Lagardere Sa · EURONEXT:MMB
Lagardere Sa — Lagardère Travel Retail — Investor Day (March 2016)
80 slides from Lagardere Sa's investor day presentation, Mar 24, 2016
Slide 1: Lagardère Travel Retail 2016 Investor Day
24 March 2016 Lagardère Travel Retail 2016 Investor Day
Slide 2: Lagardère 2016 Investor Day Agenda
Lagardere LAGARDERE 2016 INVESTOR DAY - Thursday 24th MARCH, 2016 Lagardére Travel Retail Head Quarters (c/o Allen&Overy) 52, avenue Hoche — Paris 75008 = Welcome speech = We deliver - AGENDA - Amaud Lagardére Dag Rasmussen = An attractive travel retail market Dag Rasmussen & Frédéric Chevalier = Aw
Slide 3: Agenda
Agenda I. We deliver II. An attractive travel retail market III. A winning positioning and a clear strategy IV. A compelling financial performance V. A major step forward in North America VI. The plan towards profitable growth VII.2015-2019 guidance
Slide 4: We deliver
Agenda I. We deliver II. An attractive travel retail market III. A winning positioning and a clear strategy IV. A compelling financial performance V. A major step forward in North America VI. The plan towards profitable growth VII.2015-2019 guidance
Slide 5: Strong growth in the past four years
Lagardère Travel Retail has experienced a strong growth in the past four years 2015 2015 vs 2011 €3.1bn proportional sales1) + €1bn prop. sales €165m x 2 prop. recurring EBITDA proportional recurring EBITDA2) 31 countries + 12 countries 220 airports + 100 airports 16,000 employees 1) Travel retail p
Slide 6: A pure travel retail player
A pure travel retail player Distribution Achieved New almost financial corporate divested guidance identity 6
Slide 7: A remodeled group following the sale of the distribution business
A remodeled group following the sale of the distribution business IFRS consolidated sales and recurring EBIT (€m, 2011-2015) +28% Distribution +6% CAGR 2,546 Travel Retail 1,986 1,738 IFRS Consolidated 964 sales 2011 2015 +100bps +20% CAGR 72 68 Recurring EBIT 33 34 2011 2015 Source: Lagardère Trave
Slide 8: We are delivering our financial commitment
We are delivering our financial commitment 2012 and 2014 Investor Days’ guidances Guidance June Guidance May 2011 2012 2013 2014 2015 (2011 to 2016) (2013 to 2016) Proportional +10% 10.5% +5% to +10% 8.6% sales1) 2,127 CAGR CAGR per annum 2011 - 2013 per annum 2013 - 2015 Proportional recurring +0.5
Slide 9: A new corporate identity to materialize our positioning
A new corporate identity to materialize our positioning as pure travel retail player “We are committed to exceeding the expectations New of the travelers we serve, every day. mission Our team is passionate about developing and executing innovative solutions, tailored to statement optimize our landlo
Slide 10: An attractive travel retail market
Agenda I. We deliver II. An attractive travel retail market III. A winning positioning and a clear strategy IV. A compelling financial performance V. A major step forward in North America VI. The plan towards profitable growth VII.2015-2019 guidance
Slide 11: Travel retail industry is structured around stakeholders
Travel retail industry is structured around 4 stakeholders Traveler Brand 11
Slide 12: Travel retail is a niche with unique market drivers
Travel retail is a niche with unique market drivers and a specific operating model Customer knowledge Brand relationship Entry barriers Operational constraints Concession contracts 12
Slide 13: A market experiencing strong growth
A market experiencing strong growth Travel retail market size (€bn, 2014) = €94bn = €94bn Estimates Foodservice 6% €36bn, 38% 22% RoW + 31% 33% €26bn, 28% Travel Essentials1) 48% 49% + 11% €14bn, 15% + 54% = 30% ASPAC 4% = 36% €34bn, 36% Duty Free & Fashion 67% €44bn, 47% 52% 47% 40% Europe 39%
Slide 14: Key trends of the global travel retail market
Key trends of the global travel retail market 14
Slide 15: Global travel retail market growth is fueled by sound drivers
Global travel retail market growth is fueled by sound drivers Travel retail PAX1) Spend Per Pax market growth growth growth 1) Passenger 15
Slide 16: Air traffic PAX growth will remain strong
