NEWS/INSIGHT: DUFRY GROUP
Manoeuvring Asia’s share among Dufry’s key 2018 aims
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been extremely good, especially in duty free and duty paid. In my view, both organisations – Division 4 and Division 5 (North America) – are well positioned to repeat a good year. We need to be optimistic about the Americas’ performance in 2018.
Fine tuning Asia’s commercial strategy to grab a greater slice of global sales remains a critical focus for Dufry Group this year. In an exclusive interview with Group CEO Julián Díaz, Luke Barras-Hill learns that success and opportunity in the Americas means Asia is still playing catching up.
Above: Dufry aims to increase Asia's share of global sales this year. [Pictured] The Atrium store at the famous Venetian resort in Macau.
T
hree pivotal areas were responsible for Dufry Group’s notable CHF8.4bn ($8.8bn)
result in 2017: organic growth, improved cash generation and reduced net debt. As the fulcrum behind the firm’s
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continued rise, Dufry CEO Julián Díaz says this three-pronged strategy remains sustainable in the short term, but he is ever-wise in noting that the longer-term viability of such an approach is not a question easily answered. Notwithstanding this, delivering value on top of current passenger growth remains a realistic prospect, TRBusiness hears.
“The possible opening of duty free shops on Brazil’s border following the approval and gradual increase in inbound allowances are good triggers for increasing and accelerating value.”
Julián Díaz, CEO, Dufry Group
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The Americas continues to deliver with Latin America posting impressive organic growth (+10.8; FY17 results) leveraged by giant Brazil plus the likes of Uruguay, Chile and Peru. Are you confident that the revival in Latin America is now being fully realised? So far what we have seen has been a replica of what happened in 2017. The whole continent, starting with Division 4 (Latin America and all divisions in Central and South America) is performing extremely well, especially in South America, Mexico and the Caribbean. What is most important for us is after two years of devaluation in the local currencies, we are seeing a partial recovery and better competitive advantages. Most countries in South America increased double-digit compared to the previous year and we have seen this so far in the first two months of 2018. Regarding North America, we listed the company [Dufry’s 100% owned subsidiary Hudson Group - Ed] in January. The performance has
Slowing inflation, falling interest rates and positive GDP growth in Q4 must be encouraging, but upcoming elections in Brazil, Colombia, Mexico, Paraguay and other countries presents some uncertainty. How is Dufry negotiating the potential challenges ahead? Uncertainty is not good for business and this is obvious today, but what I have seen in past elections [in the region] is stability is greater than in years gone by. An election process in any of these
countries is not generating a big change in terms of the performance of the business – different from 15 to 20 years ago when any election created huge uncertainty in the economy. As a consequence, uncertainty was reflected in the performance of retail, of which we are one part. In recent years, we have
understood the meaning of these changes and we try internally to manage these expectations in a way that generates value for customers. It is unlikely that today, in the type of countries and markets we operate in, elections would have a significant negative impact.
Spend per pax still has work to do to return to the highs of 2010. Are you confident that this trend towards airport privatisation in Brazil coupled with the move to increase the arrivals allowance upwards from $500 will help develop footfall and SPH? I think the potential in Brazil remains very large in terms of growth. Brazil is still the most interesting emerging
MAY 2018
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