Lufthansa shares climb as Q3 profits rise despite soaring fuel costs

(Sharecast News) - Shares in Lufthansa rose on Tuesday after the German airline group reported higher third-quarter profits despite a sharp increase in fuel costs, although it narrowed its full-year earnings guidance. The stock climbed 3.2% to €7.71in Frankfurt after the company posted a 6% increase in adjusted earnings before interest and tax (EBIT) to €1.41bn for the three months to September, up from €1.33bn a year earlier. Net profits surged 30% to €1.26bn from €966m.

Revenues jumped 9% to €12.24bn from €11.20bn, supported by strong passenger demand.

The improved bottom-line performance came despite a €543m year-on-year increase in fuel costs, reflecting higher kerosene prices linked to the conflict in the Middle East.

However, the adjusted operating margin slipped to 11.5% from 11.9%, while passenger numbers declined 2% to 41.1m.

The company also narrowed its full-year adjusted EBIT forecast to between €1.7bn and €2.0bn, compared with its previous guidance of €1.7bn to €2.2bn, citing further increases in fuel prices.

Lufthansa said fuel costs were now expected to be around €600m higher than forecast three months earlier, making the upper end of its previous profit guidance unlikely.

The airline maintained its expectation of a "clear increase" in annual revenues, while reducing its net capital expenditure forecast to around €2.1bn from €2.5bn due to fewer aircraft deliveries than originally planned.

It also reiterated its expectation of adjusted free cash flow of approximately €900m for the year.