EANS-Adhoc: gategroup Delivers Good Growth in Challenging Market Environment
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ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
distribution. The issuer is solely responsible for the content of this
announcement.
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6-month report
23.08.2012
-- Global businesses perform well, European markets challenging
-- Revenue HY1 up 7.2% to CHF 1,413.9 million
-- EBITDA margin 5.6% compared to 6.7% in previous year
-- Refinancing of the Group successfully completed, providing stable balance
sheet structure
-- Bolt-on acquisition strategy proceeding well
gategroup reports for the first half of 2012 revenues of CHF 1,413.9 million
which is an increase of 7.2% against previous year (CHF 1,318.7 million). The
EBITDA margin in the first half of 2012 was 5.6% compared to 6.7% in the first
half of 2011. Net income for the period was CHF 4.7 million compared to CHF 20.3
million in the previous year, driven also by one-off costs from the refinancing
and higher taxes. Cash flow from operations doubled in comparison to the
previous year and reached CHF 8.4 million, (CHF 4.0 million). The Product and
Supply Chain Solutions business performed well in terms of growth and earnings,
as did the Airline Solutions business in America and the Emerging Markets. The
profitability of the Airline Solutions business in Europe was weaker than last
year as market conditions got more difficult. gategroup is responding to the
challenging market environment in Europe with a number of initiatives which are
expected to have a positive impact on margins as from 2013. Investments in
future growth, such as IT infrastructure and one-off costs for acquisition and
development activities have further impacted the EBITDA margin. The integration
of the Helios acquisition is proceeding well, and the bolt-on acquisition
strategy is progressing positively.
In the first half of 2012 it generated total revenues of CHF 1,419.4 million, at
constant currency, representing a sizeable growth of 7.6%. Currency exchange
effects reduced this result by CHF 5.5 million, or 0.4%, to CHF 1,413.9 million
on a reported basis which results in a growth rate of 7.2%. This growth was
primarily driven by a revenue expansion of some 20% in the Emerging Markets
(including the recovery in Japan), and the contribution from recent acquisitions
(Helios).
gategroup achieved an EBITDA of CHF 78.5 million (5.6% EBITDA margin) in the
first half of 2012 compared to CHF 88.4 million (6.7% EBITDA margin) in the
first half of the previous year. The positive margin development of the global
business portfolio and the higher contribution of the Emerging Markets Division
to EBITDA was offset by weakness in the European Airlines Solutions business.
Although revenues in Europe remained relatively flat, profitability was impacted
by the loss of some higher margin businesses which was only partially offset by
new business wins, where associated start-up costs were also incurred.
Additionally, cost pressure on European carriers is driving a shift in the short
haul business concepts for certain customers. To address these issues gategroup
is already progressing a comprehensive set of initiatives. These include
overhead cost savings, the exiting of lower margin business and the right-sizing
of certain locations to address changes in the short haul business. These
initiatives will continue for the remainder of the year and are expected to have
a positive impact in 2013.
end of ad-hoc-announcement
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gategroup also expects to see the benefit of new business started in the first
half of the year to have a positive impact going forward, notably the new
business for Virgin Atlantic in the UK and the expansion of the Virgin Australia
business in Australia.
Higher costs were incurred at the corporate level to advance the growth
strategy, particularly investments in the IT infrastructure as well as costs for
the execution of M&A and corporate development activities.
The profit for the reporting period was CHF 4.7 million, down from CHF 20.3
million in the same period in the previous year, reflecting higher interest
expenses and one-off costs from the refinancing of the Group. Further, gategroup
incurred higher relative tax expenses in first half of 2012.
Cash flow from operations in HY1 2012, meanwhile, was CHF 8.4 million, up from
CHF 4.0 million in the equivalent period of the previous year. The rise was
mainly due to further improvements in the management of working capital and
lower cash requirements for provisions and retirement benefit obligations.
gategroup's balance sheet as per June 30, 2012 shows equity of CHF 469.2 million
(CHF 415.9 million as at June 30, 2011). The Group's refinancing was completed
during the first half of 2012. This involved repaying debt and cancelling all
outstanding commitments by issuing 7 year unsecured notes worth EUR 350 million
at a fixed coupon of 6.75%. A new multi-currency revolving credit facility of
EUR 100 million has also been established. Net debt as per June 30, 2012 was at
CHF 244.7 million (an increase of CHF 87.6 million from the previous year).
