INTERNATIONAL. Global travel retail powerhouse Avolta maintained its strong momentum in 2023, posting +21.6% year-on-year organic growth (proforma) in turnover to CHF12,534.6 million (US$14,214 million) based on constant exchange rates for the year.
[Note: Refers to combined organic growth (proforma) versus 2022, assuming 11 months contribution of Autogrill from February 2022 onwards for the comparable period. All growth comparisons in this story refer to 2022 combined proforma comparable period.]
Unveiling its full-year results today, the company noted a “transformative and successful year for Avolta”, delivering its synergy targets alongside an “impressive” set of financials in its first year.
Avolta said it had exceeded its financial targets, with a core EBITDA margin of +9% and EFCF (equity free cash flow) of CHF323 million (US$366.28 million), reflecting the strong operational execution and successful working capital and capex control.
The company continued to benefit from a “very balanced” split of business lines with its duty-free unit accounting for 37% of core turnover, duty paid 31% and food & beverage 32%. The airport channel was the key contributor, generating 82% of sales.
Reported gross profit margin stood at 64.31% compared to 63.8% in 2022, thanks to the “solid consumer demand, tight inventory management and the introduction of new product lines, over and above geographic and channel mix effect”.
Core EBITDA for 2023 came in strongly reaching CHF1,129.6 million (US$1,281 million), with a margin of 9.0%, compared to 8.7% from the previous year. The growth was boosted by the continued cost efficiency and synergies resulting from the integration of Autogrill.
Core net profit to equity holders rose to CHF307.9 million (US$349 million), a steep increase from CHF105.7 million (US$119 million) in 2022.
Net debt was down to CHF2,696.1 million (US$3,057.32) from CHF2,810.7 million a year ago and at its lowest level since 2015.
Dufry Group CEO Xavier Rossinyol commented: “2023 was a very successful year for Avolta. The company completed a transformational business combination redefining the global travel retail and food & beverage industry.
“This success is further reflected in Avolta delivering CHF30 million (US$34 million) of synergies, which are set to increase to CHF85 million (US$96.4 million) in 2024. With the launch of Avolta, the successful opening of our first hybrid stores and early signs of innovation initiatives, we have set the course for continued profitable growth and are driving the travel experience revolution.
“Throughout our transformation, our focus on consistent growth and cash generation remained resolute. Further enhancing our geographical diversification, Avolta achieved particular success this year in strengthening our footprint around the world.”
Rossinyol underscored global expansion strategies including the key renewal of the vast majority of Avolta’s Spanish airport contracts for 12 years; the company’s 15-year contract extension at Harry Reid International Airport in Las Vegas; alongside many other activities across Europe, the Middle East, Asia Pacific, Latin America and North America.
He continued: “2023 saw Avolta meet our financial targets, setting the foundations for sustainable, profitable growth as the globally leading Travel Experience player. Looking ahead, the robust long-term global passenger outlook (+4.3% CAGR 2023-2042) is also seen in January and February – and is testimony to our enhanced market position to deliver profitable growth in 2024 and beyond.
“This, coupled with our strategic initiatives for passenger conversion, increased spend per head, and our strengthened diversification across geographies and business lines, bolsters our confidence to deliver in our strategic direction and our financial outlook.”
Performance by region
Growth across all regions contributed to Avolta’s strong growth in 2023. Here is a breakdown by geography.
Europe, Middle East and Africa
Turnover reached CHF6,265.4 (US$7,104.84 million), up +20% from 2022 (in organic terms at constant exchange rates).
In Q4 2023, turnover for the combined region reached CHF1,577.5 million (US$1,788 million), with core turnover at CHF1,518.3 million (US$1,721.72 million), an organic increase of +11.6% year-on-year.
The performance was mainly driven by the strong leisure demand, benefitting holiday traffic destinations in Southern Europe, the Middle East and Africa in both travel retail and F&B. In addition, the UK, Nordics and Central Europe benefitted from the continued recovery in international travel.
During the quarter, Avolta continued to progress on new openings and significant store upgrades in the region, including, for example, opening the company’s first innovative hybrid concept, Hudson Café with Baci at Milan Malpensa Airport in Italy.
Other examples include the extension of the company’s operations at Abu Dhabi’s new Zayed International Airport with the opening of 13 F&B concepts as well as the opening of a special edition Le CroBag flagship store airside at Düsseldorf Airport.
North America
Turnover reached CHF1,025.1 million in Q4 2023 with proforma organic growth of +7.8% year-on-year. In the US, growth across both F&B and travel retail was robust, supported by traffic trends and solid demand from domestic and international passengers. Canada continued to benefit from the progressive recovery of Asian travellers over the quarter.
During the quarter Avolta expanded its presence in the US by securing a 15-year contract at Fresno Yosemite International Airport (California) for three travel convenience stores.
HMSHost opened The Wise Omega Bodega at Memphis International Airport, Queen Charlotte’s Kitchen at Charlotte Douglas International Airport, Tacos Locos at Birmingham-Shuttlesworth International Airport, and Circle City Beer Garden at Indianapolis International Airport, among other dining venues. ✈
Hudson introduced six travel convenience and specialty retail shops at Chicago Midway International Airport, including its largest ‘Evolve By Hudson’ concept store in North America, as well as an outpost of French luxury fashion house Chloé at Vancouver International Airport.
Latin America
Turnover in Q4 2023 came in at CHF455.3 million with strong year-on-year proforma organic growth of +28.7%. Best performing markets were Argentina, positively impacted by local currency developments, as well as Mexico and the Caribbean, especially benefitting from leisure demand.
Brazil continued to improve as international traffic further returned. The cruiseline business progressed further.
During the quarter Avolta achieved significant progress in the LATAM region including the renewal of the duty-paid contract at Santiago del Chile (Arturo Merino Benítez International) Airport. This renewal is set to lead to a walk-through shop spanning more than 900sq m in the domestic terminal, along with a Beauty Studio concept and additional arrivals shops covering more than 500sq m of retail space.
The region also confirmed an important contract extension at São Paolo Congonhas Airport, as well as new concessions wins and extensions across the Caribbean. The LATAM team held openings in Puerto Rico, the Dominican Republic, as well as in Aruba and the Bahamas.
Asia Pacific
Turnover totalled CHF138.2 million in Q4 2023 with year-on-year proforma organic growth of +35.1%. Trends across the quarter in the region continued to improve from the Q4 2022 low base. These were underpinned by domestic and intra-regional travel as well as the gradual recovery of inbound and outbound international travel. While Chinese intercontinental travel were stilla impacted by air capacity constraints and reduced group travel volumes, intra-regional travel continued to accelerate during the quarter.
During the quarter, Avolta boosted the company’s footprint in India with a new contract in Hyderabad, India. The APAC team successfully opened new or refreshed stores this quarter, including a wide array of new retail and F&B stores at Bangalore International Airport (India), as well as a Diptyque boutique and Crystal Jade restaurant at Shanghai Hongqiao International Airport (China).
F&B outlets Open House, The Loaf, Ahh Yum and Tealive were introduced in Kuala Lumpur, Malaysia, and Schnitz on the Gold Coast, Australia. ✈
