The Dublin Airport Authority (daa) reports that its international travel retail business ARI (Aer Rianta International) saw a decline in profits and minority interests of €13m ($14.6m) last year, down to €11m ($12.3m) from €24m ($27m) in 2017.
Daa reports that profit after tax, including non-controlling interest, reached €13m, down from €30m in 2017.
Having said this, in ARI’s financial statement, the company published a ‘managed turnover’ figure of of €1.1bn ($1.23bn) in 2018; a 4% increase year-on-year. Turnover increased by 7% on a like-for-like currency basis.
ARI attributes the decline in profits to ‘higher concession fees’ it is paying in Beirut and Oman, after the company retained key contracts at the airports, following its success in two separate tenders.
RESTRUCTURING IN CYPRUS
It also cites the impact of a restructuring programme in Cyprus – where it operates at airports in Larnaca and Paphos – and continued investment in ARI’s strategic development as ‘affecting the results’ in 2018.
“ARI had a challenging year in 2018 in profit terms, but we are continuing to invest in our stores and our people and are seeking new markets to expand our business,” says ARI Chief Executive Ray Hernan.
“We will continue to seek out opportunities to expand our airport footprint and leverage our position in the Middle East where we are the largest multi-site retail operator.
“We are excited by the announcement of the inaugural flight from Abu Dhabi Airport’s new Midfield Terminal this December where ARI Middle East will operate the P&C, sunglasses and jewellery outlets.
NEW TERMINAL IN BAHRAIN
“The new terminal in Bahrain is also scheduled to open later this year and we are delighted by the potential this will provide for our business, after recently negotiating a 10-year extension to our existing contract.”
ARI, which has businesses in 13 countries including its home market of Ireland at Dublin and Cork airports, also holds daa’s 20% stake in Düsseldorf Airport.
The financial results for ARI’s overseas businesses, includes ARI’s share of profits from Düsseldorf Airport, as reported in daa’s group results issued today*. The ARI figure does not include the performance of ARI’s Irish operations at Dublin and Cork airports.
In Ireland, total sales at Dublin and Cork airports, including retail and food and beverage sales by concessionaires, increased to a record €331m in 2018.
TRAFFIC GROWS IN IRELAND
Passenger numbers increased again at Dublin and Cork airports during the year and ARI continued to invest in a major upgrade of its stores in Terminal 2 at Dublin Airport.
Hernan adds: “We will also see the launch of a major new e-commerce platform that is regarded by ARI’s brand partners as best in class.”
Ireland will be the first country to launch followed by New Zealand, Cyprus and Canada. “The enhanced omnichannel capability will enable us to more effectively meet our customers’ expectations and provide an effective and targeted way to communicate with prospective customers,” says Hernan.
“ARI’s programme of multi-million euro refurbishments will continue, the most significant of which are at T2, Dublin Airport, and also Larnaca in Cyprus, where some 7,000 square metres of retail and F&B will be refurbished.”
DELHI ENJOYS RECORD YEAR
By region, ARI highlighted that although its operations in Cyprus benefitted from traffic growth of 7% at both Larnaca and Paphos airports, this was offset by a decline in average spend per passenger, particularly from Russia. “As a result, the sales performance was broadly flat year-on-year,” says ARI.
ARI’s joint venture operations at Delhi International Airport, in which it holds a 33.1% stake, enjoyed another record year, with turnover growing almost 15% year-on-year. A new arrivals store opened during the year and the departures outlet is currently being upgraded.
ARI says its retail operations in Canada and Auckland enjoyed strong sales performances in 2018, with sales in Canada increasing by 7% and Auckland by 11%. Auckland also benefitted from a major investment in the new flagship departures store, which was completed in December 2017.
Last year ARI signed agreements to enter new markets in Indonesia and Saudi Arabia. It has a stake in a retail operation at Terminal 3 of Jakarta’s Soekarno-Hatta International Airport and is also providing management support services to the duty paid operation in Terminal 5 at King Khalid International Airport, Riyadh, Saudi Arabia.
Passenger numbers at Düsseldorf Airport declined by 1% to 24.3 million last year due mainly to the fallout of the 2017 collapse of Air Berlin, but have returned to growth this year.
[*Daa’s Annual Report does not provide separate profit figures for ARI’s operations in Ireland, which are incorporated in the overall performance of the group.]