After the realignment of its extensive global services and product lines into
two major businesses at the beginning of the current fiscal year, both Airline
Solutions and Product and Supply Chain Solutions are performing well with the
exception of the Airline Solutions businesses in Europe. The Airline Solutions
business includes food production; pre-departure loading and post-arrival
unloading; a comprehensive onboard retail programs; aircraft cabin appearance
services; airline lounge catering, business technology applications; and
security services for catering and cargo. All this accounts for around 80% of
the Group's revenues. The Airline Solutions businesses' revenues increased by
6.3%, from CHF 1,148.9 million to CHF 1,221.8 million. At constant exchange
rates the Airline Solutions business achieved a turnover of CHF 1,224.1 million,
which represents a gain of 6.5% over the same period last year. The reduction in
EBITDA from CHF 79.2 million (6.9% of revenues) in HY1 2011 to CHF 71.8 million
(5.9% of revenues) in HY1 2012 was mainly caused by the above-mentioned weakness
in Europe.
The Product and Supply Chain Solutions business provides global procurement and
supply chain solutions; design and branding services; off-airport food and
beverage sourcing, assembly and packing services; contact items and onboard
products as well as passenger comfort items. Revenues increased by 15.3% from
CHF 233.7 million to CHF 269.4 million. At constant exchange rates the Product
and Supply Chain Solutions achieved a turnover of CHF 272.8 million, or +16.7%.
It reported an increase in EBITDA from CHF 14.9 million (6.4% of revenues) in
HY1 2011 to CHF 18.2 million (6.8% of revenues) in HY1 2012.
gategroup bought the outstanding 26% of Sky Gourmet in India in February and
announced that this company, together with Travel Food Services, a leading
Indian provider of travel food and beverages, was finalizing a strategic
partnership to manage retail-on-board services. Since then, a joint venture has
been created.
deSter Holding BV, a subsidiary of gategroup, acquired Helios Market, Product
and Production Development BV, an innovative and respected global provider of
onboard products and services for the airline, rail and hospitality industries
on March 16, 2012. The addition of Helios expands the ability of the combined
companies to bring innovative approaches to customers and new geographies and
will provide synergies in marketing, manufacturing and supply chain solutions.
This transaction has added some CHF 22 million to revenue in HY1 2012.
gategroup has also recently announced its intent to acquire two flight kitchens
owned by Qantas Catering Group and operated by Q Catering in Australia. The Q
Catering businesses involved are its Riverside facility in Sydney and its Cairns
operation in Queensland. Following completion of the transaction, annual revenue
from the assets to be acquired is expected to be approximately CHF 50 million.
gategroup expects the acquisition to be accretive within an 18- to 24-month
window as a result of operational synergies, process improvements and effective
management of commercial relationships. The transaction is subject to customary
closing conditions and approvals, including clearance by competition
authorities.
Outlook
gategroup's business is seasonal, reflecting long-established consumer travel
patterns and the performance of airlines, which are the Company's primary
customer base. This seasonality affects the comparability of gategroup results
between quarterly periods. Looking ahead for this year, and given the uncertain
economic outlook in Europe, gategroup maintains an expectation of flat growth in
real terms across its portfolio. The streamlining of the European Airline
Solutions businesses will have a positive impact in 2013. gategroup will benefit
from the acquisitions, new business gains and investments that it has recently
made within 12 to 24 months and therefore it confirms its 2015 mid term targets.
