Avolta said its key strategic growth projects are advancing as planned as it has seen solid and consistent growth for 2024.

Avolta said it has seen seven consecutive quarters of strong growth up to Q324, confirming its medium-term targets, and will cancel approximately 6.1 million treasury shares (4% of issued share capital) in 2024 in line with its reinforced shareholder focused capital allocation policy.

2024 reported turnover through nine months came to CHF10.3bn ($11.89bn) with a core turnover of CHF10,172m ($11.74bn). Organic growth  reached 6.6%, while like-for-like growth was slightly higher at 6.8%.

Q3 reported turnover reached CHF3.9bn ($4.5bn) while Q3 core turnover hit CHF3.8bn ($4.39bn) with organic growth at 5.7% and like-for-like growth at 5.9%.

Avolta said it remains confident in delivering its outlook and confirms its Destination 2027 targets: growing the business organically and through bolt-on acquisitions, expanding profitability and cash generation with a target leverage of 1.5x to 2.0x.

Xavier Rossinyol, CEO of Avolta, stated: “We are very pleased with our strong trading performance over the peak summer months which underscores our confidence in Avolta’s outlook for 2024 and the years beyond in line with our Destination 2027 strategy. Consistent with our strategy of traveler centricity, we have recently announced Club Avolta, a unique loyalty program available in all our locations worldwide.

Capitalizing on our global platform, we have a clear focus to grow the business organically expanding our profitability and cash generation, while targeting leverage of 1.5x to 2.0x. This focus on shareholder value is reflected in our reinforced capital allocation policy, according to which we will return excess cash to shareholders via dividends and potential share buybacks over the coming years. This starts with the cancellation of 4% of outstanding shares in 2024.”

Key operational highlights

Strengthening its local partnership with Mass Transit Railway (MTR) in Hong Kong, the company has entered into an agreement to acquire 100% of Free Duty at an accretive multiple, extending its presence to six locations, reaching an additional 150 million travelers, and significantly expanding its footprint in Hong Kong.

This regional acquisition, which is subject to customary conditions precedent to closing, accelerates the execution of Avolta’s Destination 2027 strategy in the APAC region, driving continuous revenue growth with attractive margins.

Avolta’s 9M performance showed growth in all regions except for Latin America.

Avolta launched Club Avolta in October, a loyalty program that brings together duty-free, duty-paid, convenience, F&B, brands, airports, airlines, hotels, and more across Avolta’s 5,100 outlets worldwide.

Avolta confirmed its core turnover growth target of 5%-7% per annum on average at constant exchange rates in line with its Destination 2027 strategy.

Key performance figures for Avolta’s 9M fiscal reporting.

Avolta noted it has a clear focus to: deliver organic growth; EBITDA margin expansion and higher EFCF conversion; and a clear commitment to drive shareholder value, as it continues to prioritise organic investment to drive growth.

The company said it will continue to selectively consider value-accretive cash funded M&A opportunities, maintaining a high threshold for strategic and financial returns.

Q324 results presentation

Speaking via webcast, Rossinyol and Yves Gerster, Chief Financial Officer for Avolta, covered much ground in relation to the retailer’s regional performance, the development of its hybrid concepts, its quickly developing loyalty programme, the progress of its digital transformation and the ‘Destination 2027’ strategy.

“We had very strong growth in EMEA and Asia Pacific, and very strong growth, also in North America. We had reported negative growth in LATAM, but if you correct for the Argentina effect, LATAM was also in line with the rest of the group,” noted Rossinyol, who added: “We are developing our hybrid concepts in a very healthy manner, we have 34 open stores that are hybrid, another 40 to come in the next couple of quarters. So we will reach 100 points of sale on hybrid very soon, and the market is clearly moving into that direction.”

To put that into perspective, hybrid concepts now account for 25% of the US tenders for which Avolta has submitted over the last nine months.

Gerster commented: “EBITDA came in excess of 1 billion Swiss francs, reflecting an improvement versus the last year performance of 40 basis points year to date, and if you look at the third quarter only by 60 basis points. We have achieved that on one hand by a very strong demand from our customers, which remains unbroken with a very clear trend. Improvements in regard to the productivity and a very strict cost control on all levels.

If you look at equity free cash flow came in at 445 million Swiss Francs for the nine months. That’s a significant improvement versus last year. We feel extremely comfortable with that. There’s just one point I want to mention in regard to the fourth quarter. The fourth quarter historically, is typically negative, in line with the seasonality of our business. With the financial net debt and the leverage the group has achieved in Q324 a leverage of 2.16% that’s the lowest level in more than 14 years.”

Xavier Rossinyol, CEO of Avolta, and Yves Gerster, Chief Financial Officer for Avolta, speaking via webcast to discuss Avolta’s 9M fiscal report and key operational developments.

With regards to its recently released loyalty programme, Rossinyol noted: “We launched it three, four weeks ago, and already the key numbers on engagement, subscription, download of apps, are all increasing 40, 50 percent. But even more importantly, in the last few weeks, the sales the  under club Avolta program have reached 6.3%, which is triple what we used to have with the separate loyalty programmes.

On the sales we’re already having, we are getting much more information, and this. Is a clear step on the digital and data transformation we announced a couple of years ago. It’s a tangible example. We focus on the efficiency of the existing platform, but at the same time, we are identifying these transformative initiatives mainly link to the digital transformation that can generate a different type of company, and if I may say, over the years, even a different type of industry.”

Speaking about Avolta’s ‘Destination 2027’ strategy and the acquisition of Free Duty in Hong Kong, Rossinyol had the following to say: “We made very clear that our focus is organic growth, but we also said that from time to time we can address inorganic, selective acquisitions. This acquisition which is subject to final regulatory approval. So we expect the closing to happen at the end of this year, beginning of next year. It’s a small company, 250 million in revenue, that is a perfect fit for our development in Asia Pacific.”

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