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NEWS/ANALYSIS: DUFRY GROUP Return to growth in Q4 ‘important achievement’


no doubt be keeping a close eye on developments in the coming months. A spokesperson at AENA recently


confirmed to TRBusiness it is working on an analysis phase to define the concession strategy, but declined to elaborate further on the details. Operational highlights include the


final stages of its Business Operating Model (BOM) implementation; CHF40m of efficiency savings were consolidated in the results with a further CHF10m to follow this year. A total of 34,800sq m of space was


refurbished in 2018. This included the arrival of the New Generation store at Heathrow T3 (2,500sq m); and Cancun T3 (1,800sq m). New operations covered 26,800sq


The Dufry Group returned a robust sales performance in 2018 despite a challenging year, notably in South America, as Luke Barras-Hill reports.


Above: Dufry opened a New Generation Store in T3 of London Heathrow Airport last year.


D


ufry Group’s turnover grew by 3.7% to total CHF8.7bn (US$8.6bn), with organic


growth nudging up +2.7 (like-for- like growth +1%; net new concession gains +1.7%). “Based on current indications of


our trading in 2019, we anticipate a continued gradual improvement in organic growth along the year,” read a statement. “In the first two months of 2019, total growth was above +3%. The growth improvement in early 2019 is mainly due to the contribution of new concessions.” Dufry says it expects to generate


further progress in 2019, with mid- term average organic growth in the region of between +3-+4%.


“The continued improvement seen in the first two months of 2019, with total growth at above +3%, confirms that we are moving in the right direction.”


Julián Díaz, CEO, Dufry Group 20 TRBUSINESS


Full-year 2018 EBITDA increased by 3.3% to CHF1.1bn ($1bn), with EBITDA margin stable at 12%. Gross profit lifted 4.4% to reach CHF5.2bn, with gross margin improving by 40 basis points. Free cash flow before interest and minorities totalled CHF617.1m compared to CHF467m.


AENA contracts to expire The travel retail juggernaut will be buoyed by a gradual return to organic growth in Q4 2018 (+1.8%) after posting a negative result in Q3 (-0.7%) due to headwinds in Spain, Brazil and Argentina. Selling expenses, 90% of which


are accounted for by concession fees, rose by 70 basis points as a percentage of turnover. About one third of that rise was


due to minimum annual guarantees across Dufry’s Spanish airport contracts and another 10 basis points due to new operations outside the airport channel. Dufry’s contracts at 26 Spanish


airports managed by operator AENA are due to expire in 2020 and it will


m of gross space including the start of operations on 16 cruise ships across 48 stores (4,000sq m); three stores at the MTR high-speed railway station in Hong Kong (1,500sq m); and 57 shops across North America (5,100sq m). Julián Díaz, CEO of Dufry Group


said: “2018 proved to be a challenging year for Dufry but we delivered resilient results. Besides managing the daily business, the teams made a major effort implementing the BOM throughout the whole year – a task that involved countries, divisions and headquarters alike and requested a close collaboration. “I am pleased with the organic


growth recovery in the fourth quarter. After organic growth being negative in the third quarter, this return to positive growth is an important achievement. Also, the continued improvement seen in the first two months of 2019, with total growth at above +3%, confirms that we are moving in the right direction. “Looking at our three key financial


metrics, in 2018 we continued to generate topline growth in most of our operations, driven mainly by organic growth. Our EBITDA margin reached 12.0% and we managed to generate significant improvements in both our free cash flow and equity free cash flow which increased to CHF 617.1 million and CHF 370.8 million, respectively.” «


APRIL 2019


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