EMEA leads the charge as Lagardère TR revenue growth tops 100% in first half

By Luke Barras-hill |

Lagardère Travel Retail is confident of a strong rest-of- year performance, but cautions on the ramifications of the economic crisis and war in Ukraine.

Lagardère Travel Retail has posted €1,688 million/$1,772 million in revenue in the six months ending 30 June – up  +97.2% on a like-for-like basis (+103.2% reported).

Growth of +97.5% (like-for-like) in the second quarter outpaced that of the first at +96.8%, as all regions notched positive performances.

Europe, Middle East and Africa (excluding France) delivered growth of +148.2% compared to the same period in 2021 (down 16.5% against H1 2019), buoyed by loosening travel and health restrictions and rallying regional and transatlantic traffic, particularly in Western Europe and Poland.

Rebounding traffic helped the Americas jump 78.5% year-on-year (down 4.2% versus H1 2019) as it benefitted from healthy returns from the US (+64.2%) and Canada (+584%) due to favourable comparisons on Q2 last year due to health restrictions in place at the time.

Asia Pacific revenue climbed 1.6%, with China’s zero-Covid policy continuing to weigh heavily on the recovery of international and domestic air travel.

Recurring EBIT increased by 122% to €26m/$27m for the period in question.

Defining win in Paris

This month, the travel retailer successfully defended its business in Paris after emerging as the victor in a tender to become the partner of Groupe ADP’s Extime Duty Free Paris joint venture. 

The new JV, the subject of an exclusive interview with Lagardère Travel Retail Chairman and CEO Dag Rasmussen, will be responsible for the design, development and operation of nearly 150 duty free and fashion outlets at Paris-Charles de Gaulle and Paris-Orly Airports for a period of ten years.

Source: Lagardère Group. Click to enlarge.

Lagardère Group revenue totalled €3,027m, up *38.6% like-for-like (+45.8% reported).

Group recurring EBIT totalled €107m, up by €104m compared to recurring EBIT of €3m in first-half 2021.

Net debt stood at €1,961m as of 30 June 2022, compared to €1,535m at 31 December 2021. The 3.69x leverage ratio remains close to the 3.64x recorded at end-December 2021.

The high-profile takeover of the Group by French media conglomerate Vivendi SE is nearing a conclusion after the finalisation of a friendly public tender offer last month resulted in the latter upping the share capital it owns in Lagardère to 57.35%.

In December, Vivendi acquired the shares held in Lagardère by then-shareholder Amber Capital and crossed the 50% capital line in May.

However, the purchased shares and those acquired in the public offer do not carry voting rights until the takeover is formally approved by the competition authorities.

In an outlook statement, the Group says the travel retail division ‘is well placed to benefit from the resumption of commercial flights as and when the health situation permits’.

“Amid a significantly improved business environment, Lagardère Travel Retail is pressing ahead with its operational excellence drive launched during the crisis, enabling the division to increase its flow through target for 2022 to within a range of 10% to 15%, assuming higher business levels than in 2021,” added the statement.

Dag Rasmussen, Chairman and CEO, Lagardère Travel Retail.

Confidence, but uncertainty reigns

In an addendum to today’s results, Dag Rasmussen, Chairman and CEO of Lagardère Travel Retail, issued a statement noting his pleasure at the company’s consolidated revenue performance, one that he said is ‘testament to the dynamic recovery of air travel and to the continued mobilisation of our teams to create efficiency gains everywhere’.

“This is largely due to the strong rebound of traffic in the US and in Europe, both on regional and international scales,” he continued. “We’ve posted double to triple-digit growth in each region where we operate, with the exception of China where Covid and related sanitary measures have continued to severely hamper business performance in the first quarter.

“We have also achieved an operational result of €26 million, up €122 million compared to the first half of last year, and have managed to bring our flow-through (impact of sales decrease over operational result) down to an unprecedentedly low level: 6.7%.

“The remarkable performance in the first semester fuels our confidence for a strong rest of the year, even if uncertainty remains the name of the game. Most notably, we must be careful about the consequences the economic crisis and the war in Ukraine could create in months to come.

“We must also look closely at how the travel retail market is reshaping. There are certainly very interesting times ahead for our industry and we are confident that Lagardère Travel Retail is equipped to continue its steady development and growth.

“Our long-standing expertise to developing holistic customer journeys, via a three business lines model, is the right strategy – one we have been pursuing since 2012 – and we believe changing market dynamics will open up more opportunities for us to seize, not less.

“Our teams have continued to deliver remarkable efforts to realise the ambitions of our large-scale business transformation programme – LEAP – and we are fully on track to achieve the objectives we have set ourselves in terms of efficiency and productivity gains.

“We have renewed our contract with ADP to continue to deliver our operational excellence to passengers in Paris for the next decade; we have joined forces with AWPL in the Pacific to become the undisputed leader in travel essentials across the Pacific region; are seeking F&B leadership in the Middle East with a new partnership with HWH; and are continuing the dynamic development of our network across all three business lines.

Source: Lagardère Group. Click to enlarge.

“All these are some of the seeds which will fuel our growth for many years to come. Finally, we are becoming more bullish in terms of achieving CSR leadership, and have announced a market-leading ambition to be contributing to carbon neutrality by the end of 2023.

“I am very grateful to all the teams who have once again gone above and beyond to help the company achieve such performance, and I look forward to working with all of them to deliver a similar set of excellent results for the full year.”

*Variations between reported and like-for-like revenue linked to a €103m favourable currency effect (€72m to the US dollar, €10m to the pound sterling and €9m to the Chinese yuan).

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