Air traffic PAX growth will remain strong in the next 20 years 4.6% global PAX growth in the next 20 years… Additional capacities Air traffic growth1) by region (% CAGR, 2014-2034) Asia +5.6% Pacific North +3.4% Abu Dhabi Midfield Terminal America Western +3.6% Europe Latin America +4.7% Middle East
Slide 17: Rail PAX growth will be supported by strong investments
Rail PAX growth will be supported by strong investments Future investments in HSR1) Selection of major rail projects Thousand km new track (2010-2025) 50 Bolloré Group project in West Africa HSR1) project between Algeria, Morocco and Tunisia 40 EMEA London Tube Berlin S-Bahn 30 Toronto lig
Slide 18: Despite short-term bumps, air traffic shows its resilience
Despite short-term bumps, air traffic shows its resilience World airport traffic (bn pax, 2000-2014) 2009: global economic crisis & downturn 7 2004: Madrid terrorist attacks 2010: eruptions of Eyjafjallajökull 2001: 9/11 terrorist 6 attacks 2005: London terrorist attacks +4% 2001-2002: g
Slide 19: Global travel retail market growth is fueled by sound drivers
Global travel retail market growth is fueled by sound drivers Travel retail PAX1) Spend Per Pax market growth growth growth Stores Category Infrastructure Nationality commercial growth improvements mix effectiveness 1) Passenger 19
Slide 20: Positioned on categories with slightly positive growth
We are positioned on categories that on average will enjoy a slightly positive growth globally1) Global retail category growth outlooks (World, %, 2015-2020 CAGR forecast) +4% +4% Estimates +2% +1% 0% -3% Liquor Beauty Fashion Tobacco Print Food 1) All geographies, but also all channels including hi
Slide 21: SPP growth supported by further infrastructure investments
SPP growth will be supported by further infrastructure investments 159% Sq.m commercial space1) per million pax (2014, base 100 = CDG) 100% 105% 81% Existing 57% 58% 37% 34% retail spaces 27% 12% Fort Worth) (Dallas and (Frankfurt) Francisco) (Chicago) (London) (Jakarta) (Atlanta) (Beijing) (Tokyo)
Slide 22: Store commercial effectiveness will remain a key lever to boost SPP
Store commercial effectiveness will remain a key lever to boost SPP New aeliadutyfree store at Nice airport +25% SPP increase 2) New So! Coffee at Prague airport +20% SPP increase 1) 1) August-December 2015 vs August-December 2014 2) October-December 2015 vs October-December 2014 Source: Lagardère T
Slide 23: SPP boosted by favorable passenger nationality mix
SPP will continue to be boosted by favorable evolutions of the passengers nationality mix SPP by destination – Analysis based on a sample of European airports (€, rebased, 2015) 1,340 Other impacts on SPP Currency effects 611 Regulation effects 153 156 100 France UK USA Russia China Source: Lagardèr
Slide 24: Growth drivers are solid
Growth drivers are solid Travel retail product category growth outlooks by growth driver High Street and Travel retail growth drivers Store commercial effectiveness Travel retail growth drivers Nationality mix Infrastructure improvements Pax growth Global Retail growth driver Category growth Liquor
Slide 25: A winning positioning and a clear strategy
Agenda I. We deliver II. An attractive travel retail market III. A winning positioning and a clear strategy IV. A compelling financial performance V. A major step forward in North America VI. The plan towards profitable growth VII.2015-2019 guidance
Slide 26: A unique and winning positioning
In this competitive and evolving market, we built a unique and winning positioning Unique Selling Proposition “Glocal” Profitable growth 3 businesses Operational expertise excellence 26
Slide 27: A global leader in the three businesses
It contributed to create a global leader in the three businesses Lagardère Travel Retail sales and ranking by business (sales @100% pro-forma1), 2015) €4.0bn Core Top Duty Free 10 Duty Free 40% & Fashion 50% Fashion #1 #1 Travel Essentials 10% Top Foodservice 5 2015 global travel retail ranking by s
Slide 28: Our strategy will strengthen this positioning and deliver growth
Our strategy will strengthen this positioning and deliver growth Duty Free & Overall strategy Further develop innovative and Fashion ✓ Maintain the growth momentum differentiated concepts Accelerate digital initiatives ✓ Further develop like for like sales, especially through operational excelle
