ITALY/INTERNATIONAL. Leading global food & beverage group Autogrill today outlined its updated strategy and financial targets, with revenues expected to grow at a compound annual growth rate (CAGR) of 4.5% to 5.0% over the next three years, reaching €5.3 billion in 2021.
Revenue growth will be mainly driven by a forecast strong like-for-like performance and by the airports business. Autogrill said it will focus on increasing the underlying EBITDA margin to around 10% by 2021 (up by around 110 bps).
The company said that capex will return to “a normalised level by 2021” of between 5% and 5.5% as a percentage of revenue, with enhanced free cash flow generation of around five times the 2018 level.
Autogrill Group CEO Gianmario Tondato Da Ruos said: “The initiatives put in place during the last two years allow us to set important targets for 2021, with a solid top line growth in the three-year period and a substantial increase in profitability and cash generation. Leveraging on our global leadership, as well as our ability to innovate, our best-in-class operational skills, underpinned by the positive perspectives for the sector, we are confident our group will accelerate its growth and will further expand its business.”
In the coming years, Autogrill said it aims to strengthen its position, leveraging a strategy led by:
- Continued focus on top line growth in the channels at the core of Autogrill’s strategy (airports and railways) both organically and through M&A while also expanding footprint in adjacent market segments (convenience retail).
- Profitability enhancement through new concepts, innovation and targeted actions across all P&L lines.
- Capital allocation focused on strategic priorities. Among others, Autogrill said it will explore further opportunities to unlock value in motorway concessions’, as achieved through the recently announced sale of the Canadian motorways, and will evaluate possible moves into adjacent business areas “by leveraging its existing internal capabilities and network”.
Underlining the potential of the business, Autogrill highlighted its status as “a global leader in a structurally attractive industry with a positive macroeconomic backdrop.” It noted that global air traffic and the food service business are projected to each grow by more than 25% over the next five years.
In addition, it added, the sector benefits from “a unique environment where there are favourable customer demographics and longer dwell times”, with spending driven by “immediate needs and impulse purchasing behaviours”.
Autogrill said that competition from online was “limited” in the airport space. It added that Autogrill was well placed, with “scale, track record and consistent execution key requirements for landlords and government authorities globally” with the regulatory environment becoming increasingly complex.
Guidance for 2019 foresees €5 billion in revenue (compared to €4,695.3 million in 2018, up 2.2% on a reported basis or 5% at constant exchange rates).
Top line growth will be driven this year by North America and International divisions, while Europe will continue its “footprint rationalisation”. Underlying EBITDA should reach €450 million to €470 million (€416.7 million in 2018).
The company expects stable underlying EBITDA margin in North America and International, while Europe will “deliver a significant improvement thanks to the efficiency initiatives implemented in the past months”.
EBITDA and earnings will be affected this year by the disposal of the Canadian motorways business; the phasing out of the Tank & Rast motorway business in Germany plus the impact of the acquisition of Pacific Gateway Concessions (via Stellar Partners) in the USA.
Looking to the next three years, Autogrill said: “The combination of the increased free cash flow generation, the financial flexibility provided by the solid balance sheet and the incremental free cash flow from the optimisation of the motorway concession portfolio, will provide Autogrill with financial resources of up to €1.5 billion to be deployed to drive further expansion.”
