REG - ANA Holdings Inc - ANAHD Financial Results for 2Q of FY2016 <Origin Href="QuoteRef">9202.T</Origin>

ANA HoldingsAnnouncement

31/10/2016 08:05

RNS Number : 8370N
ANA Holdings Inc
31 October 2016
ANA HOLDINGS Financial Results 
for the Six Monthsended September30, 2016
TOKYO, October 31, 2016 - ANA HOLDINGS (hereafter "ANA HD") today reports its consolidated financial results for the six months ended September 30, 2016.
Overview
- ANA HD has delivered a solid profit performance, with consolidated operating income up 3.2% to 89.5 billion, consolidated ordinary income up 0.6% to 83.4 billion, and consolidated net income attributable to owners of ANAHD up 6.4% to 57.4 billion.
- ANA HD achieved this result through tight operational management and control of expenses, mitigating a decrease of 2.9% in revenues, to 884.9 billion. This was principally due to reduced revenues in the Air Transportation Business which, as reported at the time of ANA HD's Q1 results in August, was affected by the Kumamoto Earthquake, terrorist attacks in Europe and the yen appreciation.
- During the period, ANA launched new routes to two international cities - Wuhan and Phnom Penh. ANA is also strengthening its dual-hub model for the Tokyo Metropolitan Region, improving domestic-international flight connections at Haneda airport and international transfers at Narita airport. 
- ANA continues to enhance its in-flight experience, introducing ANA Business Staggered full-flat seats in business class on medium-haul flights, particularly those routes linking Japan and Southeast Asia in addition to long-haul flights. ANA has, for the fourth consecutive year, received the maximum 5-Star rating from SKYTRAX, and "World's Best Airport Services" and "Best Airline Staff in Asia" at the 2016 World Airline Awards.
- Although there has been some weakness in capital investment, the Japanese economy continued to improve steadily during the second quarter, supported by robust personal consumption. This trend is expected to continue, underpinned by ongoing improvements in domestic employment and household income as well as the effect of government policies, while there is increasing uncertainty in some overseas markets in relation to economic slowdowns and the UK's decision to leave the European Union.
- ANA HD expects operating revenue for the full year ending March 31, 2017 to be 70.0 billion lower than initial projections, due to the yen appreciation and less favorable fuel surcharges. Guidance for operating income, ordinary income, and net income attributable to owners of ANA HD remains unchanged. 
Consolidated Financial Performance Unit: billion yen (except for % comparison, rounded down)

First Half
FY2016
First Half
FY2015
Difference
%
Comparison
2Q/
FY2016
Difference 
Operating revenues
884.9
911.2
-26.2
-2.9
480.5
-16.7
Operating expenses
795.4
824.4
-29.0
-3.5
405.1
-22.1
Operating income
89.5
86.7
+2.7
+3.2
75.4
+5.3
Non-operating income/ losses
-6.1
-3.8
-2.2
-
-2.6
+0.3
Ordinary income
83.4
82.9
+0.4
+0.6
72.8
+5.7
Extraordinary income / losses
0.1
0.0
+0.0
+117.7
-
-0.0
Net income attributable to owners of ANA HOLDINGS INC.
57.4
53.9
+3.4
+6.4
50.7
+5.1
Performance by business segment Unit: billion yen (rounded down)

