SWITZERLAND/INTERNATIONAL. Dufry today announced a +9.7% rise in turnover to CHF2,610.2 million (US$2,867 million) in 2010. Turnover increased by +15% based on constant rates, of which organic growth accounted for 10.1%. New concessions (net) added 4.7%. The foreign exchange impact of translating into Swiss Francs was negative by -5.1%.
Gross margin improved by 1.6 percentage points to 57.5% and EBITDA grew by +19.2% at constant exchange rates. When translated into Swiss Francs, EBITDA reached CHF343.1 million (US$376.8 million), up +13.9% compared to 2009. EBITDA margin improved by 0.4 percentage points to 13.1% versus 12.7% in 2009.
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Net earnings increased by +48.8% to CHF144.8 million (US$159 million). Dufry again generated a significant amount of cash flow from operations of CHF362.5 million (US$398 million). Gross margin improved by 1.6 percentage points to 57.5% in 2010 versus 55.9% in 2009.
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“We confirmed the strength of our business model combining a strong organic growth performance with its resilience based on our approach of risk diversification“ |
Julián Diaz Chief Executive Officer Dufry Group |
In absolute terms, gross profit in 2010 amounted to CHF1,501.9 million (US$1,650 million), up +13.0% from 2009. The continuation of global negotiations with suppliers, coupled with economies of scale, and the further development of initiatives started in 2010 as part of the “˜Dufry plus One’ project, all contributed to the increase in gross margin, the company said.
Selling expenses, net, came to CHF584.8 million (US$642 million), or 22.4% of turnover, in 2010, versus CHF 510.9 million, or 21.5% of turnover, in 2009. The start-up phase of a number of new projects, as well as the impact of certain locations, led to an increase in concession fees in 2010. The effect was however amplified in relative terms as Dufry benefited from temporary rebates on concession fees during the first quarter of 2009.
EBIT increased by +21.1% to CHF197.9 million (US$216.3 million) in 2010.
Dufry Group CEO Julián Díaz said: “In 2010 we confirmed the strength of our business model combining a strong organic growth performance with its resilience based on our approach of risk diversification.
“We also generated a significant increase in profitability down to net earnings and re-launched the expansion of our business into new countries and channels. We are convinced that our current strategy will also be successful in the coming years and we will continue to improve top line growth and gross margin, as well as to leverage the company’s cost structure.
“The implementation of our three year mid-term plans Dufry Plus One and One Dufry, which we started in 2010, will be key to further developing our business and to driving profitability.
“The outlook remains positive in general: global passenger growth in the short and medium-term is forecasted to be in the +4-5% range. We will dedicate all our efforts to grow organically over and beyond passenger growth by adding productivity gains, as well as to create new growth opportunities through acquisitions like we did in the past.”
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THE BENEFITS OF DIVERSITY
Diaz noted that recent events have shown again the benefits of a diversified concession portfolio. “Also, our higher exposure to emerging markets positions us well to benefit from the higher expected growth in these regions,” he said. “With more than 60% of our turnover stemming from emerging markets, we are determined to capture the positive momentum in those markets and we also have the expertise and capacity to grow our presence further. At the same time, our presence in the developed world is a helpful diversification.”
RESULTS BY REGION
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Turnover of Region Europe grew by +6.3% in local currency, driven by the operations at Milan Malpensa Airport, which started to improve in the second half of 2010, and by the roll-out of the Hudson News concept in various Italian railway stations.
In Swiss Franc terms turnover in 2010 stood at CHF310.8 million (US$341.3 million) versus CHF316.8 million in 2009. Both the closing down of the European airspace due to the volcano ash cloud in April 2010 and the snow storms in Europe in December 2010 had a very limited impact on operations, Dufry said.
Region Africa’s turnover in 2010 increased by +5.3% in local currencies. In absolute terms turnover reached CHF184.1 million (US202.2 million) in the period. In Egypt the operation in Sharm-el-Sheikh Airport was temporarily closed because of flooding in January and February 2010.
Dufry opened a new operation in Alexandria’s new international airport in December 2010, which will start contributing in 2011. Morocco and Tunisia had a “very good” performance throughout the year, the company said.
In Region Eurasia turnover in local currencies increased by +2.7%. Translated into Swiss Francs, turnover reached CHF229.1 million (US$251.6 million) in 2010 versus CHF232.1 million the previous year. “Our operation in Moscow Domodedovo performed very well on the back of double-digit traffic growth and we are also pleased with our operations in Shanghai, which we opened in March 2010 and which continued to ramp up,” said Dufry.
In Region Central America & Caribbean turnover increased by +6.4% measured in local currencies. Translating into Swiss Francs, turnover reached CHF400.0 million (US$439.3 million) in 2010, compared to CHF392.1 million in 2009.
Turnover in the English-speaking Caribbean gradually recovered from the lows seen in 2009. Other Caribbean businesses saw an even stronger continued upward trend throughout the year, Dufry said.
Business in Mexico experienced a setback in September due to the crisis of Mexicana, one of the two incumbent carriers in Mexico which stopped operating and has gone into “˜Concurso Mercantil’ (the Mexican version of a Chapter 11 process), resulting in substantially lower passenger numbers.
Some airlines have started to build up their flight schedule to this region, but the overall situation remained weak until year-end, Dufry noted.
Turnover of Region South America increased by +39.5% at constant exchange rates. In absolute Swiss Franc terms, turnover reached CHF713.3 million (US$783.4 million) in 2010, from CHF530.0 million in 2009.
Dufry said: “Our turnover growth was well ahead of the respective passenger growth and was driven by several initiatives that we implemented during 2010 in our Brazilian operations. For example, we fine-tuned the payment possibilities as we introduced the possibility for Brazilian customers to pay in up to seven instalments. Also we launched innovative promotions and sales incentive programmes. All elements together generated a solid increase in the spend-per-passenger on top of the strong passenger growth.”
Turnover of Region North America – which includes Hudson News in the US and Canada, as well as duty free shops in US locations – increased by +11.6% based on constant exchange rates.
In Swiss Franc terms turnover amounted to CHF755.8 million (US$830 million) in 2010, from CHF699.6 million in 2009.
The Hudson News business continued its positive organic growth trend as did the other operations in the US, Dufry said. This was further supported by an active development of the concession portfolio in the country with the opening of 66 Hudson News shops.
“Despite the economic environment in the US still being complex, we achieved a double-digit growth through a combination of productivity improvements, external growth and passenger growth,” the company added.
SUCCESSFUL HUDSON ROLL-OUT
The international roll-out of the Hudson News concept has also progressed well, Dufry said.
“We opened 74 Hudson News stores in the past two years outside the US and Canada,” it commented. “The performance of those shops has been very good in general and we will continue to develop the business model as well as to expand our shop network in line with our strategy.”
STRATEGY CONFIRMED
Dufry said that its development in 2010, as well as the medium-term expectations, confirms the company’s strategy (defined back in 2004) focusing on emerging markets and tourist destinations.
“Furthermore, the regional diversification of Dufry has again proven to be key to risk management, not only because of diverging economic performance but also looking at other events, such as the volcano ash cloud in April, and the heavy snowfalls in the northern hemisphere, to name a few,” it said.
“Hence the strong results of 2010 need to be seen in the light of our continued efforts in the past years. Whereas the implementation of the Efficiency Plan in 2009 focused on cash generation and safeguarding our profitability, in 2010, Dufry capitalized on its execution capabilities and flexibility, and grew organically as well as through new business opportunities.
“As a result the company consolidated its global leading position in the travel retail industry not only in terms of turnover but also in terms of profitability.”
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