Milan-listed duty free and travel retailer, World Duty Free, saw first half revenue climb in double digits (+23.7%) to €1,294.9m/$1,429m, but the so-called linearisation of concession fees at Spanish airports plus other one-off costs, has turned a profit of €28.0m/$31m in H1 2014 into a €52.8m/$58.3m loss.

During the period WDF has also completed the appointment of advisors to handle “the envisaged mandatory tender offer by Dufry”. In light of current trading, WDF has also changed its full-year guidance (see below) due to currency flux.

WDF’s net financial position fell from €969.5m at 31 December 2014, to €936.6m.

Explaining its loss for the period, the company says: “This was mainly driven by the provisions for restructuring costs related to the UK and Spain corporate headquarters for €10.8m, the linearisation of concession fees of €39.9m and provision for the onerous contract affecting Düsseldorf of €17.0m.”

The sales evolution at the German airport has been “significantly lower than expectations” and WDF adds that operational and management performance is “not in line with the projections”.

HIGH SALES FROM MOST MARKETS

The high H1 sales growth of +23.7% (+12.9% at constant exchange rates) was helped by strength across almost all markets, the positive impact of exchange rates; and an additional €59.9m in sales from an expanded perimeter. These included operations in Tenerife Sur, luxury stores in Spain, Helsinki’s operations, Eurotunnel France and new business acquired from HMSHost by WDF in Q1 2015 (at Atlanta and Oakland airports and the Empire State Building).

Adjusted Ebitda was up +6.0% to €128.2m but Ebitda margin fell from 11.6% in H1 2014 to 9.9%, driven by the adjustment in rents: Spanish airports, excluding the Canary Islands, are currently in Minimum Annual Guaranteed levels, while Heathrow saw concession rents increased when the contract was extended last October.

The adjusted Ebitda numbers include the recovery of annual concession fees paid in advance to AENA which amounted to €18.7m in H1 2015, versus €14.7m in the same period of 2014.

REVENUE BY CHANNEL & REGIONAL SEGMENT

In H1, revenue related to the airport channel amounted to € 1,254.7m or 96.9% of the total revenue generated in 2015.

The group also supplies wholesale commercial services which amounted to €40.2m of 3.1% of the group’s total revenue, up from €22.8m in the same period of 2014.This rise is due to an increase of the wholesale activity in Saudi Arabia and new stores in locations outside airports such as Eurotunnel France and in the Empire State Building.

In the United Kingdom revenue reached €528.9m, up +14.7%, due to the strong pound versus the euro. Stripping that out, constant exchange rate growth was just +2.3%.

Rest of Europe sales were €382.5m, up +26.4%, of which some €32.1m was from non-airport businesses, predominantly wholesale. Rest of Europe airport sales were €350.4m, up +23.7% of which Spain’s airport sales hit €295.6m, a rise of +19.4%.

In the Americas revenue increased by +22.9% to €285.8m (at constant exchange rates). The US retail business grew faster at +34.8% to €107.6m. The acquisition of stores in Atlanta, Empire State and Oakland contributed €19.5m sales, while organic growth of +12.1% reached €88.1m.

WDF’s smallest revenue region, Asia and Middle East, was flat at €97.7m (at constant exchange rates).

2015 GUIDANCE: SALES & EBITDA UP

In the period ending 26 July, WDF delivered airport sales of €1,514.69m, a growth rate of +22.8% compared to the same period of the previous year.

The 2015 guidance, disclosed during WDF’s Q1 results, has been revised due to exchange rates says the company. Total revenue in 2015 is now expected in the range €2,800m-2,850m (previously €2,705m-€2,745m); adjusted Ebitda between €300m-315m (previously €290m-€305m) while the net financial position is expected to be between €860m-€900m (previously €820m-€870m).

ADVISORS FOR DUFRY OFFER

Ahead of the launch of a mandatory tender offer from Dufry for 50.1% of WDF’s share capital, WDF has completed the appointment of advisors.

The company will be supported by Barclays Bank as an independent expert while Clifford Chance and Studio Legale Lombardi-Molinari-Segni will advise in legal matters. Financial advisers are Deutsche Bank and Mediobanca.