the segment further.

Revenues from "external activities and services" rose 4.1% in 2012, as Fraport grew overall revenues 3%.

Just over a fifth of the airport operator's €2.4 billion ($3.1 billion) turnover was generated by external activities and services. This comprises direct shareholdings as well as management and service provision contracts for 13 international airports.

Chief executive Stefan Schulte says the segment has not only been developing "very well" in commercial terms, but that such investments also helped to diversify "to some extent" Fraport's risks after the financial crises of the past five years.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) in the external activities segment have nearly quadrupled since 2007, to €273 million, while the return on investment has doubled to over 15%.

Fraport is preparing to open a new terminal at St Petersburg's Pulkovo airport in December. This will replace the existing two terminals at Russia's third-largest hub, operations of which are managed by Fraport, which also holds a 35.5% stake.

The German airport operator has invested around €135 million - allocated another €50 million in standby equity - in the €1 billion expansion of Pulkovo.

Schulte says Fraport is looking at additional engagements at international airports and could simultaneously shoulder two to three projects like Pulkovo. Brazil is a particularly interesting area for such investments, he says.

But Fraport is also evaluating expansion projects among its existing shareholdings, such as a new terminal and runway at Lima's airport. Fraport holds a 70% stake in the Peruvian capital's Jorge Chavez International airport.

In a bid to build Istanbul's planned third airport, Fraport partnered with Turkish construction firm IC Ictas, which is one of the two main contractors at Pulkovo and built a new terminal in Antalya, where Fraport is the majority shareholder. However, a Turkish construction consortium defeated Fraport and IC Ictas to secure the 25-year Istanbul deal.