Slide 29: A truly glocal organization
A truly “glocal” organization with the right balance between local empowerment and global expertise Local teams ✓ Drive local operations and operational teams Travel Essentials landlord relationships Country 1 Country 2 Country 3 Country 4 Global Duty Free & Fashion Foodservice ✓ Provide expertise t
Slide 30: Overview of Duty Free & Fashion business
Overview of Duty Free & Fashion business Snapshot Brand portfolio 40% of 2015 sales @100% pro-forma1) Proprietary concepts Global 21 countries Premium Food Gate Local / bespoke Abu Dhabi Duty 600 PoS Free Top 4 product category Partner brands Global Perfume & Cosmetics Liquors & Tobacco Fashio
Slide 31: Innovative and unique retail concepts
We deliver innovative and unique retail concepts aeliadutyfree Auckland airport Casa del Gusto Rome airport The Fashion Gallery Singapore airport 31
Slide 32: Overview of Foodservice business
Overview of Foodservice business Snapshot Brand portfolio 10% of 2015 sales @100% pro-forma1) Proprietary concepts Global "Gusto" 17 countries Local / bespoke 800 PoS Global Partner brands 82% proprietary brands Local / bespoke 1) Paradies acquisition consolidated at 100% for the full year Source: L
Slide 33: World-class tailor-made restaurants
We operate world-class tailor-made restaurants 4th Street Vine Long Beach Airport Loksins bar Reykjavik Airport La Plage de Thierry Marx Nice Airport 33
Slide 34: Overview of Travel Essentials business
Overview of Travel Essentials business Snapshot Brand portfolio 50% of 2015 sales @100% pro-forma1) Proprietary concepts Global THE TRAVEL STORE 22 countries Local / bespoke 2,700 PoS Official Shop Top 4 product category Partner brands Global Food & Beverage Gift, Souvenir & Travel Accessories
Slide 35: Consolidate global leadership in Travel Essentials: invest in Relay
Consolidate global leadership in Travel Essentials: innovate and invest in Relay Relay, one of the very few global travel …in which we invest to maintain retail brands1)… leadership A new positioning and reinforced brand identity Rely on Relay: upgrade your journey! Stay in tune with landlords and
Slide 36: Innovate with new proprietary concepts such as tech2go
Consolidate global leadership in Travel Essentials: innovate with new proprietary concepts such as tech2go Launched in Sydney in 2012 Opportunity for Leverage Australian concept know-how worldwide expansion Solution for Create plug & play concept expansion solutions ✓ 2012 2013 2015 2016 Results
Slide 37: An operational excellence recognized globally
An operational excellence recognized globally Selection of awards (2011-2015) Foodservice Travel Essentials Duty Free & Fashion 2012 2012 Best new store Gifts & Electronics 2012 Lonely Planet - UK Best new store beauty Buy Paris – France EMEA Best launching of a food concept Bread & Co - Poland 2012
Slide 38: Operating the three businesses creates unique opportunities
Operating the three businesses creates unique opportunities Duty Free & Fashion 38
Slide 39: B2B synergies through landlord relationships
B2B synergies are generated through the capitalization of landlord relationships Illustration – Non exhaustive First year of operations Before 1998 2000 2003 2008 2010 2012 2014 2015 2016 2017 Nice TE DF&F FS DF&F Warsaw TE FS Singapore TE DF&F FS DF&F Prague TE FS DF&F TE FS Rome DF&F Kunming TE FS
Slide 40: Cross business promotions drive sales up
Cross business promotions drive sales up Warsaw airport cross promotions Source: Lagardère Travel Retail internal data 40
Slide 41: Purchasing synergies across businesses
Purchasing synergies are extracted across businesses Foodservice Travel Essentials Duty Free & Fashion Supplies purchasing Capex Water, Liquor Services (payment…) Non-alcoholic beverages, Dairy, frozen beers Coffee Snacking Confect. Tobacco Toys & Electronic Gastronomy Travel accessories, Personal c
Slide 42: Know-how synergies for higher agility
Know-how synergies for higher agility ? ? How to sell? What to sell? Optimized Evolving store category concepts management Auckland Top Shelf Bar Advanced selling Targeted techniques promotions Venice airport cross promotions Source: Lagardère Travel Retail internal data 42
