Dufry Group CEO Julián Díaz: “I am particularly pleased with the EBITDA and cash generation for the period, a record for the first semester due to our good operational performance.”

SWITZERLAND/INTERNATIONAL. Dufry today unveiled an all-time high first half EBITDA of CHF464.1 million (US$466.23 million), a +12.9% rise year-on-year.

The company described its results for the period as “solid” after recording a +7.2% increase in turnover to CHF4,097.1 million (US$4.1 billion). Organic turnover growth was +5.5%. [See analyst reaction below].

“Given our diversified portfolio and our leading position in Europe, we are in the best possible position to capture passengers in almost any market.” – Julián Díaz

EBITDA margin expanded by 50 basis points to 11.3%. Both free cash flow and equity free cash flow were the strongest ever for a first semester. Free cash flow reached CHF330.2 million (US$331.7 million) versus CHF127.6 million (US$128.2 million) last year. Equity free cash flow was CHF222.2 million (US$223 million) versus CHF 16.5 million (US$16.6 million).

Dufry Group CEO Julián Díaz commented: “The first half year results were solid and in line with Dufry’s expected targets for 2018. I am particularly pleased with the EBITDA and cash generation for the period, a record for the first semester due to our good operational performance.

“In general, most of our operations continued to perform well. Our European business has been stable with some shifts in destinations. Especially Turkey and Greece are more popular this year at the expense of Spain, where in order to drive sales we have implemented several actions including shop openings and refurbishments as well as various marketing initiatives.

“Given our diversified portfolio and our leading position in Europe, we are in the best possible position to capture passengers in almost any market. Eastern Europe, Middle East, Asia and Australia continued with stellar performances. Especially in Asia, the strong growth in Chinese passenger has been a key driver. North America has been performing stronger than ever with continuous business development by adding retail space in existing and new locations.

“Latin America had a mixed picture: while Central America and the Caribbean have performed well, especially Argentina and Brazil had a weak performance in the second quarter. The devaluation of the Brazilian Real and the Argentinean Peso are affecting our sales in US Dollars. Having said this, when measured in local currencies, the performance of the business is stable, which is a sign that the overall consumer sentiment is still positive.

“Regarding profitability, the Business Operational Model [BOM] further contributed by generating efficiencies and improvements in the cost structure, positively impacting the EBITDA margin. Until June, the BOM has been launched in 39 countries in total, of which 14 countries were already certified by the programme.

“We continued to actively foster the opening of additional retail space and refurbishments across the Group. During the year until June, we added 13,200sq m and refurbished 22,400sq m of retail space. As for the remainder of 2018 and 2019, we have already secured agreements, which amount to 14,100sq m, to be opened in existing and new locations, and plan to revamp a further 33,000sq m during 2018.”

Analyst reaction*: (1) Bank of America Organic Merrill Lynch

Key takeaways

• Dufry reported cFX organic growth of +4.2% in Q2, below FY guidance of 5-7%. Europe and Latin America were weak, the analyst noted.
• EBITDA margin expansion slowed to +20bps to 12.3% (-30bps vs cons). Selling expenses resumed their increase at +80bps in Q2
• Dufry faces “long term structural headwinds”. U/P, PO CHF90

In detail
• Dufry Q2 revenue reached CHF2,277m, c.1% ahead of cons, helped by a significant FX tailwind. However, cFX organic growth was weak at +4.2% (vs. 5-7% FY guidance). EBITDA margin was 12.3% for the quarter, vs consensus of 12.6%, as margin expansion slowed (+20bps YoY, vs. +100bps YoY in Q1 18).
• “We believe Dufry faces significant long term headwinds with (1) increasing concession fees; (2) negative passenger mix; and (3) increased online threat. Reiterate U/P & PO of CHF90.”

*We’ll bring you more analyst reaction soon.

Díaz highlighted several first-half contract gains, including new retail operations across all regional divisions and multiple channels – train stations, cruise lines, downtown locations and airports – and covering all divisions. The most recent was a new duty free concession at Perth Airport, Australia; while earlier this year the company signed retail contracts for ten cruise vessels belonging to Holland America, Carnival Cruise Line and Norwegian Cruise Line. In Asia it gained the duty free concession for the new high-speed railway station in Hong Kong.


Like-for-like growth contributed +3.5% to the turnover gain and net new concessions added +2.0%, which resulted in the +5.5% organic growth. The FX translation effect during the period was +1.7%, mainly due to the strengthening of the Euro and the British Pound versus the Swiss Franc.

Southern Europe and Africa – Shifting destination patterns

Turnover grew by +7.3% to CHF833.1 million (US$836.9 million) in the first half of 2018.

Organic growth in the division reached +0.5%. In the second quarter, a trend of tourists shifting from Spain to Turkey and Greece became more evident, which benefitted the latter operations with Turkey seeing high double-digit growth. Spain’s passenger growth was driven more by domestic tourism which has lower spend and as such did not translate into turnover growth, Dufry noted.

Tasty results: Dufry’s Hellenic Duty Free business in Greece benefited from changing tourism patterns.

UK and Central Europe – Geneva contract lost impacts turnover

Turnover reached CHF910.1 million (US$914.3 million). Organic growth (excluding the closing of the Geneva Airport contract last year) amounted to +3.3%. Including the Geneva impact, organic growth was down -1.2%. Switzerland and Scandinavia were positive overall and the key UK market performed well, driven by steady growth in passenger numbers.

Eastern Europe, Middle East, Asia and Australia – Asia boom

Turnover in this diverse collection of markets increased to CHF546.5 million (US$549 million) in the first half. Organic growth remained high, reaching +22.1%. Strong results were recorded across the division. In Eastern Europe, Russia continued with a good performance, as did Armenia, Bulgaria and Serbia.

In the Middle East, Jordan and Kuwait grew double-digits, while Sharjah also saw good gains. Asia continued to “boom”, Dufry said, with Bali, Cambodia, Indonesia, Macau and South Korea all posting double-digit rises. Australia generated a strong double-digit increase after the full renovation of the stores at Melbourne Airport.

Melbourne makeover: Dufry’s ambitious refurbishment of its retail offer at the Victoria gateway is paying off.

Latin America – devaluations hit South America in Dollar terms

Turnover edged ahead by +0.2% to CHF821.3 million (US$825.1 million). Organic growth was+ 4.2%. In Central America, Mexico and the Caribbean recorded strong performances. Dominican Republic, Jamaica and regional cruise business all prospered. In South America, Ecuador and Peru posted positive growth, but Argentina, Brazil, Chile and Uruguay posted a collective decline in US Dollar terms due to the devaluation of the respective local currencies versus the greenback.

North America – strong organic growth

Turnover rose +5.5% to CHF896.6 million (US$900.7 million). Organic growth reached +7.7% driven by ongoing passenger growth, positive productivity and new contracts. Both retail concepts, duty free and duty paid, contributed growth.