Lagardere Sa · EURONEXT:MMB
Lagardere Sa — Lagardère Travel Retail — Exane London 2017
41 slides from Lagardere Sa's conference presentation, Jun 22, 2017
Slide 1: Discussion materials on Lagardère Travel Retail
June 22, 2017 Discussion materials on Lagardère Travel Retail - London -
Slide 2: Agenda
Agenda 1. An attractive travel retail market 2. A winning positioning 3. A clear strategy to further grow in a dynamic market
Slide 3: Travel retail is a niche structured around 4 stakeholders
Travel retail is a niche, structured around 4 stakeholders, with unique market drivers and a specific operating model Entry Customer knowledge Brand relationship barriers Operational constraints Concession contracts 3
Slide 4: 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 4
Slide 5: 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 CAGR: CAGR2): 2000 +4% 2016 +4.4% 2036 ✓ Despite short-term bumps, air traffic shows its resilience ✓ Air traffic PAX growth will remain strong in the next 20 years 1) Passenge
Slide 6: 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 Customer commercial growth improvements mix2) effectiveness 1) Passenger 2) Customer mix: passenger nationality, profile (legacy vs. low cost car
Slide 7: And outgrow the traditional retail segments
And outgrow the traditional retail segments Travel retail product category growth outlooks by growth driver High street and travel retail growth drivers Store commercial effectiveness Travel retail growth drivers Customer mix1) Infrastructure improvements Pax growth Global retail growth driver Categ
Slide 8: Agenda
Agenda 1. An attractive travel retail market 2. A winning positioning 3. A clear strategy to further grow in a dynamic market
Slide 9: Strong growth in the past five years
Lagardère Travel Retail has experienced a strong growth in the past five years… 2016 2016 vs 2011 €3.6bn proportional sales1) + €1.5bn prop. sales €209m x 2.5 prop. recurring EBITDA proportional recurring EBITDA2) 32 countries + 13 countries 232 airports 16,000 employees + 110 airports 1) Travel ret
Slide 10: Thanks to a unique and winning positioning
…Thanks to a unique and winning positioning Unique Selling Proposition “Glocal” Profitable growth 3 businesses Operational expertise excellence 10
Slide 11: A glocal organization balancing local empowerment and global expertise
A “glocal” organization with the right balance between local empowerment and global expertise Flagship airports Top 100 airports in terms of PAX volume Other airports 32 countries ✓ Local teams: drive local ✓ Global operational teams: provide operations & landlord relationships 232 airports “Glocal”
Slide 12: A unique positioning on the three businesses
A unique positioning on the three businesses creating numerous opportunities Only travel retailer operating across the three businesses through a wide brand portfolio leveraging both proprietary concepts and partners brands ✓ Ability to capitalize on existing landlords relationships to operate new b
Slide 13: A renowned operational excellence in and across all businesses
A renowned operational excellence in and across all businesses World-class tailor-made Innovative and unique retail Diversified offer in tune with restaurant offer for concepts for Duty Free & traveler needs for Travel Foodservice Fashion Essentials Digital and innovative solutions 13 across all bus
Slide 14: We build successful JV operated with strategic partners
We build successful JV operated with strategic partners Opening date 2003 Since 2003, ADP and Lagardère Travel Retail operate the largest duty free JV in the world. The partnership was extended in 2011 to travel essentials segment Gain of the tender launched by Aéroports de Lyon to operate the d
Slide 15: A well positioned sales mix
A well positioned sales mix… Sales evolution by BL and region between 2013 and 2016 (€m, sales @100%) CAGR +13% 2016 Σ = €4.2bn 2013 Σ = €2.9bn Duty Free & Duty Free & Fashion Fashion 41% 39% Foodservice Foodservice 8% 12% Travel Travel Essentials Essentials 51% 49% EMEA ASPAC North Am. EMEA ASPAC N
Slide 16: Strong contribution of both organic and external growth
… And strong contribution of both organic and external growth Bridge sales growth (€m, sales @100%, 2013-2016) 61% 801 4,162 Series 39% 508 +46% 278 Tender offers won1) 2,853 230 Existing contracts 2013 sales Organic External 2016 sales growth growth 1) Net of contracts terminated over the period So
Slide 17: Growth was strong on high-margin categories
Growth was in particular strong on high-margin categories Breakdown sales by product : 2013 vs. 2016 2013 2016 €2.3Mds 5% €3.1Mds 6% 16% 17% 12% 25% IFRS 10% 9% 16% Liquor 13% Tobacco 8% 12% 24% Gourmet food 5% 13% 11% & confectionary Perfume & Cosmetics Fashion €2.9Mds 6% 6% €4.2Mds 6% Food & Bever
Slide 18: Growth driven by award of major tender offers
Growth has been driven by the award of major tender offers in all three businesses… Focus on major airport tender offers won since 2014 2014 2015 2014 2017 Award date Reykjavik Krakow Hong Kong Phoenix Geneva Melbourne T4 Auckland Luxembourg Gdansk Prague Riyadh & Dammam Warsaw T1 Abu Dhabi Hong Kon
Slide 19: Selective M&A operations
… and by selective M&A operations Focus on M&A operations performed in 2014 and 2017 Paradies Coffee Fellows Gerzon Closed in October 2015 Closed in January 2014 Closed in January 2014 520 PoS located in 75 airports 18 PoS in German train stations 12 PoS in Schiphol airport Operations
Slide 20: Agenda
Agenda 1. An attractive travel retail market 2. A winning positioning 3. A clear strategy to further grow in a dynamic market
Slide 21: A clear strategy, tailor-made for each business
A clear strategy, tailor-made for each business… Further develop Duty Free & Overall strategy Fashion innovative and ✓ Maintain differentiated concepts the growth momentum both through sustainable organic growth and Accelerate digital selective M&A opportunities initiatives ✓ through Further inc
