ITALY/INTERNATIONAL. Autogrill Group today revealed details of a solid performance for the first eight months of 2017, with revenue up by +3.2% (+2.7% at constant exchange rates) to €3 billion (details below).
In related news, the company outlined plans for its corporate reorganisation, first announced in April, involving the separation of the Italian F&B business. At the time, Autogrill’s share price soared to a record as investors speculated about possible merger and acquisition activity. Group shares are up by +26.2% in the calendar year to date (reaching €10.84 by close of trading last night).
Autogrill today said that its Reorganization Project will provide it with “more flexibility to better develop alliances/joint ventures in the different business areas”.
The company said: “The Reorganization Project is aimed at separating the management and coordination activities of the Autogrill Group from the Italian Food & Beverage operating activities and from the coordination and service activities in favour of the European direct subsidiaries.”
It added: “The listed parent company will define and develop the growth strategies for the entire organisation, while the operating activities will be managed by fully controlled subsidiaries operating in the different geographic areas.” The move will allow for “more efficient and effective management of the business divisions,” and ”communicate more clearly the group’s positioning, facilitating a better understanding of the business divisions”.
Three new business branches will be created, managed by three wholly-owned companies. These will include one business overseeing all operations in Italy; another to direct the group subsidiaries in Continental Europe and a third to oversee support and service functions.
Approval of the Reorganization Project by the Board of Directors is scheduled to take place in November and become effective from January 2018.
Robust performance in 2017 to date
In its trading update, Autogrill said that its revenue increase for the January to August period had been driven by like-for-like growth (+3.4%) and the positive effects of its CMS and Stellar Partners’ acquisition last year (+1.9%, net of disposals).
The company noted: “The like-for-like growth was very positive, despite a softer contribution from North America during the summer due to the comparison with the very strong performance in the same period of 2016 and some signs of softening consumer spending in the restaurant industry.
“The balance of openings and closings is down by 2.3%, with the new openings partially offsetting the selective renewals in Italy and the reduction at Tampa Airport in the USA. ”
The acquisitions made in the second half of last year in the USA had an impact of €54 million in first eight months of 2017, while in 2016 the revenue of the French railway stations business, sold in June 2016, amounted to €26 million.
Revenue growth benefited from a favourable currency effect of +0.4%; the period was also marked by a calendar effect of -0.3%, mainly due to the fact that 2016 was a leap year.
The results were supported by the “excellent performance” of the airport channel, where revenue rose by +8.4% in the period (+7.7% at constant exchange rates), mainly due to the sustained growth trajectory in the USA and International regions. The airport channel posted like-for-like growth of +5.5% overall.
North America in good health
Revenue in North America grew by +4.9% (+4.8% at constant exchange rates) in the first eight months, with like-for-like growth of +3.3% the main contributor. Compared with the first half of 2017, said the group, the July and August performance at airports was strong, and benefited from the removal of long security screening lines that affected the larger airports across the USA in preceding months.
New openings, including those at Chicago O’Hare, Montreal and Atlanta airports, and the acquisitions in 2016 of CMS and Stellar, helped offset the reduction of its presence at Tampa Airport and in the shopping malls sector.
International division: double-digit growth
International continued to grow, with revenue up +16.4% in the period. The robust performance in the region reflects strong like-for-like growth of +10.8% across the board. New openings, including in the Netherlands, Finland and Norway, contributed +8% (net of closing). At the beginning of 2017 the Group unwound a JV in Indonesia, which had a -1.3% impact on revenue for the region. The currency effect was -1.4%, while the reporting calendar effect was +0.2%.
Disposal means revenue slips in Europe
Revenue in Europe decreased by -3.3% in the period, mainly due to the disposal of the French railway stations business in 2016 and to selective renewals on Italian motorways. Like-for-like revenue growth was +1.7%; this figure includes a 1.1% positive growth of the Italian motorways and a strong performance at airports across Europe.
Net openings and closings had an impact of -2.4%, the currency effect was nil while the calendar effect was -0.4%.
