Dufry considers an IPO for its North American business as 2Q 2017 growth accelerates to nearly 9%

Travel retailer Dufry reports that second quarter organic growth accelerated and reached 8.9% from 7.2% in Q1 2017. Most markets performed well and performance was particularly strong in the United Kingdom as well as businesses welcoming Brazilian and Russian travelers, says the company.

The strong organic growth helped push turnover up by 5.8% to CHF 3,821.3 million in the first half of 2017. Gross profit margin improved by 110 basis points to59.5% in the first half of 2017 and EBITDA grew by 7.8% to CHF 411.2 million.

Dufry also reported that the company is considering an initial public offering of its North American business including both duty-free and duty-paid travel retail.

Since the North American travel retail market differs from Dufry’s other markets with its focus on food & beverage and other specific segments, an IPO would create strategic flexibility for the North American business to pursue growth opportunities specific to this market, it said in its earnings statement.

Proceeds from an IPO would be used initially to reduce leverage allowing Dufry to reach its target leverage ahead of time. After the IPO, Dufry would retain a majority stake in the business and continue to fully consolidate it. The business would remain an important component of Dufry’s global diversification strategy, and its operations would remain integrated with Dufry Group across all major functions, allowing the North American business to continue to benefit from Dufry’s expertise and scale in the global travel retail industry.



The Americas

Latin America turnover grew by 13.8% to CHF 819.6 million in the first half of 2017 from CHF 719.9 million one year earlier. Organic growth in the division reached 12.4% in the same period. In Central America, Mexico, Dominican Republic and Puerto Rico had a good performance. In South America, Brazil continued to post strong growth. Argentina, Chile, Uruguay and Peru also performed well.

In North America, turnover grew to CHF 849.5 million from CHF 790.1 million in the first half of 2016. Organic growth reached 6.3% as a result of solid performance in the United States and Canada, in both duty-free and duty-paid businesses.



Julian Diaz, CEO of Dufry Group, commented: “The second quarter of 2017 confirmed the positive trends in the business. After three consecutive quarters of positive growth, organic growth reached 8.9% in the second quarter, which is the highest since 2012.”

In line with its strategy of accelerating organic growth, Dufry is maintaining its Shop Development Plan for 2017, which foresees the opening and refurbishing of 70,000 sqm (300 shops).

“The plan is moving well as in the first six months of 2017 we have already opened close to 14,500 sqm of new space and refurbished close to 13,500 sqm of retail space,” says Diaz. “With respect to the future, we have already signed contracts to open further 21,800 sqm of new commercial space in 2017/2018 and we are also currently working with a pipeline of additional opportunities which add to around 35,000 sqm. Last but not least, we have just opened two new generation stores in Melbourne and Madrid, which represent important steps for the implementation of our digital strategy.”

Diaz also confirmed that synergies from the WDF acquisition continue to flow through results, improving margins as expected. When systems are fully defined and implemented, planned for the end of 2018, Dufry expects to generate by then efficiencies in the magnitude of 50 basis points at EBITDA margin level, he said.