Slide 43: Know-how synergies to find the winning digital model
Know-how synergies to find the winning digital model Web & Mobile platform E-commerce Pre-ordering (Click & Collect) Digital experience Beacon pilot Robot technology for geo- assistance & in- Social media located promotions store experience Personalized relationship through CRM loyalty program
Slide 44: A compelling financial performance
Agenda I. We deliver II. An attractive travel retail market III. A winning positioning and a clear strategy IV. A compelling financial performance V. A major step forward in North America VI. The plan towards profitable growth VII.2015-2019 guidance
Slide 45: Sales bridge: from IFRS to Proportional and 100% views
Sales bridge: from IFRS to Proportional and 100% views (€m, 2011-2015) 3,993 3,589 404 3,067 522 2,546 521 2015 IFRS Owned share Proportional JVs @ 100% Sales Pro-forma Sales @100% consolidated of JVs sales @100% full year pro-forma sales Paradies1) CAGR CAGR CAGR CAGR +4% +9% +12% +18% 2013 2,344 2
Slide 46: Sales growth with a more balanced sales mix
A pure travel retail player experiencing sales growth with a more balanced sales mix Sales evolution by BL and region between 2013 and 2015 (€m, sales @100%) CAGR +12% 2015 = €3.6bn 2013 = €2.9bn Duty Free & Duty Free Fashion & Fashion 41% 42% Foodservice Foodservice 8% 12% Travel Travel Essenti
Slide 47: Growth driven by organic growth and M&A
A strong development driven both by organic growth and M&A Bridge sales growth (€m, sales @100%, 2013-2015) 45% 3,589 55% 329 407 +26% 190 Tender offers won1) 217 Existing contracts 2,853 2013 sales Organic External 2015 sales growth growth 1) Net of contracts terminated over the period Source: Laga
Slide 48: Growth driven by M&A operations
Growth has been driven by M&A operations… Focus on M&A operations performed in 2014 and 2015 Paradies Gerzon Closed in October 2015 Closed in January 2014 520 PoS located in 75 airports 12 PoS in Schiphol airport Operations in the 3 businesses Operations in Fashion Annual sales: €480m
Slide 49: Major tender offers won in all three businesses
… and by the award of major tender offers in all three businesses Focus on airport tender offers won in 2014 and 2015 Award date January July February March July October December 2014 2014 2015 2015 2015 2015 2015 Reykjavik Krakow Hong Kong Warsaw T1 Auckland Luxembourg Abu Dhabi Source: Lagardère T
Slide 50: Growth on high-margin categories
Growth was in particular spectacular on high-margin categories Breakdown sales by product (€m, sales @100%, 2011-2015) CAGR CAGR €2.3bn +12% €2.9bn +12% €3.6bn Liquor 6% 6% 6% 24% 19% Tobacco 25% 10% Gourmet food 9% 9% & confectionary 16% Perfume & Cosmetics 15% 16% Fashion 5% 10% 6% Food & Beverage
Slide 51: Proportional recurring EBITDA grew faster than sales
Proportional recurring EBITDA grew faster than sales showing strong profitability improvement (€m, proportional recurring EBITDA, 2013-2015) +21% CAGR +€52m +1.1 pt 5.4% of sales 165 4.3% of sales 28 113 24 2013 Like for like growth & Perimeter 2015 profitability initiatives Note: proportional recur
Slide 52: Improvement of the free cash flow while investing in development
Improvement of the free cash flow while continuing to invest in development (€m, IFRS view, 2013-2015, travel retail business only) €m 2013 2015 Delta Recurring EBITDA 98 148 +50 Other non-recurring (1) (13) (12) Interests and income taxes (24) (32) (8) Change in working capital (12) 36 +48 Cash Flo
Slide 53: Solid concession contracts tenure and ~90% renewal rate
A solid concession contracts tenure and a renewal rate around 90% (Sales @100%) Below one year 8% 9% 29% One to five years 35% Renew rate ~90% 62% Above five years 57% 2013 2015 Source: Lagardère Travel Retail internal data 53
Slide 54: A major step forward in North America
Agenda I. We deliver II. An attractive travel retail market III. A winning positioning and a clear strategy IV. A compelling financial performance V. A major step forward in North America VI. The plan towards profitable growth VII.2015-2019 guidance
Slide 55: A large, resilient and mature market