Slide 22: Adapted for each region
… adapted for each region… Deliver Paradies acquisition BP and capture further market Expand and opportunities optimize major contracts Gain market share by strengthening growth in current markets and expanding in selected countries Opportunistic developments with major airport partners Actively pur
Slide 23: Supporting an ambitious target for 2019
... and supporting an ambitious target for 2019 2015-2019 guidance (proportional sales and recurring EBITDA) New Guidance 2015 2019E (%, from 2015 to 2019E) Proportional +7% to +10% €4.1bn €3.1bn Sales per annum €4.6bn On track! Proportional recurring > €260m €165m > +1.0 pt over EBITDA (5.4%) > €29
Slide 24: Appendices
Agenda Appendices Lagardere TRAVEL RETAIL
Slide 25: Overview of Duty Free & Fashion business
Overview of Duty Free & Fashion business Snapshot Brand portfolio Proprietary concepts 39% of 2016 sales @100% Global 22 countries Premium Food Gate Local / bespoke Abu Dhabi 630 PoS Duty Free Top 4 product category Partner brands Global Perfume & Cosmetics Liquors & Tobacco Fashion Local /
Slide 26: Overview of Foodservice business
Overview of Foodservice business Snapshot Brand portfolio Proprietary concepts 12% of 2016 sales @100% Global 18 countries Local / bespoke 800 PoS Global Partner brands 82% proprietary brands Local / bespoke Source: Lagardère Travel Retail internal data 26
Slide 27: Overview of Travel Essentials business
Overview of Travel Essentials business Snapshot Brand portfolio Proprietary concepts 49% of 2016 sales @100% Global 25 countries Local / bespoke 2,900 PoS Top 4 product categories Partner brands Food & Beverage Global Gifts, Souvenirs & Travel Accessories Local / Readables bespoke Tobacco So
Slide 28: We consolidate our leadership in Travel Essentials by investing in Relay
We consolidate our global leadership in Travel Essentials by innovating and investing in Relay Relay, one of the very few global travel …in which we invest to maintain retail brands1)… leadership A new positioning and reinforced Rely on Relay: brand identity upgrade your journey! Stay in tune with
Slide 29: Key features and ratios of tender offers
Key features and ratios of tender offers in the airport travel retail environment ✓ Contracts are awarded through tender offer processes where travel retail operators answer RFPs on “packages” depending on the retail space location and / or the product line targeted Business Line Main ratios1) Duty
Slide 30: Know-how in launching and integrating new businesses
We have developed an extensive know-how in successfully launching and integrating new businesses M&A integration Across the years, we have built strong PMI skills at local process and global level to ensure the smooth integration of newly acquired businesses and to maximize synergies across the Grou
Slide 31: Consolidation in travel retail but market still fragmented
Consolidation in travel retail is gaining momentum but the market still remains highly fragmented … in a yet fragmented Travel Retail A strong consolidation trend… market1) EV/EBITDA March 9.2x Total 2011 market: 2008 Acquisition of Aldeasa (remaining 49.95%) & WDF (100%) by Autogrill €75Bn Top 10 S
Slide 32: Strategic initiatives grouped under 6 major topics
To reach our strategic targets we have grouped our strategic initiatives under 6 major topics 1 2 3 Market penetration Quality and Organization and and business operations system optimization development 4 5 6 Reinvention and Franchising Digital and CRM adaptation through projects new concept/offer
Slide 33: Launch of TOM project to enhance operational performance
Illustration: launch of TOM project, a dedicated transversal program to enhance operational performance Objective: collectively step up in operational performance to reach the strategic plan ambitions with contribution from all entities and on the full spectrum of our operations (all BL, all countri
Slide 34: Know-how synergies for higher agility
Know-how synergies for higher agility ? ? How to sell? What to sell? Optimized Evolving store category concepts management Advanced selling Targeted techniques promotions Venice airport cross promotions Source: Lagardère Travel Retail internal data 34
Slide 35: 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 assistance technology for geo- & in-store Social media located promotions experience Personalized relationship through loyalty programs CRM
Slide 36: We deliver innovative and unique retail concepts
We deliver innovative and unique retail concepts aeliadutyfree Luton airport The Fashion Gallery Changi airport Dylan's Candy Bar Dallas Forth Worth airport 36
Slide 37: Diversified concept portfolio in Travel Essentials
We consolidate our global leadership in Travel Essentials through a diversified concept portfolio tech2go Brisbane airport Discover Venice airport Relay Singapore Airport 37
Slide 38: We operate world-class tailor-made restaurants
We operate world-class tailor-made restaurants Ajisen Ramen Rome airport Sumo Salad Sydney airport Lucky fish Los Angeles Airport 38
Slide 39: Store commercial effectiveness a key lever to boost SPP
Store commercial effectiveness will remain a key lever to boost SPP Aeliadutyfree store in Rome +26% SPP increase 1) Aeliadutyfree store in Nice +25% SPP increase 2) Aeliadutyfree store in Luton +13% SPP increase 3) 1) Jan-Feb 2017 vs Nov-Dec 2016 2) Oct-Feb 2016 vs Jun-Sep 2015 3) Jul-Feb 2017 vs.
Slide 40: SPP boosted by evolution of 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 (France, base 100, 2016) 1,232 Other impacts on SPP Currency effects Regulation effects 510 207 145 100 France UK USA Russia China Source: La
Slide 41: Experience new horizons, every day
Experience new horizons, every day. Lagardere TRAVEL RETAIL