First Half
FY2016
First Half
FY2015
Difference
2Q/FY2016
Difference
Revenues
Operating income
Revenues
Operating income
Revenues
Operating income
Revenues
Operating income
Revenues
Operating income
Air Transportation
769.1
84.7
788.0
81.1
-18.9
+3.6
418.2
72.1
-12.6
+6.2
Airline Related
127.7
5.3
114.4
4.2
+13.2
+1.0
66.4
2.8
+9.7
+0.5
Travel Services
82.4
2.0
88.4
2.8
-6.0
-0.8
48.3
1.3
-3.8
-0.8
Trade and Retail
68.9
2.6
71.5
3.0
-2.6
-0.4
34.5
1.5
-1.8
-0.0
Others
16.6
0.7
16.1
0.6
+0.5
+0.0
8.3
0.3
+0.1
+0.0
Air Transportation
1. Domestic Passenger Service 
- Revenues decreased due to factors including the Kumamoto Earthquake and shorter consecutive holidays, which resulted in lower passenger numbers and lower unit price from the same period of the prior fiscal year. ANA worked to improve revenue by flexible fares in accordance with demand. 
- ANA continues to improve its domestic network, opening a new route between Haneda and Miyako, Okinawa which started operations from the beginning of the summer timetable. In addition, ANA captures demand on its popular Haneda-Okinawa route for a certain period of the summer, with additional nighttime flights. ANA also worked to optimize supply-demand through further fine-tuning to match aircraft deployment to booking tendency.
- ANA provided 175 extra flights for those affected by the Kumamoto Earthquake.
- ANA has also been supporting initiatives to boost tourism in the Kyushu region, where travel demand is decreasing due to Kumamoto Earthquake, such as introducing some lower fares and a wide range of travel products utilizing a range of special discount fares, designed by government to stimulate tourism in the region.
As a result, income from domestic passenger services decreased by 5.8 billion (an 1.7% year-on-year decrease).
(Except for % comparison and passenger load factor, rounded down)
Domestic Passenger Services 
First Half
FY2016
First Half
FY2015
Difference
% Comparison
Revenues (billion yen)
347.4
353.2
-5.8
-1.7
Number of passengers (millions)
21,520
21,551
-31
-0.1
Available seat km (million)
30,225
30,307
-82
-0.3
Revenue passenger km (million)
19,526
19,433
+93
+0.5
Passenger load factor (%)
64.6
64.1
+0.5
-
2. International Passenger Service
- Passenger numbers continued to rise from the same period in the prior year, due to solid demand for business travel on flights to Europe, North America and Asia. Tourist demand from Japan to Europe showed some reduction as a result of terrorist attacks in the region.
- Strong demand continued for travel to Japan from all regions. However, operating revenue decreased from the same period in the prior year due to currency translations and the yen appreciation and decrease in fuel surcharge with the drop in fuel prices.
- ANA continues to build its international network, capturing strong demand, particularly from Asia. In April, ANA established a new route between Narita and Wuhan, China, and, in September, it launched the only Japan-Cambodia direct service between Narita and Phnom Penh, strengthening ANA's network in Asia.
- In response to demand gap on China routes, ANA introduced discount fares for flights departing from China to Japan in order to stimulate demand.
- To improve product service, ANA introduced ANA Business Staggered full-flat seat service for business class on medium-haul flights, particularly between Japan and Southeast Asia, in addition to all long-haul business class flights to and from North America, Europe and Oceania.
As a result, income from international passenger services decreased by 0.5 billion (a 0.2% year-on-year decrease).
(Except for % comparison and passenger load factor, rounded down)
International Passenger Services 
First Half
FY2016
First Half
FY2015
Difference
% Comparison
Revenues (billion yen)
259.1
259.6
-0.5
-0.2
Number of passengers (millions)
4,479
4,062
+417
+10.3
Available seat km (million)
29,458
26,333
+3,124
+11.9
Revenue passenger km (million)
22,309
19,984
+2,324
+11.6
Passenger load factor (%)
75.7
75.9
-0.2
-
3. Cargo services
- In domestic cargo services, ANA captured demand in the home parcel delivery business, where volumes are robust. However, as a result of the overall lower demand for domestic air cargo due to factors including unseasonal weather reducing the volume of cargo departing Hokkaido, both cargo volume and revenue decreased from the same period in the prior year.
- International cargo volumes increased over the same period of year, supported by a recovery in demand for services from Japan to overseas. In particular, ANA is capturing increased demand for deliveries to China and Asia. ANA is also developing its service to provide cargo routes linking US and Asia via Japan. 
- International cargo volumes in September achieved a record high for a single month. However, as a result of factors including the continuous yen appreciation, declining unit price due to deterioration in the supply-demand environment and change of agency commission settlement scheme, revenue decreased from the same period of the prior year.
Revenue from domestic cargo services decreased by 0.4 billion (down 3.0% year-on-year) and revenue from international cargo services decreased by 16.5 billion(down 28.3% year-on-year). 
(Except for % comparison, figures are rounded down)
Cargo Services
First Half
FY2016
First Half
FY2015
Difference
% Comparison
Domestic
Revenues (billion yen)
15.0
15.5
-0.4
-3.0
Freight carried (thousand tons)
222
228
-6
-2.7
Ton km (million)
225
230
-4
-2.0
International
Revenues (billion yen)
41.8
58.3
-16.5
-28.3
Freight carried (thousand tons)
457
396
+61
+15.4
Ton km (million)
1,999
1,702
+297
+17.5
4. Others
- Other Revenue from the Air Transportation Business, which includes ANA's mileage program, Vanilla Air, in-flight sales and maintenance services for other airlines, was 101.6 billion (up 5.7% year-on-year).
- Vanilla Air launched new routes between Kansai and Taipei in April, Taipei and Ho Chi Minh City, Okinawa and Taipei in September. During the peak demand period in August, Vanilla Air captured demand through increased flights between Narita and Kaohsiung, Narita and Amami Oshima. In addition, in May, Vanilla Air became one of the launch partners in the "Value Alliance", the world's first-ever LCC alliance together with seven other LCCs in the Asia-Oceania region. As a result, Vanilla Air, during the second quarter, carried 1,016 thousand passengers (up 13.3% year-on-year), with a passenger load factor of 86.6% (down 0.1 percentage points year-on-year).
Airline Related, Travel Services, Trade and Retail and Others
- In Airline Related businesses, operating revenue for the second quarter was 127.7 billion (up 11.6% year-on-year) and operating income was 5.3 billion (up 24.7% year-on-year) due to factors including an increase in contracts for ground support operations from other airlines at Haneda, Chubu and Okinawa Airport.
- In Travel Services, operating revenue decreased compared to the prior year in the domestic market, due to factors including the impact of the Kumamoto Earthquake on bookings made to the Kyushu region. Revenues also decreased in the international market due to factors including the impact of terrorist attacks, in bookings for travel to Europe. Due to intensifying competition, the number of bookings for travel to Japan also decreased from the same period in the prior year. As a result of these factors, operating revenue in the second quarter was 82.4 billion (down 6.8% year-on-year) and operating income was 2.0 billion (down 28.6% year-on-year).
- In Trade and Retail, operating revenue for the second quarter was 68.9 billion (down 3.7% year-on-year) and operating income for the period was 2.6 billion (down 13.9% year-on-year) due to factors including lower sales revenue in the Retail and Food businesses.
- In others, second-quarter operating revenue was 16.6 billion (up 3.2% year-on-year) and operating income was 0.7 billion (up 9.8% year-on-year) due to factors including the solid performance of the real estate related business. 
Outlook for the FY2016 (April 2016-March 2017)
- Japan's economy is expected to continue recovering gradually, supported by government policies and the domestic employment and income environment, which are improving.
- ANA HD is alert to potential downside risks such as increased uncertainty in overseas economies and increasing competition in both domestic and international markets.
- ANA HD is committed to delivering its FY 2016-2020 Mid-Term Corporate Strategy, announced in January this year. ANA HD has a robust corporate structure and decisive leadership, allowing it to respond to changes in the business environment and deliver its ambition to be the "world's leading airline group".
- ANA HD expects operating revenue for the full year ending March 31, 2017 to be 70.0 billion lower than initial projections, due to foreign currency fluctuations, the yen appreciation and less favorable fuel surcharges. However, ANA HD remains committed to reducing operating expenses and reinforced cost management and therefore guidance for operating income, ordinary income, and net income attributable to owners of ANA HD remains unchanged from initial projections. 
ANA HD hereby adjusts projected consolidated business performance for the year ending March 2017 as shown below.
Consolidated Financial Forecastunit: billion yen

