Despite the challenging economic situation in much of Latin America, Dufry posted steady turnover in the first half of 2019, growing 2.2% to CHF 4,180.1 million. Organic growth accelerated to +2.2% in HY 2019; with Q2 improving to +2.3%. This gain was followed by further improvements in the first weeks of July.
On a like for like basis, organic growth was +5.4%, excluding South America, says the company.
Adjusted operating cash flow was CHF 409.0 million. Dufry confirms the Equity Free Cash Flow target of CHF 350-400 million for the full-year 2019 and the medium term organic growth target of 3% to 4%.
Regional overview
The like-for-like performance in Q2 2019 improved significantly as compared to first quarter, and reached a turnaround in June and July. By geography, Asia-Pacific and Middle East continued to perform very well, driven by new concessions. Europe and Africa accelerated, benefitting from a notable recovery in Spain. North America was positive, while the Central and South American division remained challenging but showed encouraging signs of recovery in July.
In the first half 2019, the company refurbished 31,700 sqm of space. Dufry also opened and expanded 15,400 sqm of gross retail space and has signed contracts for opening a further 15,300 sqm in 2019/20.
Diaz comments
Julián Díaz, CEO of Dufry Group, commenting on the positive development in the first half, said:
“The second quarter has shown a further improvement versus the first quarter, reaching an organic growth rate of 2.3% and it is encouraging to see that this growth acceleration is picking up further in the first weeks of July.
“In particular, Asia Pacific and the Middle East have continued with their strong performance. Recovery has started in Europe with Spain performing well, while North America has continued with its resilient growth. Even South America has shown encouraging signs of recovery in the first weeks of July.
Diaz continues:
“In this context, I would like to highlight the considerable improvement we have seen in the like-for like performance with respect to the first quarter this year and which reached a turn-around in June and July. This was the result of a combination of commercial and market initiatives launched in several markets. Organic growth further benefited from strong contributions from our new concessions. Worth mentioning in the first half are the new operations at the MTR station in Hong Kong, the new airport in Perth, and the addition of new cruise ships to our portfolio,” he said.
The Americas
In the Americas, turnover in the Central and South America Division was CHF 761.8 million in H1 2019 as compared to CHF 821.3 million one year earlier; organic growth was -10.6%.
Central America delivered good performance in Mexico and the Caribbean and Dufry’s cruise business continued to grow in high double digits from the additional new ships added to the portfolio. In South America, most operations continued to be impacted by the devaluation of local currencies, particularly in Brazil and Argentina, but some recovery was seen in June and July, reports the company.
The ongoing strong performance in North America was mostly driven by strong duty-paid like-for-like performance, with the duty-paid business outperforming the duty free.
Turnover reached CHF 954.5 million compared to CHF 896.6 million in the first half of 2018. The performance in the region remained resilient, with organic growth reaching 3.7%, mainly supported by the good performance of the duty-paid business.
Dufry’s organic growth further improved to +2.3% in Q2 2019 from +2.0% in Q1 2019: Positive growth in Europe and North America; improvement in Spain; resilient double-digit growth in Asia despite higher comparables; and still tough conditions in South America with recovery seen in June / July.
Dufry retail openings: Brazil Border stores and renewed flagship at Ezeiza
Dufry added 15,400 sqm of gross retail space in HY 2019. This included several locations in North America, where 29 new stores covering 2,600 square meters were opened, as well as 6 new shops in the Bahamas (1,100 sqm) and 4,800 sqm of space on 17 new cruise ships from 29 new stores.
In addition, Dufry refurbished 31,700 sqm of retail space in the period. Highlights included a 3,100 sqm New Generation flagship store in Buenos Aires Ezeiza airport, and 8 shops in Detroit covering 600 sq meters.
Dufry will also be opening its first border duty free shop in Brazil within a few says. The 850 sqm shop is located in the city of Uruguaiana, the second largest city on the Brazilian border with Argentina and Uruguay, and is easily accessible to Argentinians, says Dufry.
