Dufry shows accelerated growth in 2Q

Dufry Group reports that strong organic growth of 5% in the second quarter from 2.2% in the first quarter helped turnover grow by 6.7% in constant exchange rates (cer) — 2.4% in Swiss Franc — in the first half of 2014. Dufry’s first half sales reached CHF 1,707.9 million (approx. US$1,884m). EBITDA reached CHF 221.4m for the half year 2014 and EBITDA margin was 13.0% in the period and 14.2% in the second quarter. Cash flow before working capital grew by 9.0% to CHF 212.2m.


Dufry credits new concessions and improvements in all businesses in Latin America, notably in the Caribbean, Uruguay and Brazil, for the improvement. Its business in the US & Canada and EMEA & Asia also showed continued positive trends begun in the first quarter.


Gross profit margin expanded by 40 basis points to 59.2% from 58.8% in the first half of 2013. In absolute terms it grew by 3.1% and reached CHF 1,011.1 million in the first half of 2014 versus CHF 981.0 million one year before.


Dufry opened 16,200sqm of gross retail space in the first half, including 27 new shops in Brazil, 17 of which are located in the new Terminal 3 in Sao Paulo Guarulhos Airport. Dufry also opened shops in Indonesia, South Korea and Sri Lanka.


Turnover by region
Turnover in Region America I was flat in cer at CHF 357.3m in the first half, although performance accelerated in Q2 with 4% growth (cer). Mexico continued to perform well and operations in the Caribbean slightly accelerated on the back of an increase in passenger numbers. Business in Argen- tina held up well and business in Uruguay had positive momentum after the weakness in the first quarter due to the depreciation of the Uruguayan Peso at the end of January, says the company.


Turnover in Region America II reached at CHF 318.4m in the first half of 2014 down from
CHF 342.6m in the same period in 2013, but turnover growth accelerated in the 2Q (cer), up 3.7% compared to -9% in the 1Q.


Sales measured in Brazilian Reais also accelerated to 9% in the period, but the devaluation of the local currency continued to mask the turnover growth when mea- sured in USD. The devaluation of the Brazilian Real was significantly lower in the second quarter with -8% versus -18% in the first quarter. Dufry expects to see a positive impact on sales from all the new shops opened in Brazil in May.


Dufry also reports that the Foot- ball World Cup hosted in Brazil in June and July had a neutral effect on sales in the region, even though it expects to see a long term benefit from the positive effect on tourism in Brazil.


Turnover in Region United States & Canada surged by 13.4% in constant FX rates. In Swiss Franc terms, sales were CHF 451.1m in the 1H 2014 from CHF 420.1m in 1H 2013. The business continues to be strong driven by the roll out of the new Hudson format and new concessions.


Turnover in Region EMEA & Asia increased by 12.9% in cer to CHF 552.1m in the year to June from CHF 498.8m in the previous year. France, Italy, and Switzerland showed good performance, as did Serbia and Armenia, while Russia was impacted by currency and the Ukraine situation. Africa- and Egypt were also impacted by the political situation.


In the Middle East and Asia, existing operations performed well, and new openings in China, Indonesia, Kazakhstan, South Korea and Sri Lanka contributed to results as expected.


According to Julian Diaz, CEO of Dufry Group, Dufry’s “development in the US & Canada continue dynamic, where we have already opened 36 shops or 2,800 sqm and additional 1,900 sqm are planned for the second half of the year. We are in the perfect position to accelerate growth during the most important period of the year,” he said.


As for the Nuance transaction announced on June 4, Diaz reports “good progress,” including the issuance of a new bond of EUR 500 million.


“Once we have obtained all regulatory approvals and have closed the transaction, we will launch the integration process. Overall, we expect to generate synergies of approximately CHF 70 million per year which should be fully implemented by 2016,” said Diaz.


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