Please see the following link on the gategroup web site for a copy of the H1
2012 financial results report and additional information:
http://www.gategroupmember.com/index.php?option=com_content&view=article&id=548&Itemid=228
Overview of key figures for the first half of 2012 (January - June)
millions of CHF Q1 Q2 HY1 HY1 Change Change
2012 2012 2012 2011 at const. Fx
Revenue 656.7 757.2 1,413.9 1,318.7 7.2% 7.6%
EBITDA 25.5 53.0 78.5 88.4 (11.2%) (13.3%)
EBITDA margin 3.9% 7.0% 5.6% 6.7% (1.1pp) (1.3pp)
Operating profit 4.7 31.7 36.4 49.3 (26.2%) (31.2%)
Operating profit
margin 0.7% 4.2% 2.6% 3.7% (1.1pp) (1.3pp)
Profit for
the period (14.8) 19.5 4.7 20.3 (76.8%)
Cash flow from
operations 2.7 5.7 8.4 4.0 4.4
Net debt 205.5 244.7 244.7 157.1 87.6
Cash (incl.
available
credit lines) 376.7 338.8 338.8 495.8 (157.0)
Note: Constant Fx (constant currency) restates the current period results using
the average exchange rates for the same period of prev. year
OVERVIEW of gategroup
gategroup is the leading independent global provider of products, services and
solutions related to a passenger's onboard experience. gategroup comprises the
following brands: deSter, eGate Solutions, Gate Aviation, Gate Gourmet, Gate
Retail Onboard, Gate Safe, Harmony, Performa, potmstudios, Pourshins and
Supplair.
FORWARD-LOOKING STATEMENTS
This publication contains forward-looking statements and other statements that
are not historical facts. The words "believe", "anticipate", "plan", "expect",
"project", "estimate", "predict", "intend", "target", "assume", "may", "will"
"could" and similar expression are intended to identify such forward-looking
statements. Such statements are made on the basis of assumptions and
expectations that we believe to be reasonable as of the date of this publication
but may prove to be erroneous and are subject to a variety of significant
uncertainties that could cause actual results to differ materially from those
expressed in forward-looking statements. Among these factors are changes in
overall economic conditions, changes in demand for our products, changes in the
demand for, or price of, oil, risk of terrorism, war, geopolitical or other
exogenous shocks to the airline sector, risks of increased competition,
manufacturing and product development risks, loss of key customers, changes in
government regulations, foreign and domestic political and legislative risks,
risks associated with foreign operations and foreign currency exchange rates and
controls, strikes, embargoes, weather related risks and other risks and
uncertainties. We therefore caution investors and prospective investors against
relying on any of these forward-looking statements. We assume no obligation to
update forward-looking statements or to update the reasons for which actual
results could differ materially from those anticipated in such forward-looking
statements, except as required by law.
INVITATION TO ANALYSTS AND INVESTORS
Andrew Gibson (CEO) and Thomas Bucher (CFO) invite analysts and investors to
participate in a telephone conference call.
The presentation can be accessed via webcast and dial-in teleconference at 14:00
CET on Thursday, August 23, 2012.
To listen to the live presentation via teleconference, call the dial-in number
approximately 15 minutes before the start time. Once dialed in, please follow
the instructions given over the phone.
Direct dial-in numbers:
+41(0)91-610-56-00 (Europe)
+44(0)-203-059-58-62 (UK)
+1-866-291-41-66 (USA - Toll-Free)
To link to the live webcast of the presentation, please follow the link on our
website
http://www.gategroupmember.com/index.php?option=com_content&view=article&id=419&Itemid=231
Further inquiry note:
Media -- Jean-Luc Ferrazzini, jferrazzini@gategroup.com, +41-43-812-9128;
Investors/analysts -- Dagmara Robinson, drobinson@gategroup.com,
+41-43-812-5496
INVITATION TO MEDIA: Andrew Gibson (CEO) and Thomas Bucher (CFO) invite media to
participate in a telephone conference call at 9:00 am CET on Thursday, August
23, 2012. To listen to the teleconference, call the dial-in number
approximately 15 minutes before the start time. Once dialed in, please follow
the instructions given over the phone. Direct dial-in numbers: +41 (0)91 610 56
00 (Europe) / +44 (0) 203 059 58 62 (UK) / +1 866 291 41 66 (USA - Toll-Free)
end of announcement euro adhoc
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issuer: gategroup Holding AG
Balz-Zimmermannstrasse 7
CH-8302 Kloten
phone: +41 43 812 54 96
FAX: +41 43 812 91 19
mail: invest@gategroup.com
WWW: http://www.gategroupmember.com/
sector: Consumer Goods
ISIN: CH0100185955
indexes:
stockmarkets: Hauptsegment: SIX Swiss Exchange
language: English