Release Date: March 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Avolta AG (DUFRY, Financial) reported a total turnover growth of 8.9% at constant exchange rates for 2024, with organic growth at 6.3%, excluding Argentina's effect.
- Core EBITDA margin improved by 40 basis points, reaching 9.4% in 2024, indicating efficient cost management.
- Equity-free cash flow increased by 32% to CHF425 million, demonstrating strong cash generation capabilities.
- The company successfully reduced its net debt to EBITDA ratio to 2.1, with potential to drop below 2 times if share buybacks are excluded.
- Avolta AG (DUFRY) announced a 43% increase in dividends to CHF1 per share, highlighting a commitment to shareholder returns.
Negative Points
- The Nordics region continues to lag due to restrictions on Russian airspace, impacting growth in that area.
- North America faced challenges such as plane delivery delays, capacity constraints, and extreme weather conditions, affecting growth.
- The Asia-Pacific region required restructuring to exit unprofitable operations, indicating past inefficiencies.
- Concerns about a slowdown in passenger traffic in the US could impact future growth if not offset by other regions.
- The company faces criticism regarding the Aena concession terms, with questions about leveraging additional space effectively.
Q & A Highlights
Q: Jon Cox from Kepler Cheuvreux asked about the slowdown in US passenger numbers and how Avolta plans to offset this if it continues throughout the year. He also inquired about the impact of various initiatives on spend per passenger.
A: Xavier Rossinyol, CEO, explained that despite a slowdown in the US, other regions have compensated for this, maintaining strong consolidated numbers. He noted that spend per passenger has improved by 3.5% to 4% on a consolidated basis, and they expect better performance in the US in the second half of the year.
Q: Gian Marco Werro from Zürcher Kantonalbank asked about the development of the conversion ratio in stores and the impact of Club Avolta on sales synergies between food and retail concepts.
A: Xavier Rossinyol highlighted that conversion rates have increased in locations where new concepts and entertainment have been introduced. Club Avolta has been instrumental in creating synergies, allowing targeted promotions and enhancing customer engagement across different segments.
Q: Laura Bucher from Octavian AG inquired about the Aena concession and the utilization of additional space, as well as the prevalence of hybrid concepts in US tenders.
A: Xavier Rossinyol confirmed that the Spanish renewal has been successful, with results ahead of expectations. He noted that hybrid concepts are increasingly being included in tenders, with about 20 airports already featuring them.
Q: Manjari Dhar from RBC Europe Ltd. asked about the potential for bolt-on M&A, the prevalence of hybrid contracts, and criteria for continuing share buybacks.
A: Xavier Rossinyol stated that while they have regional priorities for M&A, specifics are sensitive. He anticipates that 10% to 20% of the market could include hybrids in the future. Yves Gerster, CFO, added that share buybacks would continue if leverage remains within target ranges and no significant growth opportunities arise.
Q: Ali Naqvi from HSBC Bank PLC questioned the sustainability of Avolta's US market share and the group's return on capital employed.
A: Xavier Rossinyol emphasized that market share is not their primary focus, but maintaining cash returns is crucial. He assured that their market share has been stable and that recent wins at JFK demonstrate their strong market position. Yves Gerster did not provide specific return on capital employed figures due to competitive sensitivity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
