Travel Retail and Duty Free Business Intelligence    Saturday 29 November 2014

AIRLINES

gategroup realigns global businesses as margins hit by currency impact

Published: 28/02/12

Source: ©The Moodie Report

By Martin Moodie

SWITZERLAND. gategroup today announced changes to realign its extensive global services and product lines into two major businesses: Airline Solutions and Product and Supply Chain Solutions.

To support these new lines of business, the company is realigning its leadership team and its Executive Management Board (EMB, effective 1 March.

gategroup brands Gate Gourmet, Gate Aviation Services, Gate Safe, eGate Solutions and Performa, will become part of gategroup’s new global Airline Solutions business.

The business also will include the Gate Retail Onboard platform, formed in 2011 to consolidate gategroup’s extensive experience in onboard retail services to customers in both the traditional and low-fare carrier segments.

Andrew Gibson, gategroup CEO, said, “Increasingly, our customers are seeking integrated service solutions. This move aligns under one umbrella all of the business services we deliver daily to our airline customers, allowing our regional teams and global leadership to more effectively develop and manage a coordinated delivery.”

The Airline Solutions business will remain regionally led, with the two major markets centred in Europe and North America continuing as single divisions under existing leadership. The remaining regions, including Latin America, Asia-Pacific, and the Middle East, will be coordinated as one Emerging Markets division with strengthened local teams.

“To accelerate the growth in these important markets, we need to take a different approach,” Gibson said.

“We know that we can be very successful when we establish focused regional teams within specific markets to manage the local business environment, drive tailor-made strategies, and build local business relationships.

“The approach and skills required in emerging markets are different from our mature markets, and we must adapt. To ensure we make effective use of our resources and capabilities, we are coordinating these regional teams as an Emerging Markets division.”

In a separate move, the gategroup brands focused on airline products and supply chain management, namely deSter, Harmony, Supplair, potmstudios and Pourshins will become part of a new global Product and Supply Chain Solutions business. 20% of gategroup’s total revenues.

To support the new businesses, gategroup is also realigning its leadership team. Centred in London, the Product and Supply Chain Solutions business will be led by Andrew Langdale, who is being promoted from his current function as CEO of Pourshins and Supplair to Group SVP and President, Product and Supply Chain Solutions.

He will be supported by Jaap Roukens, formerly CEO of Performa, who has been named Chief Marketing Officer for the new business. Langdale joins Roukens on the EMB of gategroup, representing the Product and Supply Chain Solutions business division.

For the Airline Solutions business, Peter van Niekerk and Doug Goeke will continue heading the Europe & Africa and North America divisions, respectively.

Herman Anbeek, formerly gategroup Chief Commercial Officer (CCO), assumes full-time leadership for the new Emerging Markets division as its President. Anbeek, Goeke and van Niekerk remain on the EMB of gategroup representing the Airline Solutions business.

Drew Niemeyer, previously CCO of North America and acting President for Gate Gourmet in the U.S., succeeds Anbeek as gategroup CCO. Additionally, the CCO function has been expanded and will now be formally responsible for strategy and corporate development, including mergers, acquisitions and alliances. As CCO, Niemeyer also becomes a member of the EMB of gategroup.

Gibson stated, “The formation of the new global businesses is a natural next step in the evolution of gategroup. As a leadership team, we are extremely excited with these changes and see them as an important enabler to drive the Group’s strategy forward and deliver profitable growth in the coming years.”

PROFITS UP BUT EBITDA MARGIN HIT BY EXTERNAL FACTORS

Gategroup also today released its financial results for 2011.

While the revenue base was sustained and profits rose, EBITDA margin softened against the backdrop of a strong Swiss Franc, economic uncertainty and airline industry slowdown.

Here are the key results.

• Revenue of CHF2,688.1 million, flat on a reported basis; up +2.6% in constant currencies
• EBITDA of CHF201.7 million, down -6.9% on a reported basis; up +6.4% in constant currencies
• EBITDA margin of 7.5%, down 0.5 percentage point on a reported basis
• Operating profit of CHF114.8 million, up +1.1% on a reported basis; up +15% in constant currencies
• Profit for the year of CHF58.7 million, up +17.6%
• Cash flow from operating activities of CHF60.9 million, down -51.0% reported
• Basic earnings per share of CHF2.05 versus CHF2.39 in 2010 on a 28.8% increase in weighted shares outstanding
• Net debt of CHF146.6 million, in line with the same period of 2010