Avolta Ag · SIX:AVOL
Avolta — Dufry — Q1 2019 Earnings Presentation
43 slides from Avolta's earnings presentation, May 14, 2019
Slide 1: Q1 2019 Results
Q1 2019 Results Positive start in 2019 May 14, 2019
Slide 2: Legal Disclaimer
Legal Disclaimer Information in this presentation may involve guidance, expectations, beliefs, plans, intentions or strategies regarding the future. These forward-looking statements involve risks and uncertainties. All forward-looking statements included in this release are based on information avai
Slide 3: Agenda
AGENDA 1. Q1 2019 operational performance Julián Díaz 2. IFRS 16 Yves Gerster 3. Q1 2019 financials Yves Gerster 4. Conclusion Julián Díaz 3_ Q1 2019 Results Presentation
Slide 4: Q1 2019 operational performance
1 Q1 2019 operational performance 4_ Q1 2019 Results Presentation
Slide 5: Positive start to the year with organic growth acceleration
Positive start to the year with organic growth acceleration KPIs adjusted with the implementation of IFRS 16 Inherent seasonality of the business with second and third quarter being the most important ones to further accentuate after IFRS16 implementation 5_ Q1 2019 Results Presentation
Slide 6: Highlights Q1 2019 (1)
Highlights Q1 2019 (1) • Solid turnover growth by +3.4% to CHF 1,882.6 million Organic growth • Organic growth excluding South America of +5.6% acceleration • Organic growth acceleration to +2.0% in Q1 2019 from Q1 2018 (despite shift of Easter to Q2) • Gross profit margin increased by 40 bps to 60.
Slide 7: Highlights Q1 2019 (2)
Highlights Q1 2019 (2) • Shop development plan progressing as expected Ongoing expansion of • 9,100 m2 of retail space opened across 86 shops, through new openings retail space and and expansions refurbishments • 14,400 m2 of commercial area refurbished in 27 shops • Contracts signed that will add 1
Slide 8: Organic growth
Organic growth Organic growth evolution • Solid turnover growth of 3.4% in Q1 Organic growth 2019 8.0% continued in 7.1% 7.0% • Organic growth of +2.0% positive territory 6.0% 5.0% 4.2% • Organic growth excluding South 4.0% America resulting in +5.6% 3.0% 2.0% 1.8% 2.0% 1.0% Resilient 0.0% -1.0% • O
Slide 9: Division Europe and Africa
Division Europe and Africa Organic growth Europe and Africa • Healthy performance in UK during Q1 Healthy driven by marketing initiatives 3.0% 2.4% performance in 2.0% • Positive contribution from the new the UK 1.0% 0.8% cruise business in the UK 0.0% • Improvement seen in Spain, with positive -1.0
Slide 10: Division Asia Pacific and Middle East
Division Asia Pacific and Middle East Organic growth Asia Pacific and Middle East • Strong organic growth in Q1 due to new Strong organic concessions 25.0% 22.9% growth in Q1 21.1% • Duty free stores at MTR high-speed due to openings 20.0% 17.3% train terminal in Hong Kong 14.7% 15.0% • Duty free st
Slide 11: Division North America
Division North America Organic growth North America Good organic growth in Q1, mainly from Ongoing strong like-for-like 8.4% performance in 9.0% 8.0% 7.3% 7.1% • Duty-paid business continued with a North America 7.0% healthy performance 6.0% 5.3% 5.0% 4.7% • Growth in duty-free operations impacted 4
Slide 12: Division Central and South America
Division Central and South America Organic growth Central and South America • Central America: Good performance in Performance in Mexico and the Caribbean 15.0% South America 9.0% • The cruise business continued to grow 10.0% mainly affected high double digit from the additional new by Brazil and 5.
Slide 13: Global passenger growth remains strong
Global passenger growth remains strong International PAX growth – Q1 2019 International PAX growth forecast Healthy 12% 2019 2020 2021 international 9.5% PAX growth 8% 5.7% 5.4% 5.8% Europe 5.7% 5.3% 5.0% 3.9% 5.4% Africa 7.5% 3.3% 3.2% 4% 2.3% Asia Pacific 6.5% 6.4% 6.1% 0% Middle East 1.8% 4.4% 3.