Revised Forecast
for FY2016
Original Forecast for FY2016
Difference
FY2015
Difference
Operating revenues
1,740.0
1,810.0
-70.0
1,791.1
-51.1
Operating income
145.0
145.0
-
136.4
+8.5
Ordinary income
130.0
130.0
-
130.7
-0.7
Net income attributable to owners of ANA HD
80.0
80.0
-
78.1
+1.8
Please see the attached PDF for more details.
http://www.rns-pdf.londonstockexchange.com/rns/8370N_1-2016-10-31.pdf
Contact : Corporate Communications, ANA HOLDINGS,+81-3-6735-1111,publicrelations@ana.co.jp
About ANA HOLDINGS INC.
ANAHD is an aviation group with global operations and a total of 63 consolidated subsidiaries and 17 equity method affiliates. It is divided into passengers and cargo services segments as well as airline related business such as Catering and IT Services. ANAHD was formed in April 2013 and is the parent company of ANA; full service carrier, and Vanilla Air; LCC. ANA HD promotes a multi-brand strategy to leverage the strength of ANA brand and stimulate demand in markets not completely covered by its full-service airline offering, while expanding market share for the Group as a whole, leading to enhanced value. ANA has about 260 aircraft flying to over 90 destinations and carrying about 50 million passengers per year. ANA is the largest airline in Japan by revenues and passenger numbers. ANA is a member of Star Alliance. Management vision of ANAHD is "It is our goal to be the world's leading airline group in customer satisfaction and value creation."

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