INTERNATIONAL. Global travel retail powerhouse Dufry today posted a + 31.5% organic growth rate in turnover to CHF5.7 billion (US$6.5 billion) for the first six months of 2023.
Dufry said it had delivered on all performance indicators, including a core EBITDA margin of 8.6% and equity free cash flow (EFCF) of CHF165.1 million (US$188.7 million).
The company noted that Autogrill was successfully delisted in July, coming together as one team.
Dufry Group CEO Xavier Rossinyol commented: “Today’s results underline the solid performance of Dufry and Autogrill and, even more, our potential as one company. They are an early indication of what we can achieve when acting as one team, united by a shared vision and led by clear objectives.
“Together, we have delivered another strong set of results, driven by an uninterrupted demand for travel and the outstanding execution of our teams. Dufry and Autogrill achieved CHF5,715.2 million (US$6.5 billion) core turnover as a combined company, while our core EBITDA margin stood at 8.6%, based on our sales performance, our disciplined approach to costs, and the merger synergies. Conversion from EBITDA to equity free cash flow reached 34%, partly supported by CAPEX phasing into the second half of the year.”
The positive results for the combined group were attributable to a balanced split of business lines, the company said. Duty free accounted for 38% of net sales, duty-paid for 31% and food & beverage for 31%.
The airport channel contributed 82% in a more diversified portfolio including motorways, railways, ferries, cruise ships, ports and other channels.
Reported gross profit reached CHF3,685.8 million and core gross profit hit CHF3,679.4 million, with a core margin of 64.4% for HY 2023 versus 63.7% (proforma) in HY 2022. The increase was driven by solid consumer demand, mix effects as well as active and improved commercial management.
Core EBITDA was recorded at CHF491.8 million (US$562 million) for the first half of 2023, at a margin of 8.6% above prior years’ levels of 7.9% (proforma). The improvement was a result of higher core turnover and core gross profit, cost discipline considering the challenging macro-environment and synergies from the merger.
Core EBIT stood at CHF343.9 million (US$393 million) and core net profit to equity holders CHF124.0 million (US$141.6 million). Diluted core earnings per share stood at CHF 1.01.
Rossinyol said: “Supported by our results, we believe profitability and cash flow in 2023 will be ahead of forecast with a 30 to 40bps better than expected EBITDA margin and EFCF conversion in the mid-twenties.
“We say this with prudence; our teams continue to closely monitor any potential changes in business climate and consumer sentiment, and we remain disciplined in our approach to new business development as well as cost and cash management.”
Recent business developments
Notable developments for Dufry during the first half of 2023 included its successful combination with Autogrill. The group now owns 100% of the shares and ultimately delisted the company from the Italian Stock Exchange.
The business integration with Autogrill is a key to the group’s long-term strategy. Dufry’s new strategy ‘Destination 2027’ opens a new roadmap including its focus on geographical diversification, customer-centricity and digitalisation and a strong emphasis on its people and on ESG.
Rossinyol said: “We are rapidly advancing on the integration and have successfully concluded the combination with Autogrill, delisting the company from the Italian Stock Exchange. We have defined the combined group’s organisation, ways of working and we are well on track to generate the cost synergies.
“The benefits of combining our expertise are starting to show; we are offering innovative and hybrid concepts in our tenders, as seen in Spain most recently, where we retain our position as leading travel experience operator.
“Destination 2027 can be seen across the world. From our winning proposal in Spain through to new store openings from Jordan to Brazil, as well as through the launch of new concepts such as mind. body. soul. and Haute Parfumerie, we are changing the way travellers experience retail and F&B.
“What is truly exciting is that these are early examples of our innovation concepts. We are just beginning to unleash our potential. Behind the scenes we are working on even bigger opportunities, making our stores even more fun, more vibrant, and smarter, adding live events and gamification elements in our customer experience. All to generate value for our shareholders, for our customers, for our concession and brand partners, and for our company.”
Regional performance
Reported turnover in Europe, Middle East and Africa reached CHF2,853.4 million (US$3,254 million), while core turnover amounted to CHF2,744.9 million (US$3,129 million) during the period. This led to combined organic growth of 34.2% year-on-year.
The EMEA region took the largest share, thanks to strong leisure demand especially in South Europe, Middle East and Africa.
The UK, Northern and Central Europe also contributed positively.
North America’s turnover amounted to CHF1,865.1 million (US$ 2,128 million), with combined organic growth of 21.6% year-on-year. The result was attributable to a strong domestic market in the US, while Canada continued to be impacted by a slowdown of travel demand for Chinese travellers.
Turnover in Latin America’s hit CHF776.5 million (US$886.1 million) with combined organic growth of 39.4% year-on-year. Strong performances were seen in markets including Argentina, positively impacted by local currency developments, as well as Mexico and the Caribbean.
Asia-Pacific marked a notable improvement from its previous year’s low base, thanks to China’s re-opening. Hong Kong was among the best-performing regions. Turnover reached CHF284.8 million (US$324.9 million) in HY 2023 with combined organic growth of 168.3% year-on-year.
Rossinyol said: “The combined Group is also more diversified, both geographically and on business segments, creating scope to address projects on Duty Free, Duty Paid and F&B, as well as exploring combined and hybrid initiatives.
“Together, we will further accelerate our ESG engagement – visible in our day-to-day operations globally – and are in a position to make a difference for customers, our employees and the communities we work in.”
“With all of these developments, I see our talented people at the centre once again. I thank our employees – every one of the over 60,000 – for their motivation and dedication to our day-to-day, and most importantly for their commitment to brighten the journeys of our travellers.
“Our onward journey remains clear; by revolutionizing the travel experience globally we will continue along our growth trajectory and reinforce our track record of delivery.” ✈
