The Moodie Report

FOOD & BEVERAGE TOP STORY

Autogrill beats disruptions with sound revenue and profits growth

Published: 30/07/10

Source: ©The Moodie Report

By Martin Moodie

ITALY/INTERNATIONAL. International travel retail-to-catering giant Autogrill today posted a +5.4% increase in first-half consolidated revenues to €2,800.3 million (+4.2% at comparable rates).

Consolidated EBITDA reached €265.7 million, up +3.5% on the first half of 2009 (+2.3% at comparable rates).

Cash flow generation reached €207.2 million, a +7.5% gain on the first half of 2009. Net financial indebtedness remained stable at €1,952.5 million, compared with €1,934.5 million recorded at 31 December 2009 (despite the unfavourable exchange impact of some €108.1 million).

Looking to the year-end, the Group estimates results will reach the high end of the guidance range with consolidated revenues of €6,025 million, an EBITDA of €635 million, and investments of approximately €250 million.

"The summer is off to a good start and we expect to see a performance in line with our forecasts"

Gianmario Tondato Da Ruos
CEO
Autogrill

“In the first half we maintained our cash flow generation at consistent levels and recorded good sales growth in all our business segments, despite traffic trends which continue to be fairly volatile,” said Autogrill CEO Gianmario Tondato Da Ruos.

“The summer is off to a good start and we expect to see a performance in line with our forecasts.”

The group notes that its results were positive “within a macroeconomic scenario that is still weak”, commenting: “In the period under examination the Group recorded a positive performance in all its business segments and, in particular, travel retail & duty free.

“Overall the growth in revenues was more relevant in the airports, driven by the return of business traffic and long distance flights. The recovery in sales recorded at the American airports, despite traffic which was in line with the 2009 levels, was accompanied by the solid performance of the revenues reported in the UK airports, particularly Heathrow and Gatwick, and the positive signals from Spain, above all in Madrid and Barcelona.”

RESULTS BY SEGMENT

In the first half Food & Beverage sales totalled €1,835 million, an increase of 3.4% (+3% at comparable rates) against the €1,774.2 million in the same period 2009.

This result was achieved despite the unfavourable weather conditions which penalised traffic in Europe and the United States, above all in the first quarter, as well as the low temperatures which, primarily in Italy, limited sales, in particular of beverages.

The results for the airport activities were better than those achieved along the motorways, while railway stations benefited from the new openings in Italy and the temporary shift of passengers to this channel during the period impacted by the volcanic ash phenomenon.

In the US airports, while passenger traffic was largely in line with the lows recorded in the prior year (+0.1%), sales increased 5.2% (+3.2% at comparable rates).

In the half revenues along the motorways in Italy rose _2.3%. In the period January-April (last available figure) traffic along the entire motorway network rose +2%, versus an increase in sales of +2% in the same period. The airport channel (+7%; +6.5% on a comparable basis, against traffic which rose +5.2%), the railway stations and shipboard catering (+7.4%) all made positive contributions.

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TRAVEL RETAIL AND DUTY FREE

Travel Retail & Duty Free posted revenues of €747.2 million, an increase of +6.5% (+5% at comparable rates) with respect to the €701.6 million recorded in the same period 2009.

Autogrill described this as “a very positive result obtained despite the impact of the adverse weather conditions at the beginning of the year and the prolonged strikes that affected air traffic in both Spain and the United Kingdom.”

The business in UK airports grew +8.3% (+5.4% at comparable rates) against a drop in traffic of -5.9%, mainly because the volcanic ash emissions caused air space to be closed.

This positive trend was driven in particular by the “excellent” sales at Heathrow Airport (+6.3%). Revenues in the Spanish airports rose (+0.6%) while traffic recovered (+1%) with positive performances in Madrid (+5.6%) and Barcelona (+16.5%), thanks to the business generated in the latter's new Terminal 2 and the increase in passengers travelling to non-EU destinations.

