LSG Group targets 30% cost cuts across the globe as half-yearly sales fall

By Luke Barras-hill |

LSG Sky Chefs, Retail inMotion and Spiriant are brands in the LSG Group portfolio.

LSG Group – parent of onboard retail solutions provider Retail inMotion – will aim to reduce total global expenditure by at least 30% this year after a 50%  fall in year-on-year sales in the first half of 2020.

A dramatic plunge in passenger numbers and flights due to the coronavirus (Covid-19) crisis is having a ‘drastic impact’ on its catering division, the Group said in a statement.

Cost-cutting measures will form part of the ‘Levante’ project, designed to navigate the company through the pandemic while developing its business strategy.

ADJUSTED EBIT IN DEFICIT

Chief Executive Officer Erdmann Rauer said: “The aim of the project is to optimise our company in the medium term in terms of the size of its organisation and network, and to adapt it to changing market conditions with fewer flights and lower passenger and service volumes.

“In the long term, we are thus also changing our product range according to the ‘new normality’ and want to actively bring about change in the airline catering industry. We see that our customers are ready for change, and we are ready to support them with our employees.”

Group revenue totalled €814 million/$959 million in the first six months of this year, while adjusted EBIT (earnings before interest and taxes) recorded a deficit of -€195m.

Project and hiring freezes, short-term work and temporary closures were introduced at the beginning of the crisis to mitigate against its impacts.

Chief Financial Officer Dr. Kristin Neumann added: “Thanks to our solid liquidity position and the measures we implemented on short notice to safeguard that liquidity, we were able to cushion the initial slump in sales and earnings.

“However, none of us knows how long this crisis will last, and it is obvious that only long-term solutions will help us reduce our costs sustainably and at the same time give the company more flexibility and a future.”

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