A large, resilient and mature market North American airport travel retail market overview Global airport travel retail Foodservice Duty Free & Fashion Travel Essentials Highly competitive and Larger market driven by More limited core duty Concept and product mainly driven by resilient domest
Slide 56: The Paradies acquisition: a game changer in North America
The Paradies acquisition: a game changer in North America Purchase price: $530m for 100% of the equity net of minority partners1) Key 7.5x EV/EBITDA post run rate synergies2) financial Double digit EBITDA margin terms Expected $15m synergies per year as of 2019: Margin synergies G&A syne
Slide 57: Overview of Paradies
A historical leading operator strongly renowned in North America Overview of Paradies Paradies 2015 key figures A historical player A diversified product experiencing strong portfolio across the 3 #3 growth businesses in North America 75 airports 4,000 employees An extensive US A renowned and $540m
Slide 58: Paradies Lagardère: creating a regional leader
Paradies Lagardère: creating a regional leader Overview of Paradies Lagardère Paradies Lagardère 2015 key figures A new entity managed A unique and #3 by an experienced complementary North in North leadership team American footprint America 100 airports 6,000 employees A brand portfolio A strong and
Slide 59: A strong and experienced leadership team
A strong and experienced leadership team Gregg Paradies Gerry Savaria Karen Lieberman Bill Casey Karen Suttle Jeff Flowers Nikki Harland Chuck Kersey Chief Executive Executive Senior VP Merch. Senior VP Food Senior VP Legal and Senior VP Operations Senior VP HR Senior VP Finance Officer VP & Visual
Slide 60: The integration project is on track
The integration project just passed the 100 days mark and is on track ✓ Strong and integrated management to keep momentum Immediate integration of senior leadership team Decision to have main HQ in Atlanta Focus ✓ Focusing on quick wins Margins and trade negotiations Business development int
Slide 61: Widest North American footprint
Paradies Lagardère has the widest North American footprint Paradies Lagardère services most top airports Paradies Lagardère Travel Retail North America Overlap Source: Lagardère Travel Retail internal data as of January 2016 61
Slide 62: A large and diverse brand portfolio for North America
A large and diverse brand portfolio for North America Partner brands Proprietary concepts Local National Retail Partner brands Signature chefs Local National Foodservice Chef Kent Rathbun 62
Slide 63: Operational excellence triggering lasting landlord relationships
A renowned operational excellence triggering lasting landlords’ relationships Key figures on current Paradies Lagardère contract portfolio 18 years “US best overall airport retailer” Top 10 celebrity chef airport of average tenure restaurants (worldwide) Best Airport for Dining for 21 consecutive ye
Slide 64: Robust RFP pipeline of ~$300m
Exciting projects for business development, with a robust RFP pipeline ~$300m total 2016 RFP pipeline New Existing airports airports 20% Robust Retail 45% upcoming RFP 55% pipeline in Food & Beverage 80% 2016 and beyond 2016 upcoming RFP Pipeline 2016 upcoming RFP Pipeline Retail vs. Foodservice New
Slide 65: The plan towards profitable growth
Agenda I. We deliver II. An attractive travel retail market III. A winning positioning and a clear strategy IV. A compelling financial performance V. A major step forward in North America VI. The plan towards profitable growth VII.2015-2019 guidance
Slide 66: EMEA travel retail market trends and impacts
EMEA travel retail market trends and their impacts on Lagardère Travel Retail Rise of Increasing role of low-cost carriers Middle East region ✓ Growth of intra-EU traffic ✓ Competition from regional Duty Free players ✓ Impact on SPP ✓ Stronger role of LCC’s airports ✓ Change in traveling habits Stro
Slide 67: EMEA initiatives to ensure profitable growth
EMEA initiatives to ensure profitable growth in the next coming years 20% Potential new Existing countries 80% countries Optimize retail planning on main European platforms Consolidate presence in the Middle East region in cooperation with landlords Consolidate presence in Foodservice Address opport
Slide 68: Abu Dhabi International Airport to become a large hub
