Dufry shows clout with CHF 6,878.4m turnover; Autogrill deal aims at Q2 close

By Luke Barras-hill |

Dufry Group reported today (7 March) a 57% jump in core EBITDA to CHF 606.2 million/US$650.5 million in 2022 year-on-year with a margin of 8.8%, as the resurgence in travel demand boosted 2022 Group turnover to CHF 6,878.4m/US$7,380.5m.

Like-for-like growth of +77.9% in turnover (+76.1% organic) accompanied operating profit/core EBIT of CHF 502.4m, the latter of which was driven by a strong second half performance.

Gross profit margin stood at 61% in 2022 versus 56.5% in 2021, strengthened by ‘solid consumer demand, active and improved category management and adding new product lines as well as change in the geographical and channel mix’, read a statement.

Equity free cash flow totalled CHF 305.2m while net debt declined to CHF 2,810.7m compared with CHF 3,079.5m in December 2021, registering below pre-Covid levels and the lowest figure since 2015.

Xavier Rossinyol, Chief Executive Officer of Dufry Group, commented: “I am delighted to be reporting on a successful year for the business and proud of the achievements the Dufry team has delivered. While Covid-19 related restrictions in most regions globally remained in place at the beginning of the year, the easing of travel-related requirements since Q2 have uplifted demand significantly.

‘No shareholder dividends in 2022’

“Most importantly, we have seen robustness in travel-related spending despite macro-economic and operational challenges within the travel industry. Our turnover of CHF 6,878.4m came in above of projections – all the more remarkable considering the ongoing macroeconomic headwinds of inflation, rising interest rates and travel disruptions.”

As reported, the global travel retail juggernaut edged nearer to completing its deal for Autogrill S.p.A this month after successfully transferring Edizione S.p.A’s 50.3% stake in the latter, with the full transaction ­– including mandatory exchange offer settlement – expected to close towards the end of Q2.

Core EBITDA reached CHF 606.2 million with a margin of 8.8%, underpinned by an improved gross profit margin (61%), among other factors. Concession fees were still supported by some minimum annual guarantee relief in 2022. Source: Dufry. Click to enlarge.

Dufry estimates February year-to-date net sales growth of +71.3% versus the same period in 2022 at constant currency, noting healthy demand and positive trends across key indicators.

“However, we remain vigilant given limited visibility regarding the geopolitical environment, the economic situation and related consumer sentiment as well as global travel industry operational challenges,” it stated.

It adds that in view of the General Meeting of Shareholders, it has resolved to propose not paying a dividend for the business year 2022.

By region, turnover in Dufry’s largest market Europe, Middle East and Africa increased 108% on a reported basis (+120.7% organic; constant) to CHF 3,586m, stimulated by eager leisure demand across its operations in Turkey, Greece, Middle East, Southern Europe and Africa, despite flight disruptions and capacity cuts across European airports and by airlines.

Asia Pacific turnover jumped 67.6% on a reported basis (+64.8% organic; constant) to reach CHF 165.9m.

Despite countries such as Australia, Bali, and Cambodia reopening, other territories exercised caution by adhering to a zero-Covid approach or restrictive measures, reports Dufry.

The category mix has reflected consumer demands in line with the resumption of travel, including international routes. Duty free took a 57.4% slice of net sales and duty paid at 42.6%. The contribution from Dufry’s airport channels accounted for 91.4% of net sales. Source: Dufry. Click to enlarge.

The situation in China, which unlocked its international borders earlier this year, adversely impacted overall travel in the region. However, Macau, Australia, Indonesia and China (domestic) benefitted from steep increases versus the previous year albeit at a lower level versus other global regions.

At +68.8%, turnover growth in the Americas marginally outperformed Asia Pacific on a reported basis to total CHF 2,918.3m year-on-year (+62.7% organic; constant).

