Autogrill has reported a second quarter net profit of E.46.4m ($66.6m) with revenue falling 0.8% to E.1.44bn ($2bn) and a first half net profit of E.29.6m ($42.5m) alongside E.2.65bn ($3.8bn) in revenues for the same

period. The company is maintaining its 2009 revenue forecasts of between E.5.72bn to E.5.9bn ($8.21bn to $8.47bn) and forecast EBITDA between E.575m and E.625m ($826m and $898m).

Travel Retail & Duty Free posted revenues down 0.2% (and by -5.2% on a proforma basis) of E.393.3m ($564.7m) in the second quarter, while first half revenues rose by a flattering 30% to E.701.6m/$1bn – although this was 4.1% down on a proforma basis. The initial increase quoted by Autogrill was inflated due to the increased contribution from Aldeasa (consolidated on April 1 2008) and the acquisition of World Duty Free Europe (consolidated on May 1 2008).

Autogrill freely admits that when compared with the first half of 2008 on a proforma basis, group revenues actually fell by 6.6% reflecting the impact of the recession. At the same time, its mix of businesses changed only slightly in the first six months of this year, with airports accounting for 56%, motorways 30%, In-Flight 7%; railways and maritime stations 2% and other 5%.But the good news for the travel retail, motorway toll and F&B company is that its net debt fell by E.220m ($316m) at the end of June to E.2.09bn ($3bn) and it has continued to cut spending and dividends to keep its debt ratio at 3.5 times or below – to avoid debt refinancing.

TRAVEL RETAIL & DUTY FREE

As mentioned, the Travel Retail & Duty Free division posted Q2 revenues of E.393.3m ($564.7m) corresponding to a -0.2% decrease on the E.393.9m ($565m) achieved on the same period one year ago. But compared to the 2008 proforma figure, the drop in revenues actually corresponded to a negative 5.2%.

In the second quarter, Europe accounted for sales of E.312.1m ($448.2m) corresponding to a 6.1% decline on a proforma basis. By contrast, the rest of the world contributed E.81.2m ($116.6m) – a decline of 1.6%. Within the European numbers, the UK accounted for E.180.9m ($259.8m) in sales – a 5.8% increase on a proforma basis, compared with sales of E.131.2m ($188.4m) in Spain – an 18.6% decline on a proforma basis.

In the first half, sales in Europe declined by 7.2% to E.536.1m ($769.9m), compared with sales in the rest of the world which rose 7.3% to E.165.5m ($237.7m ). Within the European numbers, the UK accounted for E.313.7m ($450.5m) – a 4.9% proforma sales increase, while sales in Spain plummeted by 20.1% to E.222.5m ($319.5m).

Autogrill management said that it was pleased with sales progress made by World Duty Free Europe (WDF) in the UK and at Heathrow Airport in particular, but Aldeasa's sales at Spanish airports continued to suffer from the collapse in visitor numbers that has been so noticeable over the last six months in particular. Autogrill said that the influence of swine flu had also depressed overall passenger traffic levels.

In its financial statement, Autogrill pointed to a positive UK airports' performance by WDF and particularly at Heathrow, where the commercial initiatives and the weakness of Sterling helped to offset the drop in traffic, pushing sales up by 5.8% on a proforma basis. But sales at Aldeasa's Spanish airports remained weak and much reduced traffic levels continue to be a concern for the parent company. Traffic was down by 13% at Spanish airports in the first half, compared with the 20% fall in sales at Aldeasa's shops.

Having said this, Autogrill singled out Madrid Barajas Airport as an exception, reporting solid per passenger spends. Equally encouragingly it also reported a 'very positive' sales trend in the UK, where sales (on a proforma basis) grew by 4.9% against a much bigger 8.2% decline in traffic at BAA airports and Manchester Airport. The Travel Retail & Duty Free division also benefited from the depreciation of the UK pound sterling in its UK airports in particular, although it is obviously a different story for UK passengers visiting Spain.

Investment levels at the division in the first six months of the year totalled E.13.9m ($19.9m) compared with E.25.8m ($37m) in the corresponding first half of 2008, with the main spending in 2009 allocated to eight new Aldeasa shops covering 2,480sq m and costing E.4m ($5.7m) in Barcelona Airport's new terminal [=5-year contract-Ed]; the expansion of its Amman store operation in Jordan and the upgrading of T2 in Manchester Airport in preparation for the introduction of the 'Biza' concept.

Autogrill management said that it had anticipated the negative trend in traffic and demand last year and correspondingly expanded the reorganisation programme originally intended solely for the integration of the retail companies to include food & beverage services. Autogrill Ceo Gianmario Tondato Da Ruos said: ‘The efficiencies implemented resulted in an increase in margins and net cash flow generation from operations, despite the significant increase in rents, which demonstrate our Group?s ability to be proactive.?

The company added that it was encouraged to see that the recession showed 'signs of relative stability' in the second quarter which were 'particularly evident in several countries' and it added that in terms of traffic, the negative airport numbers were compensated in part by 'the first signs of recovery' in motorway traffic in the US and Italy – its most important markets for this separate division.

AUTOGRILL'S OTHER BUSINESSES

In the second quarter Autogrill reports that Food & Beverage sales recovered slightly with respect to the first few months of the year, with several channels and geographical regions in particular, growing sales by +0.2% to E.945.9m ($1.357m) – although sales were down by -5.9% on a proforma basis. HMSHost achieved first-half sales of $1.1bn, a drop of 11.1% compared with the first half in 2008. HMSHost's airport sales fell by 12.4% to $904.5m within the overall total of $1.1bn.

Motorway traffic showed positive signs both in Italy (+1.6%) and in the US in the areas served by the Group (+0.3%). Though still negative (-8.6%), the drop in airport traffic in the United States held with respect to the first quarter of the year. Autogrill said that the first half was 'penalized' by the lacklustre beginning of the year and closed, despite the improvements recorded in the second quarter, once again with negative traffic figures (airport traffic in North America, -10%; motorway traffic in Italy -2.4%).

Meanwhile the In-Flight division posted second quarter revenues down 11.6% to E.102.6m ($147.2m). However, Autogrill said that the significant growth of the international business – particularly in Australia and the Middle East – offset the drop in sales in the UK which was heavily impacted by the bankruptcy of several airlines (Silverjet and Excel). In the first half, revenues generated by the segment fell by 12.6% to E.182.2m ($261.4m).

Last, but not least, Autogrill announced that the Boards of Autogrill S.p.A. and the wholly-owned subsidiaries Aviogrill S.r.l. and Nuova Estral S.r.l. have approved the proposed merger by incorporation of Aviogrill and Nuova Estral in Autogrill. The company says that the purpose of this merger transaction is to simplify the corporate structure of the Group?s activities in Italy in order to reduce general expenses.

As Autogrill holds 100% of both Aviogrill and Nuova Estral, no shares of Autogrill will be transferred in exchange for the share capital of the companies Aviogrill and Nuova Estral held by Autogrill which will be voided.