GERMANY. Inflight services specialist LSG Group has reported consolidated revenues for 2018 of €3.2 billion, the same figure as in 2017.

The company said the result was impacted by negative exchange rate movements and the expiration of two hub catering contracts in South Korea and Italy, but noted solid growth from parent Lufthansa Group’s airlines Lufthansa and Eurowings. Adjusted for currency-related factors, consolidated revenues would have improved by 4.3%, it said.

LSG Group’s financial performance in 2018. Click to enlarge.
Source: Lufthansa Group 2018 Annual Report.

Changes in the group of consolidated companies contributed to a growth in sales of €22 million. Adjusted EBIT for 2018 was €115 million, a year-on-year increase of 73%. LSG Group said this was primarily due to an improved operational performance and lower transformation costs.

“In 2018, we successfully continued the sustainable transformation of our business model by adjusting our classic-catering operational landscape in Europe while expanding our offerings for the onboard retail market,” said LSG Group Chief Financial Officer Dr. Kristin Neumann.

“A market-oriented mix of production modules, tailored logistics and valuable partnerships will enable us to serve a higher number of airports without a physical presence at every location. This will certainly increase our flexibility and agility, which are important prerequisites to succeed in the ever-changing aviation market.

“Furthermore, our Retail inMotion expert team revamped and expanded its digital retail platform. It has attracted an impressive 23 new airline and train customers since 2017, including prestigious carriers like Etihad and Swiss.”

The Etihad Airways contract win was a major coup for LSG-owned Retail inMotion.

In its 2018 Annual Report, Lufthansa Group noted that expanding the market position of Retail inMotion, to make it a leading provider of onboard sales and technology experts, was one of the “stable pillars” on which to build the future of the LSG Group.

The report also noted a “fundamental transformation” of LSG Group’s operating business model, in light of changes in customer demand. “Europe is going full steam ahead as a pilot region, promptly setting up central production structures and flexible logistics models,” the report stated. “Authorisation to build two regional production plants in Czechia and western Germany are key milestones in this process. Their range will also enable the future production centres to supply major airports at which the LSG Group is not currently present.”

Catering contracts were renewed with United Airlines, American Airlines, Delta Air Lines, Cathay Dragon and TAP Portugal for several stations in 2018, while two new train clients were acquired. As noted, contracts to supply Asiana Airlines and Alitalia at their hubs in Seoul and Rome expired.

Source: Lufthansa Group 2018 Annual Report. Click to enlarge.

“Moving forward, we will concentrate on taking advantage of the multiple opportunities offered by digitalisation,” commented LSG Group Chief Executive Officer Erdmann Rauer. “This will impact our way of doing business in every possible respect by creating new products and applications and facilitating our workflows in the backend. At the frontend, our customers and consumers will ultimately benefit from an enhanced travel experience appealing to their strong desire for individualisation, mobility and convenience.”

For 2019, the LSG Group expects revenues on the previous year’s level and an adjusted EBIT margin in the range of 2-4%.