Xavier Rossinyol: “Avolta delivered a resilient first quarter, despite the Middle East conflict, underpinned by disciplined execution across the business.”

The Middle East conflict had a first-quarter impact on Switzerland-based Avolta, the world’s largest travel retailer. Reported turnover in Q1 reached CHF2.96 billion/ $3.81bn** while core turnover* stood at CHF2.91bn/ $3.74bn, reflecting organic growth of +4.7%. This would have been +5.9% excluding the drag from the Iran war. At constant exchange rates, growth was +4.0% year-on-year (YOY).

However, at the reported growth level, the retailer’s revenue contracted by -4.8% in Q1, as a currency effect of -8.8% took its toll.

In a conference call this afternoon, CEO Xavier Rossinyol noted that as travel conditions in the Middle East have begun to stabilise – exemplified by the return of 96% of Emirates capacity – the region’s negative impact is reducing. Preliminary data from Avolta indicates that for March and April combined, organic growth was around +3.0%***, including an estimated Middle East impact of -3%. “In the past few days, it has been closer to -2%, but we will remain vigilant,” Rossinyol said.

By region, the war’s effect was clear as Europe, Middle East, and Africa (EMEA) had the weakest growth of +2.5%, reaching CHF1.37bn. North America was up by +3.9% to CHF907m, and the much smaller regions of Latin America and Asia-Pacific grew by +6.9% and +17% respectively (see chart below).

EMEA, for obvious reasons, delivered the weakest growth in Q1.

Business development advanced across both travel retail and food and beverage(F&B) in the quarter, with new concessions adding +0.5% to Q1 growth. Notable wins included Zurich Airport, a long-standing concession; Shanghai Pudong, Avolta’s duty-free entry into mainland China; and Toronto Pearson, where the new F&B contract expands an established duty-free footprint in North America.

Diversification’s helping hand

In a statement, the travel retailer said: “The group’s diversified geographic and business mix continues to provide resilience, while management remains focused on disciplined execution and is ready to take targeted actions, if required, to protect profitability and cash flow.”

How Avolta stacked by regional scale in Q1.

Looking ahead, Avolta said: “While visibility remains limited, confidence in delivering the medium-term outlook is unchanged.” The travel retailer is targeting organic growth of 5% to 7%, +20-40bps of core EBITDA margin improvement, and +100-150bps equity free cash flow (EFCF) conversion on average per annum. “This outlook is underpinned by the strength of industry fundamentals and our geographic- and channel- diversified model,” said Avolta.

The company added that while the Middle East conflict still has near-term risks, “current external uncertainties are expected to be temporary in nature”. Rossinyol said: “Avolta delivered a resilient first quarter, despite the Middle East conflict, underpinned by disciplined execution across the business. This performance reflects the focus and commitment of our teams worldwide. I would like to especially thank our colleagues in, and supporting, our operations in the Middle East, whose professionalism and dedication ensure continuity for our partners and our travellers every day.”

[* Core turnover excludes net sales from the motorway fuel business; income from fuel sales is included in core other operating income, ** FX conversions at today’s rate, *** All growth percentages following this one are organic, not reported]

READ NEXT: Avolta wins 12-year dining contract at Toronto Pearson

READ NEXT: Avolta confirms medium-term outlook after robust 2025