Lagardère Services – one of four divisions of the diversified French media conglomerate Lagardère – saw a much stronger first half than its sisters, Lagardère Publishing, Lagardère Active or Lagardère Unlimited. This allowed the group as a whole to confirm its guidance on total recurring EBIT before associates, which rose by €8m ($10.7m) to €113m ($151.3m).

 

The division – which incorporates LS Travel Retail – generated like-for-like sales of €1,852m ($2,480.5m) that were flat (-0.1%) mainly due to the weak distribution side of the business. However, this was far better than the other divisions which slipped by between -1.0% and -14.8% (see chart below).

 

Lagardère Services also produced the best recurring EBIT of €7m ($9.4m) and Lagardère Group acknowledged DF&TR’s key role in buoying its overall result, saying: “The good momentum in travel retail activities (+8.1% on a reported basis, +4.3% like-for-like), driven by the favourable trend in passenger traffic, development of Duty Free and Food Services, as well as the deployment of new concepts, allowed to partially offset the decline in printed press and the difficult advertising environment.”

 

 

 

Lagardère Services’ net sales of €1,852m in the first half were up +2.1% on a reported basis, and flat (-0.1%) on a like-for-like basis – the difference between them due to a positive scope effect (€71m) as a result of DF&TR acquisitions: primarily Gerzon in Amsterdam (€55m sales in 2013) and Airest in Italy (€216m sales in 2013). That upside was offset by a negative exchange effect (-€30m).

Excluding the impact of the ending of tobacco sales in Hungary – an impact that Lagardère says will not affect results in the rest of the year – the division grew +2.4% like-for-like over the half-year, with acceleration in the second quarter (+3.3%, after a Q1 performance of +1.5%).

 

LSTR SHINES WITH +4.3% LIKE-FOR-LIKE

In the first half, LS Travel Retail sales growth of +8.1% on a reported basis, and +4.3% like-for-like, was driven by growth in passenger traffic, consolidation of acquisitions, and the development of its Duty Free & Luxury, and Foodservice arms, with a focus on new concepts. The third arm is travel essentials.

 

Lagardère Services is also keen to point to an upturn in DF&TR in the second quarter, which posted +13.4% growth on a reported basis (+5.2% like-for-like).

 

The mix of the division has continued to change (see below) with DF&TR now making up 63% (four points higher than in H1 2013) with a 37% share for LS Distribution (press wholesale distribution and integrated retail) for which Lagardère is seeking a buyer in order to become a pure-play travel retailer.

 

 

Early last month, Chairman and CEO of Lagardère Services Dag Rasmussen (left) told TRBusiness: “For the time being there’s no deal done so it can be in two weeks or two months, or later. It’s very difficult to give an idea as to when it will happen. Right now there’s no deal on the table.” [To read the full 5-page interview with Dag Rasmussen, see the August issue of TRBusiness, out now.]

 

FRANCE FLAT, BUT EUROPE GROWS

In France, activity rose slightly over the half-year (+0.2%) with the company claiming “a good performance by the Duty Free & Luxury Foodservice segments, which offset the decline in print media markets at Relay, the impact of shops closings for modernisation works as well as strikes on the SNCF network in June”.

 

At partner, Aéroports de Paris, with which LS Travel Retail has valuable DF&TR joint ventures, revenue from retail (rents from shops, bars and restaurants, advertising, banking and foreign exchange activities, and car rental companies) grew by +3.0% in the same H1 period.

In Europe (excluding France), Italy posted a strong performance of +26% due to the ramping-up of activities at Rome’s Fiumicino and Ciampino airports (right) with three new stores: Luxottica, Victoria’s Secret and Montblanc coming in H2; Germany posted a +5.7% growth led by foodservice; and the UK was up +4.2% thanks to a recovery in passenger traffic with sales at Luton up by +9.4% and Glasgow by +12.4%.

In Central Europe, sales were still rising: +5% in the Czech Republic, driven by growth in foodservice and duty free, +4.2% in Romania, and +18.5% in Bulgaria.

 

Activity was also up sharply by +9.7% in North America after a weak 2013, with the disposal of the 34-strong High Street press retail store network in June being largely offset by 2013/2014 openings at Los Angeles, Houston, Detroit and JFK T8.

 

Growth was significant in Asia Pacific at +10.7%, but driven by the Asia side at +35.2% in consolidated sales whereas the Pacific saw net sales of +2%. In China and Singapore the overall result was thanks to a push on the fashion business, as well as some duty free developments in Australia.

 

LS Distribution activities declined by -6.6% on a like-for-like basis in H1 (but only by -0.5% when excluding the impact of the end of tobacco sales in Hungary), while diversification efforts and market consolidation virtually offset the decline in the print press market.

 

Recurring EBIT before associates was €36m for Lagardère Services, up €7m. This comprised €8m for DF&TR and down €1m for the distribution arm.