Dufry Delivers $2.66 Billion In First Consolidated Quarter With Autogrill

Travel retailer Dufry’s combination with global travel food and beverage (F&B) operator Autogrill gave the new entity a good start to the year with organic growth of 51.5%, pushing combined turnover to 2.36 billion Swiss francs ($2.66 billion) in Q1.

In a statement, Xavier Rossinyol, CEO of Dufry Group, said: “In our first quarter as a combined business we have capitalized on the continued momentum of the travel sector. Moreover, April net sales stood at plus 30.2% versus 2022 for the combined group and were—at constant exchange rates—tracking ahead of 2019 levels over the past two months.”

The two companies have been fully consolidated since February 2023 so the year-on-year pro forma growth is not exactly comparable. Nevertheless, a rebounding air travel market and rising global passenger demand—despite a still unstable economic environment—have helped Dufry grow in all four of its recently constituted regions: Europe, Middle East and Africa (EMEA); North America; Latin America; and Asia-Pacific.

Across those geographies, EMEA—the largest by revenue accounting for 45% of sales—broke $1 billion (at $1.18 billion) climbing 58%, largely driven by leisure traffic. The best performing destinations included holiday hot spots such as Turkey, Greece, and Morocco. During the quarter, Dufry won or extended retail and F&B concessions at several airports including Helsinki in Finland, and the Netherlands.

Within the region, the company has bid in a crucial ongoing $19-20 billion six-lot tender to operate travel retail concessions at Spanish airports run by Aena, where Dufry is the incumbent and therefore has a lot to lose. For the first time, the Spanish tender has received interest from Asian and Americas operators—Bahrain Duty Free, South Korea’s Hotel Shilla, GMR in India, Turkey’s Setur, China Duty Free, and UETA in the United States—as well as Dufry’s European competitors like France’s Lagardère Travel Retail, and Ireland’s Aer Rianta International.

American gains

In Dufry’s next biggest region of North America revenue reached $878 million (33% of the total) driven by a strong domestic travel market in the United States although Canada continued to be impacted by lower levels of Chinese travelers. Hudson’s Nonstop stores powered by Amazon’s
AMZN
Just Walk Out technology, have extended to eight with the latest opening in Charleston International Airport.

Meanwhile, Dufry was just awarded a long-term duty-free contract at Boston Logan, along with an extension for its duty-paid business there, and was also awarded long-term contracts for both retail and F&B at Oakland International.

Latin America and Asia Pacific contributed a further 16% and 6% to revenue respectively, with Argentina, Mexico and the Caribbean seeing the best performances.

From the perspective of business lines, Dufry is now better balanced. In Q1 duty-free accounted for 38% of turnover, duty-paid/convenience retail for 26% and F&B for 36%. In 2019 (pre-pandemic) there were just two segments: duty-free (61%) and duty-paid (39%). However, across the three business lines the airport channel remains dominant at 84% despite a more diversified portfolio that now includes motorways.

Summer hopes despite airfare hikes

Data from airports association ACI Europe suggest that the summer vacation season may be another boost for Dufry and its European rivals. Director general Olivier Jankovec commented: “The summer looks very positive for regional airports overall as they are seeing airline seat capacity just above pre-pandemic levels. This is not yet the case for larger airports. Passenger demand keeps defying inflationary pressures, in particular record increases in airfares.”

Dufry’s Rossinyol said: “We are well positioned for Q2. On an external level, our teams are closely monitoring potential geopolitical, macro-economic, inflation, operational and airport capacity changes, as well as changes in consumer sentiment.” On the financial side he added: “The new combined group has a stronger financial position, lower leverage, and more flexibility.”

The Switzerland-based travel retailer recently had its credit rating upgraded by S&P and Moody’s to BB- positive and Ba3 positive respectively, suggesting a lower medium to non-investment grade. The upgrades have helped Dufry improve its margin on borrowings. Net debt at the end of March stood at $3.4 billion.