Dufry reports solid results in a “transformational” year, as it focuses on organic growth and cash generation

Dufry reports a solid year of financial performance in 2015, with turnover up by 46.3% to CHF 6,139.3 million. Gross profit increases to CHF 3,575 million with a margin of 58.2%

In what it calls a “transformational” year, Dufry says that the primary focus in 2015 was the integration and delivery of synergies of Nuance, which was completed by year-end — combined with the acquisition of World Duty Free, consolidated from August 2015 onwards.


Dufry announced a new Group structure, introduced a new business operating model and refreshed its corporate identity together with its corporate values.

“From a strategic and operational perspective, the two transformational acquisitions reinforce Dufry’s global leadership in airport retail with 24% market share and are expected to generate a total of CHF 175 million of synergies, of which a first tranche of CHF 34 million is already reflected in the 2015 FY results,” said the company announcement.

Despite the 46.3% growth in turnover, Dufry reports organic growth was -5.3%, which was significantly impacted by the volatility in emerging market currencies, most notably among Brazilians — reflecting the massive devaluation of the Brazilian Real — and Russians. Organic growth excluding these two customer groups was 4.0%, which Dufry says underlines the positive performance of the “vast majority” of its business.

Dufry undertook a number of important organic growth initiatives throughout the Group in 2015, including opening 189 new shops representing 18,700 m2 in Spain, Zurich, Nigeria, Puerto Rico, Dominican Republic, Rio de Janeiro and others; refurbishing 105 shops representing over 17,000 m2 of retail space; and signing for 19,600 m2 of new retail space.

In addition, Dufry says that it has more than 43,000 m2 of retail space in the pipeline for future projects.
Julian Diaz, CEO of Dufry Group, said: “2015 was a transformational year for Dufry mostly characterized by the full integration of Nuance and the acquisition of World Duty Free. While these acquisitions allowed us to further develop our company, they also generated the need for important structural and organizational changes.

“In addition to our dedication in building the new Dufry, we strongly focused on driving organic growth in a tough economic environment impacted by considerable FX volatilities. In this context we opened a total of 189 new shops representing 18,700 m 2 of new retail space.

“2016 will be an important year with many challenges. The clear priority will be the integration of WDF. We want to seize the opportunity to build the strongest team of travel retail experts ever and at the same time implement the new business operating model identifying efficiencies and creating value through synergies. Since the fourth quarter of 2015, we have developed a specific action plan for the integration and we have now started its execution, which our teams expect to complete by mid-2017.”

Diaz also said that “deleveraging” will be a priority for the company. “Apart from the integration process and the related synergies, we will be monitoring costs, net working capital and investments closely to drive cash generation. Our goal is to deleverage the company to our target leverage level of 2-3x net debt/EBITDA within the next 18-24 months,” he said.

“In terms of accelerating organic growth, Dufry has already launched a wide range of initiatives last year, which have shown good results and which will be continued in 2016,” he said, highlighting Dufry’s refurbishment and brands plan, the ‘Dufry Red’ and ‘VIP voucher’ loyalty programs, as well as the  19,600 m 2 , of new retail space that will be opened in 2016.
“From a market perspective, 2016 started again with very volatile financial markets, thus reducing visibility. Nevertheless, for this year, the drivers of additional growth will be the positive global trends for travel retail, which will continue to provide growing passenger numbers expected to increase by over 6% for the year. Last but not least, we will benefit from our highly diversified geographic footprint and the large locations network, which considerably reduces the company’s exposure to any external factor’s impact, which are typically related to single countries or regions,” he said.



2015 Regional Results
Region America I’s turnover grew by 6.0% to CHF 808.4 million in 2015. Growth in local currency reached 11%, while in CER, turnover grew by 1% in the period. Performance was positive in Central America, both in the Caribbean and in Mexico.

Turnover in Region America II went to CHF 487.8 million in 2015, against CHF 683.3 million in 2014. When measured in local currencies, sales in the region declined by -5%. Turnover measured in CER declined sharply by -32%, directly reflecting the massive devaluation of the Brazilian Real against the US Dollar of 42% for the year, following a peak in the second half reaching 53%. This reduces the purchasing power of the Brazilians, who represent the most important customer group.

Region United States & Canada’s turnover grew by 8.3% in 2015 (3.6% in CER) and reached CHF 1,043.2 million compared to CHF 963.1 million in 2014. Hudson continued to post sustained growth, both from a like-for-like and new concessions perspective. Other formats like duty-free shops and brand boutiques gained increasing importance in the region.

Turnover in Region EMEA & Asia reached CHF 1,010.8 million in 2015, from CHF 1,194.5 million one year before. When measured in local currencies, turnover was flat in the region. In constant exchange rates (CER), growth was -8.1%. Europe performed positively but was negatively impacted in locations where Russians are a relevant customer base, most notably in Russia, and to a lesser extent in Greece.

Nuance’s turnover reached CHF 1,337.9 million from a four months consolidated turnover of CHF 536.6 million reported in 2014. Turnover in World Duty Free was CHF 1,410.0 million, from August to December of 2015. On a pro forma basis, organic growth in the period reached 9.6%. Operations in North America and MEA regions had good performance, while South America had a softer trading due to the currency volatility in the region.