Slide 14: Dufry has opened 9,100 m2 of gross retail space in Q1 2019
Dufry has opened 9,100 m2 of gross retail space in Q1 2019 9,100 m2 of gross retail space opened 9,100 m2 of gross • Casablanca: 4 new stores (430 m2) retail space Europe & opened in Q1 Africa • Helsinki: 1 new store (310 m2) 27% 2019 Central and • China: 6 new stores (330 m2) South America 31% • Ru
Slide 15: 18,800 m2 of signed space to be opened in 2019/20
18,800 m2 of signed space to be opened in 2019/20 18,800 m2 signed space • Further expansion in our cruise division 18,800 m2 of with operations in additional 16 ships signed space to • New store in St. Petersburg totaling more Europe & Africa 10,100 be opened in than 900 m2 2019/20 Asia Pacific and
Slide 16: Resolutions of Ordinary Annual Shareholder Meeting on May 9th
Resolutions of Ordinary Annual Shareholder Meeting on May 9th Cancellation of the 3,304,541 acquired in share repurchase Shares bought in program the share buyback • The total accretion of the share buyback program amounts to cancelled 6.5% Dividend of CHF Dividend of CHF 4.00 per share for 2018 bus
Slide 17: IFRS 16
3 IFRS 16 17_ Q1 2019 Results Presentation
Slide 18: IFRS 16 - Introduction
IFRS 16 - Introduction • Adopted new standard as of Jan 2019 • No restatement of 2018 accounts • New standard has significant impact on the presentation of the Financials • Brings leases to the balance sheet • Alignment of KPIs • No economic impact on Dufry • No impact on the way we run the business
Slide 19: IFRS 16 - Balance Sheet
IFRS 16 - Introduction • Leases brought to Balance Sheet as a Lease Liability and a Right of Use Asset • Lease Liability is the present value of future unavoidable lease payments (in case of Dufry fix MAGs) Balance Sheet • Discount rate on a contract by contract basis. Depends on start date, term an
Slide 20: IFRS 16 - Summary
IFRS 16 - Summary • Amount to be capitalized does not say anything about the quality or profitability of the contract • Capitalization varies massively depending on contract (MAG vs variable, length of contract, etc.) • Dufry seeks for long term contracts • Capitalization has negative impact on net
Slide 21: KPIs adjusted to IFRS 16
Adjusted / KPIs adjusted to IFRS 16 • Introduction of a set of KPIs adjusted to implications of IFRS 16 • EBITDA no longer suitable as proxy for underlying cash operating profit • KPIs • Turnover / Organic Growth • Adjusted Operating Profit (Adjusted EBIT) • Adjusted Net Profit / Adjusted EPS • Adju
Slide 22: IFRS 16 - KPIs: Adjusted operating profit (Adjusted EBIT)
IFRS 16 - KPIs: Adjusted operating profit (Adjusted EBIT) Adjusted operating profit ( Adjusted EBIT) 730 738 679 2018 Definition 593 post-IFRS 16 Operating profit (EBIT) 421.8 389 395 + Acquisition related amortization 316.5 = Adjusted operating profit (adjusted EBIT) 738.3 2014 2015 2016 2017 2018
Slide 23: IFRS 16 - KPIs: Adjusted Net Profit / Adjusted EPS
IFRS 16 - KPIs: Adjusted Net Profit / Adjusted EPS Adjusted Net Profit / Adjusted EPS 2018 Definition 7.31 7.50 post-IFRS 16 6.84 Net profit to equity holders -4.7 6.00 5.24 + Acquisition related amortization 307.4 = Cash net earnings 302.7 3.99 + Interest from lease liabilities 154.7 - Deferred tax
Slide 24: IFRS 16 - KPIs: Adjusted Operating Cash Flow
IFRS 16 - KPIs: Adjusted Operating Cash Flow Adjusted Operating Cash Flow 982 967 982 851 648 2018 496 Definition post-IFRS 16 Cash flow before working capital changes 1,986.0 - Lease payments, net -1,004.0 Adjusted Operating Cash Flow 982.0 2014 2015 2016 2017 2018 Pre-IFRS 16 Post-IFRS 16 • Good p
Slide 25: IFRS 16 - KPIs: Equity Free Cash Flow
IFRS 16 - KPIs: Equity Free Cash Flow Equity Free Cash Flow 2018 371 371 Definition post-IFRS 16 Adjusted Operating Cash Flow 979.8 +/- Changes in net working capital -4.1 - Income taxes paid -132.8 198 - Capex -251.1 143 + Interest received 29.5 111 = Free cash flow 621.3 - Net Interest Paid -169.9
Slide 26: Covenants – Amendment Financial Covenant Bank Financing
Covenants – Amendment Financial Covenant Bank Financing • IFRS16 requires an amendment of the financial covenants under the bank New covenant financing after IFRS 16 • Definition of Net Debt to remain the same but EBITDA to be replaced by a cash flow metric: Adjusted Operating Cash Flow • Adjusted O
Slide 27: Q1 2019 Financials
3 Q1 2019 FINANCIALS 27_ Q1 2019 Results Presentation
Slide 28: Organic growth
Organic growth Organic growth evolution Organic growth by division Q1’19 Organic growth 10.0% 20.0% 17.3% reaches 2.0% in 7.1% Q1 2019 4.2% 10.0% 5.3% 1.8% 2.0% 2.4% 0.0% 0.0% -0.7% -10.0% -10.8% Organic growth -10.0% -20.0% recovery since Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Europe & Africa Asia Pacific a
Slide 29: FX impact
FX impact FX translational impact on turnover • Translational FX turned positive in Q2/Q3 Positive FX 2018 due to weakening of the CHF impact in 4.0% 3.5% against all major currencies Q1 2019 2.0% 1.3% 1.4% • Translational FX impact was negative in 0.0% -0.5% Q4 2018 but returned to positive in Q1 2
Slide 30: Income statement: Pro forma Q1 18 adjustment for better comparability
Income statement: Pro forma Q1 18 adjustment for better comparability Q1 19 Q1 18 Comp- - in CHFm - Reported Pro-forma Reclass. IFRS16 impact Reported arable Note Q1 2019 Turnover 1,882.6 1,820.0 - - 1,820.0 according to Gross Profit 1,135.6 1,089.9 - - 1,089.9 Lease Expenses (325.0) (294.6) 31.
