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“We continue to be impacted mainly in Brazil, Uruguay, Argentina and to a lesser extent in the British Caribbean operation due to external factors, but we are confident that this adverse environment will gradually start to normalize.“ |
Julián Díaz CEO Dufry |
INTERNATIONAL. Dufry Group turnover in Q1 2013 climbed by +1.7% to CHF736.4 million (US$785.5 million), the company reported today. EBITDA for the period reached CHF85.3 million (US$91 million), down by almost -13%, and net earnings stood at CHF15.4 million (US$16.4 million), around half last year’s figure.
Crucially, EBITDA margin in the first three months of 2013 reached 11.6% versus 13.5% one year earlier. The contract renewal signed for São Paulo Guarulhos Airport was the main driver for the shift in EBITDA margin, the company said. The contract, which includes higher concession fees as from the new concession date in November 2012, provides for a +60% increase in the retail space in the second half of 2013. It will also, the company said, “allow Dufry to alleviate current capacity constraints and to generate additional revenues”.
Organic growth in turnover contributed +1.8% and +0.7% when including extraordinary effects. Like-for-like growth was +0.8%, and new concessions, net of closings, contributed +1.0%. The effect of currency translation was positive by +1.0%.
Dufry said it had good turnover growth in Regions EMEA & Asia and US & Canada, as well as in Mexico and parts of the Caribbean. The performances in Brazil, Uruguay and Argentina as well as the British Caribbean remained “below average” as in previous quarters, said the group. In Brazil this was due to a weaker economy, the softer Brazilian Real versus the US Dollar and tight airport capacity. In Uruguay and Argentina, the impact of airline Pluna’s bankruptcy continues to be felt.
Dufry said it expects that organic turnover growth will accelerate in the second half of the year due to “normalisation in some locations and several projects that were concluded in the past quarters”.
Dufry Group CEO Julián Díaz said: “The performance of the first quarter 2013 follows the trends seen in the second half of 2012. The results in most of the locations are very positive. We continue to be impacted mainly in Brazil, Uruguay, Argentina and to a lesser extent in the British Caribbean operation due to external factors, but we are confident that this adverse environment will gradually start to normalize.”
The acquisition in Greece that Dufry completed on 22 April, 2013, will be fully consolidated from April onwards. The company noted: “The business will be an important contributor to turnover growth and profitability in the coming quarters and will compensate for the effects seen in the first three months of 2013.”
Turnover by Region
Turnover in Region EMEA & Asia grew by +6.9% in first quarter 2013 and reached CHF182.5 million versus CHF170.8 million in the previous year. In Europe, good performances were seen in France, Switzerland, Russia and Spain, and Italy was stable. In Middle East and Africa, Dufry had a strong performance in most markets including Tunisia, Morocco, Sharjah. In Asia, operations in Cambodia and China performed also very well, it said.
Turnover in Region America I stood at CHF190.5 million in first quarter 2013, compared to CHF197.0 million in the same period last year. Operations in Mexico showed an “excellent performance” as did other operations like Dominican Republic and Trinidad. The British Caribbean continued to be sluggish and the operations in Argentina and Uruguay continued to be affected by the bankruptcy of the Uruguayan airline Pluna in July 2012.
Turnover in Region America II decreased by -8.2% to CHF158.6 million in the first quarter of 2013. The economic slowdown, a softening of the Brazilian Real against the US Dollar, as well as capacity constraints in some of the airports continued to impact the performance in the region.
Turnover in Region United States & Canada increased by +7.4% to CHF189.8 million in the first quarter. Turnover was driven by a combination of like-for-like growth as well as the addition of new concessions and retail space.
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Profitability
Gross profit in Q1 2013 reached CHF432.7 million, and gross margin improved by 50 basis points to 58.8% versus 58.3% in the same period in 2012.
Selling expenses, as a percentage of turnover reached 24.1%, an increase of 230 basis points compared to the previous year. In absolute terms, they reached CHF177.7 million in 2013 versus CHF157.9 million one year earlier. The main reason for this increase was the contract renewal signed in Brazil at the end of last year as well as the growth of the business in EMEA & Asia and US & Canada.
Personnel expenses as a percentage of turnover improved to 15.7% in the first quarter of 2013 versus 15.8% in the same period last year, and were CHF115.9 million.
EBIT reached CHF37.8 million in the first quarter 2013 versus CHF55.3 million in year before.
Net earnings stood at CHF15.4 million versus CHF31.7 million. Net earnings attributable to equity holders reached CHF8.8 million.
Cash flow generation
Net cash flow from operating activities reached CHF94.5 million in the first quarter versus CHF58.2 million one year earlier. In the quarter, Capex stood at CHF21 million and Free cash flow stood at CHF73.5 million.
Net debt at the end of March 2013, was CHF948.4 million compared to the CHF951.3 million at the end of December 2012. Adjusting for the capital increase of CHF286.0 million done in October 2012, whose proceeds were used in April 2013 to finance the 51% stake of Folli Follie’s travel retail operations, adjusted net debt at the end of March is CHF1,234.4 million.
Priorities for 2013
Díaz said: “As we successfully concluded the acquisition of the travel retail division of Folli Follie Group last April, the focus will be to fully integrate the business into Dufry’s structure. The consolidation from April onwards will be an important contributor to profitability and top-line growth and will compensate for the effects seen in the first quarter 2013. Other priorities in the year are to increase our commercial area in Guarulhos airport in Brazil, and we will also work to deleverage our company using our strong cash generation.”
He added: “The internal reorganization announced last year has been in place and is already delivering results. Also, the new logistic structure has started and our objective is to maximize synergies and know-how of our company through the consolidation and development of Dufry’s commercial model, while strengthening our relationship with suppliers. The model aims to centralise our logistic operations in two main platforms: one in the Americas for that region and another in Europe for Europe, Africa and Asia. Our goal is to complete this project by mid-2014 and it will be an important driver to continue growing the company’s productivity and gross profit margin in the near future.”
Diaz said he was confident that “the second semester will show a better performance. As for the operation in Uruguay the effect of the Pluna bankruptcy may fade, as in our previous experience in other locations indicate. In Brazil, the new commercial space will open and with that bring an important step forward in terms of expand our operations and presence in this very important market. As far as other operations is concerned, such as US & Canada and EMEA & Asia, we are confident that the same performance presented so far will be replicated going forward as many opportunities in terms of expansion will come as well.”