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Results in the Rest of the World were positive (+10.4% at current exchange rates, +9.7% at comparable rates) due to solid performances linked to better traffic,

Business in Vancouver, Canada, benefited from an increase in spending per passenger, thanks also to a greater number of flights to Asia.

Revenues in the second quarter amounted to €423.4 million, an increase of +7.7% (+6% at comparable rates) relative to the €393.3 million reported in the same period 2009, despite the block of air traffic in Europe caused by ash emitted by the Icelandic volcano. Flights in UK airports were blocked for six days in April, while many flights were cancelled in Spain.

The business in the UK airports, which were hit the hardest by this phenomenon, posted a growth in revenues of +6.1% (+2.9% at comparable rates) against a drop in traffic of -9.2%.

Revenues in the Spanish airports increased (+1.6%), against traffic that dropped -0.6% in the period, as well as in the Rest of the World (+18.8%), thanks to an increase in traffic in all the main airports where the Group is active.

In the first half the segment’s EBITDA rose +15.7% relative to the €66.4 million recorded in the same period 2009 (+14.2% at comparable rates) to €76.8 million.

Autogrill noted: “This positive result reflects a significant improvement in the sales mix in European airports – attributable to increased traffic for non-European destinations – the synergies generated by the integration process and the containment of operating costs which contributed to an improved EB ITDA Margin that rose from 9.5% to 10.3%.

EBITDA in the 2nd quarter reached €48.6 million, an increase of +26.1% with respect to the €38.5 million reported in the same period 2009, with an EBITDA Margin that rose from 9.8% to 11.5%.

In the first half investments in the segment, which amounted to €9.1 million versus €13.9 million in the same period 2009, were mainly made in the new terminal at Malaga Airport in Spain and the upgrading of spaces in Amman Airport in Jordan.

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SPANISH CONTRACTS EXTENDED

Autogrill officially confirmed that Aldeasa and AENA (Aeropuertos Españoles y Navegatión Aérea), the public entity that manages the Spanish airports, had reached an agreement to extend the concessions granted to Aldeasa to manage the travel retail & duty free activities in the 14 airports found in Alicante, Almería, Barcelona, Bilbao, Girona, Ibiza, Jerez de la Frontiera, Málaga, Menoría, Palma de Mallorca, Reus, Santiago de Compostela, Seville and Valencia through 31 December 2012.

In 2009 approximately €250 millionn of Aldeasa’s revenues were generated in these airports, Autogrill revealed.

In related news, on 22 July Nuova Sidap S.r.l. (wholly owned by Autogrill S.p.A.) completed the acquisition of Se.Stra. (wholly owned by 100% da Esso Italiana S.p.A.) which manages a network of approximately 80 service
stations owned by Esso Italiana. The oil activities will maintain the Esso brand while the F&B sales will be
made under the Autogrill brand.

FLIGHT

In the first half, Flight posted revenues of €218 million, an increase of +19.7% over the same period 2009, despite the impact of the volcanic ash phenomenon.

The positive performances were attributable primarily to the international activities (+10.7% at comparable rates), in particular in the Middle East and in Australia, as well as the consolidation of the assets contributed by the joint venture entered into with AirFayre in the United Kingdom in November 2009. Proforma growth reached +2.7%.

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In the 2nd quarter segment revenues reached €122.5 million, an increase of +19.4% (+12% proforma) compared to €102.6 million in the same period 2009. In the 1st half the segment’s EBITDA rose +5.5% with respect to the €18 million recorded in the same period 2009 (-2.5% at comparable rates) to €19.0 million.

The EBITDA margin fell from 9.9% to 8.7% due to the cost of integrating the assets contributed by Air Fayre.

In the 2nd quarter EBITDA amounted to €14.1 million, up 15.1% (+6.3% at comparable rates) on the same period in 2009 despite the drop in the number of flights serviced due to the volcanic ash phenomenon. The EBITDA margin fell from 12% to 11.6%.

We'll bring you more detailed analysis soon.

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