The best performing areas were the US – which was already benefitting from a rapid rebound – Mexico, Dominican Republic and Argentina, continues Dufry, while South American locations made ‘significant progress’.

Turnover from Distribution Centers was down 42.8% on a reported basis (-66.9% organic; constant).

Total retail space: 471,291sq m

The travel retailer says it is engaging with airports in the region on combined travel retail and F&B offerings to enhance travellers’ experiences.

For the year in question, the Switzerland-headquartered firm opened a total of 16,536 sq m of new shops and refurbished 32,772 sq m of sales space, corresponding to 3.5% and 6.9% of total space, respectively. Total retail space amounted to 471,591 sq m.

Dufry extended its partnership with Heathrow Airport for a further three years (until 2029) and struck concession agreements with Helsinki Airport, Finland; Sofia International Airport, Bulgaria; Ngurah Rai International Airport, Bali; Felipe Ángeles International Airport, Santa Lucia, México; Recife International Airport, Brazil; Chongqing International Airport, China, and at Colorado Springs Airport.

The new Hudson Nonstop travel convenience stores opened at Nashville International Airport and Dallas Fort Worth International Airport, the latter as a hybrid concept combining retail and F&B offers.

In line with its ‘Destination 2027’ strategy, Dufry recently unveiled a new Global Executive Committee and confirms it continues to focus on strengthening its sustainability outreach.

ESG Governance was reinforced at the Board of Directors level in 2022 through expanding the scope of the former Nomination Committee to the new Nomination and ESG Committee, chaired by the Lead Independent Director.

Emission reduction targets received official confirmation and validation from SBTi (Science Based Targets initiative), and Dufry says it has started to substitute its electricity consumption with 20% renewable energy.

Dufry CEO Xavier Rossinyol points to a disciplined capex performance in 2022, particularly during H1 due to ‘limited visibility on Covid-19 variants and broader geopolitical environments’. He says the group anticipates a more ‘normalised’ trading environment in 2023, as it continues on its ‘Destination 2027’ strategic path that includes a focus on geographical diversification, customer centricity, digitalisation, and a strong emphasis on people and ESG. 

Alongside publishing its first TCFD (Task Force on Climate-Related Financial Disclosure) Report for the business year 2022 to increase transparency on climate-related risks and opportunities, Dufry completed the Supplier Code of Conduct recertification process across North America, covering 59% of purchasing volume globally.

It says it has further expanded its diversity & inclusion engagement by introducing several group-wide initiatives, such as training for all employee and management levels across the Group and creating a community engagement strategy.

It adds that it has committed to supporting the communities affected in Turkey and Syria suffering from the devastating earthquake, with significant combined initiatives of the company and Dufry’s customers.

“During 2022, we have not only delivered on our financial targets, but also set the cornerstone for a prosperous future of our company as the global leading travel experience player,” continued Rossinyol. “Dufry’s new strategy ‘Destination 2027’ sets out the path including our focus on geographical diversification, customer-centricity and digitalisation, and a strong emphasis on our people and on ESG.

The ‘transformative’ combination with Autogrill has achieved several milestones: receiving all regulatory approvals and the transfer of the 50.3% stake in Autogrill S.p.A previously held by Edizione S.p.A. In due course, the travel retailer will launch a mandatory public exchange offer for the remaining Autogrill shares, with the full transaction expected to close towards the end of 2023. Source: Dufry. Click to enlarge.

“I want to thank our external business partners, including concession partners, brand suppliers, the financial community and our share- and bondholders who continue to support the company. Our common vision is to further develop Dufry and drive the travel experience revolution. My thanks go to our Chairman, Juan Carlos Torres, and the Board of Directors for their trust and support in evolving our company.

“A special thanks to Edizione and its Chairman, Alessandro Benetton, for their support in combining the two companies. Above all, I want to thank our employees for the extraordinary motivation and hard work they have given the company, demonstrating a great level of dedication and deserving my and our managements’ respect and gratitude.”

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