Abu Dhabi International Airport will become one of the largest hubs in the Middle East The new Midfield Terminal is designed to: Enlarge the existing Abu Dhabi airport Become the hub of Etihad Airways Overview Forecasted opening date: December 2017 7.4% passenger growth p.a. expected betwe
Slide 69: Major tender won through Lagardère Capital joint venture
A major tender offer was won through Lagardère Capital joint venture Overview of Lagardère Capital joint venture 50/50 joint venture created to bid and run operations 10-year Duty Free contract Strong local knowledge combined with global retail expertise Bespoke and innovative concepts along wit
Slide 70: Multi-sensory shopping experience with an Abu Dhabi touch
Bringing a multi-sensory shopping experience with a unique Abu Dhabi touch Overview of Abu Dhabi core Duty Free contract awarded 10-year contract on core duty free categories, Key confectionery and fine foods figures 13 PoS over 3,000 sqm 10-year estimated cumulated sales: €3bn Source: Lagardè
Slide 71: Long standing experience of successful joint ventures
A long standing experience of successful joint ventures with strategic partners A strong experience in operating under joint venture model with strategic partners Two joint ventures on Duty Free & Fashion and Travel Essentials 2003 Since 2003, Lagardère Travel Retail and Aéroports de Paris have bu
Slide 72: Asian travel retail market trends and impacts
Asian travel retail market trends and their impacts on Lagardère Travel Retail Booming travel retail Heterogeneous airport market maturity ✓ Fuel for growth by addressing first-time travelers ✓ Need for differentiation in mature international airports ✓ Opportunities coming from growing infrastructu
Slide 73: Asian initiatives to ensure profitable growth
Asian initiatives to ensure profitable growth in the next coming years 65% Singapore and China Hong Kong Innovate with new lines of products and new concepts Consolidate leading positions in Duty Paid and Luxury Fashion Accelerate growth in Foodservice Grow in Foodservice Consider development in new
Slide 74: Pacific travel retail market trends and impacts
Pacific travel retail market trends and their impacts on Lagardère Travel Retail Dual customer profile Globally mature travel market retail environment ✓ Ability to answer different customer needs: domestic and Asian ✓ Need for innovation ✓ Agility to work with both large and small landlords ✓ Neces
Slide 75: Pacific initiatives to ensure profitable growth
Pacific initiatives to ensure profitable growth in the next coming years New routes Innovation Strengthen presence in Push new concepts in the 3 “alternative” channels businesses Further grow with the master Invest in digital and CRM to concession model strengthen current leadership Current position
Slide 76: USP helps capture master concession opportunities
Our USP helps us capture master concession business opportunities Overview of commercial master concession model Landlord needs on smaller Lagardère Travel Retail Market opportunity platforms value proposition Master concession model Refers to multi-segment long-term commercial concessions Expressio
Slide 77: First two master concession contracts awarded in 2015
First two master concession contracts were awarded in 2015 Master concession model illustration: Karratha and Kunming Karratha airport - Australia Kunming airport Opened in November 2015 Phase 1 opened in August 2015: Luxury and Travel Essentials Foodservice and Travel Essentials master concession P
Slide 78: 2015-2019 guidance
Agenda I. We deliver II. An attractive travel retail market III. A winning positioning and a clear strategy IV. A compelling financial performance V. A major step forward in North America VI. The plan towards profitable growth VII.2015-2019 guidance
Slide 79: A new guidance
A new guidance 2015-2019 guidance (proportional sales and recurring EBITDA) New Guidance 2015 (From 2015 to 2019E) Proportional +7% to +10% €3.1bn Sales per annum Proportional recurring > +1.0 pt over 5.4% EBITDA four years margin Notes: 1) Figures based on proportional sales and proportional recurr
Slide 80: Experience new horizons, every day
Experience new horizons, every Ady. Lagardere