Milan / IT. (aspa) The Board of Directors of Italy’s Autogrill S.P.A. examined and approved the consolidated financial statements and the Company’s draft financial statements for 2016 a long with the corporate governance report and the remuneration report for 2016.
Overview
Outlook
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Chief Executive’s Statement
Autogrill CEO Gianmario Tondato Da Ruos commented on the results for the year as follows: «2016 was a positive year. The Company posted excellent financial results thanks to the contribution of all the regions where we operate. In North America, where we are the undisputed leader, we saw growth in sales, especially in the airport sector. In the International area we saw double-digit growth for the third year running and in Europe we continued to rationalize our contracts portfolio and made important improvements to margins».
Tondato then added: «Over the year we recorded excellent results in terms of contract renewals and the winning of new contracts in all geographies, amounting to around 8 billion EUR, thus bringing the total portfolio to 34 billion and increasing average maturity. We were also able to define a stable dividend policy for the coming years tied to a clear investment strategy, which reflects our commitment to all the shareholders. So we can affirm that we now have a solid base for continuing to grow in the future».
Financial key performance indicators
Revenues in 2016 rose 4.6 percent at constant exchange rates, to over 4.5 billion EUR, thanks in particular to the contributions of North America and the International area. Like-for-like sales grew by a significant 3.1 percent.
Ebitda amounts to 411.6 million EUR, up 10.5 percent at constant rates on 373.5 million EUR in 2015. The result includes the capital gain from the disposal of the French railway station business (14.7 million EUR). Excluding such capital gain and the contribution of the business disposed of, the Ebitda margin moved up 20 basis points, to 8.8 percent from 8.6 percent the previous year. The improvement in profitability was due to the increase in sales, costs efficiencies and rationalization of business in Europe, which made it possible mitigate the effect of pressure on labour costs in North America.
There was a marked improvement in Ebit (201.0 million EUR), up 32.5 percent at constant rates, thanks to the improvement in profitability and the reduction in amortization and depreciation.
Net profit for the year amounted to 98.2 million EUR (up 53.9 percent at constant rates), meaning an EPS of 0.39 EUR.
Contracts portfolio
At the end of 2016 the portfolio stood at 34 billion EUR, with an average maturity of 7.3 years. In 2016, contracts renewals were worth around 6.3 billion EUR and newly won contracts around 1.6 billion EUR.
In North America, where the Company is the undisputed leader and partner of choice for major airports, contract renewals included Charlotte-Douglas Airport (renewed well in advance and for 10 years) and Orlando. New contracts won in Northern Europe include Bergen and Rotterdam airports, and expansion continued in emerging markets like the Middle East (Abu Dhabi and Doha) and Asia (Beijing). In Italy, there were satisfying results in renewals in the current tender campaign: contracts renewals were worth 190 million EUR [1].
In addition to newly won contracts and contract renewals, 2016 saw the completion of a number of acquisitions and disposals that further improved the portfolio: in the USA with the acquisitions of CMS, which strengthened the position at Los Angeles and Las Vegas, and Stellar Partners, a well-reputed and innovative retail operator in the convenience sector, which opens up interesting growth prospects for the Group in a market worth 1.5 billion USD.
In Europe, business optimization continued with the disposal of operations in French railway stations and motorway service areas in The Netherlands, the latter including important hotel operations, a trade not deemed of strategic interest to the Group.
Outlook
In the period 2016-2019, the compound annual growth rate (CAGR)4 of revenues is expected to be between 5 percent and 7 percent, while the CAGR5 of EPS is expected to be 15 percent (assuming organic growth only and a Euro/Dollar exchange rate of 1.06 [2] in the period 2017 to 2019).
The CAGRs [3] of sales and EPS are calculated on the basis of the figures for 2016 adjusted to exclude the effects of the disposals made in 2016. After these adjustments, the rebased figures for 2016 are equal to a 4.49 billion Euros revenue (compared to the reported figure of 4.52 billion EUR) and a 0.33 EUR EPS (compared to the reported figure of 0.39 EUR).
The additional contribution of the businesses acquired in North America in 2016 on FY2017 results is expected to be of around 58 million EUR to 62 million EUR revenues and around 0.5 cents to 1 cent EPS.
In 2017, the Group expects good growth in revenues in North America, thanks in part to the full impact of the two acquisitions made in 2016. The Group will remain strongly focused on profitability, given the persistent pressure on labour costs.
Sustained growth in sales continues to be the trend in International area, also due to completion of the openings following the contracts the Group has won over the last WTO years, with absolute margins rising as a result.
In Europe, lastly, the strategy of selective renewals and the focus on efficiency will be maintained to carry forward the process begun two years ago to recover margins.
- Meaning a retention rate of over 80 percent of sales from contracts nearing maturity.
- A change of 0.01 in the EUR/USD rate has:
- an impact of around 20 million EUR to 30 million EUR in annualized revenues for 2017 to 2019
- an impact of around 0.3 cents on annual EPS for 2017 to 2019
- Growth rate is calculated at current rates: the average EUR/USD rate for 2016 was 1.1069, whereas the EUR/USD rate assumed for years 2017 to 2019 is 1.06.