Slide 31: Adjusted Operating Profit and Adjusted Net Profit / Adjusted EPS
Income statement KPIs: Adjusted Operating Profit (Adjusted EBIT) and Adjusted Net Profit / Adjusted EPS Adjusted Operating Profit (adjusted EBIT) • Variation mainly related to: Q1 2018 Q1 2019 Pro-forma • Gross profit increase by CHF 45.7 million Operating Profit (EBIT) -30.9 2.4 • Increase in perso
Slide 32: Cash flow – overview
Cash flow – overview Cash Flow KPIs Q1 2019 Cash flow statement (CHF million) Q1 2019 Q1 2018 D% largely unaffected by Adjusted Operating Cash Flow 159.3 164.7 -3.3% IFRS 16 Equity Free Cash Flow (123.0) (103.3) 19.1% Cash flow generation influenced by business seasonality Adj. Operating CF seasonal
Slide 33: Cash flow statement
Cash flow statement Cash flow statement Adjusted Operating Cash (CHF million) Q1 2019 Q1 2018 Flow at similar Cash flow before working capital changes 386.4 164.7 levels to last Lease payments, net -227.1 - year Adjusted Operating Cash Flow 159.3 164.7 Changes in NWC -171.0 -130.8 Income tax paid -0
Slide 34: Cash flow – free cash flow
Cash flow – free cash flow Core Net Working Capital (1) Increase in net 600 8.0% working capital 6.3% 7.0% 550 5.9% NWC (as % of Turnover) related to new 5.6% 5.3% 5.5% 5.6% 6.0% NWC (CHF million) 4.7% 4.9% 4.9% 500 concessions and 5.0% 450 4.0% performance in 550 3.0% South America 400 444 461 498
Slide 35: Balance sheet
Balance sheet Summary balance sheet as per 31.03.2019 Intangible assets (CHF million) 31.03.2019 31.12.2018 Variation mainly Right of use assets 4,276 0 4,276 generated by Concession right finite life 3,086 3,086 0 acquisitions Goodwill, Brands, Conc. rights indef. life 2,906 2,918 -12 Other intangi
Slide 36: Financing: Net Debt Evolution
Financing Net Debt Evolution Net debt of CHF • Deleveraging remains as one of the main 4,000 3,423 million focus point for Dufry 3,500 • 2018 net debt affected by Hudson IPO (CHF million) 3,000 3,687 proceeds, share byback program and 3,210 3,151 3,088 3,286 3,423 purchasing of treasury shares 2,500
Slide 37: Financing: Debt by currency and maturity
Financing Debt by currency Dufry has a well • Credit lines by currency mirrors cash CHF balanced debt 7% generation structure, matching cash GBP EUR flows. 25% 40% USD 28% Debt maturity profile as per 31st Mar. 2,500 • Well balanced maturity profile with no 2,000 Dufry’s financing maturities until 2
Slide 38: Conclusion
3 CONCLUSION 38_ Q1 2019 Results Presentation
Slide 39: Conclusion & Trading update
Conclusion & Trading update • Positive start of the year despite challenging conditions in some key markets Continuation of positive trends • In the first quarter of 2019, performance continued to improve, with organic April 2019 growth at around +2%. The improvement is related to a number of factor
Slide 40: Appendix
Appendix 40_ Q1 2019 Results Presentation
Slide 41: Turnover growth
Turnover growth Growth components Organic growth reaches 2.0% in Q1 '18 Q2 '18 Q3 '18 Q1 '19 Q1 '19 Q1 2019 Like for Like 4.9% 2.3% -0.9% -1.4% -1.3% New concessions, net 2.2% 1.9% 0.2% 3.2% 3.3% Organic growth 7.1% 4.2% -0.7% 1.8% 2.0% Organic growth FX impact -0.5% 3.5% 1.3% -1.0% 1.4% recovery si
Slide 42: Dufry's Segmentation Q1 2019
Dufry’s Segmentation Q1 2019 Dufry by Division Dufry by Category Balanced concession Latin America Perfumes and Confectionary, cosmetics Food and portfolio across 21% Europe & Africa 30% Catering 18% divisions 39% Other Wine and 7% Spirits Literature and 16% P&C, Food and North America 24% Publicati
Slide 43: Thank you
Thank you © DUFRY