Performance

Earnings and financial performance

Autogrill’s earnings and financial performance were positive in 2010, and showed improvement on the previous year, in an economy that showed signs of recovery by way of growth in international trade and mobility. Although the trend was not linear, the year stood out for an upturn in airport traffic that outpaced the rise in motorway traffic. The main beneficiary was therefore Travel Retail & Duty-Free, which takes place solely at airports, while Food & Beverage has a more extensive network along motorways and elsewhere.

The recovery was partial, especially with regard to consumption, but because of the Group’s geographical and business diversification it was able to achieve a 7.1% increase in revenue (+4.5% at constant exchange rates) that exceeded traffic growth in its principal countries and business channels.

EBITDA rose by 7.3% (+4.4% at constant exchange rates), in line with the trend in revenue, thanks especially to Travel Retail & Duty-Free. This segment benefited from an improved sales mix, encouraged by the increase in long-range flights, and from the ever stronger synergies achieved through the integration process. The continued volatility of traffic made the Food & Beverage business less productive, although it still made a strong contribution.

During 2010 the Group recorded a good performance from both the financial point of view and on the portfolio activities’ refocusing, with the sale of the Flight business.

Late in 2010 the Flight business was sold to Dnata, a leading airport services company in the Middle East with a growing international presence. Autogrill had entered the Flight business in 2007 with the acquisition of Alpha Airports Group Plc., as a first step toward entering the UK airport channel (completed the following year with the purchase of World Duty Free). The sale, which reduced consolidated debt by € 165.4m, has freed up financial and managerial resources for the two strategic segments of Food & Beverage and Travel Retail & Duty-Free.

In 2010 the Group also reached and surpassed the deleverage targets it had set in 2008 after its acquisitions in the TR&DF business. Strict financial discipline led to net cash flow which, in combination with the sale of the Flight business, reduced consolidated debt from € 1,934.5m to € 1,575.5m.

The positive earnings and financial results also produced a significant rise in net profit, from € 37.0m in 2009 to € 103.4m.

Condensed consolidated income statement

Condensed consolidated income statement1

 (€m)  2010  % of revenue  2009  % of revenue Change
2009 At constant
exchange rates
Revenue 5,703.5 100.0% 5,325.4 100.0% 7.1% 4.5%
Other operating income 138.6 2.4% 145.7 2.7% (4.8%) (5.6%)
Total revenue and other
operating income
5,842.2 102.4% 5,471.1 102.7% 6.8% 4.2%
Raw materials, supplies and goods (2,089.9) 36.6% (1,972.3) 37.0% 6.0% 3.8%
Personnel expense (1,442.1) 25.3% (1,327.5) 24.9% 8.6% 5.6%
Leases, rentals,
concessions and royalties
(1,150.8) 20.2% (1,063.5) 20.0% 8.2% 5.5%
Other operating costs (554.0) 9.7% (543.7) 10.2% 1.9% (0.6%)
EBITDA 605.4 10.6% 564.1 10.6% 7.3% 4.4%
Depreciation, amortisation and
impairment losses
(328.0) 5.8% (330.0) 6.2% (0.6%) (2.8%)
Impairment losses on goodwill (22.2) 0.4% (9.8) 0.2% n.s. n.s.
EBIT 255.2 4.5% 224.3 4.2% 13.8% 9.8%
Net financial expense (74.9) 1.3% (93.2) 1.7% (19.6%) (20.7%)
Impairment losses on
financial assets
(0.5) 0.0% (0.1) 0.0% n.s. 39.7%
Pre tax profit 179.8 3.2% 131.0 2.5% 37.3% 30.7%
Income tax (89.4) 1.6% (100.0) 1.9% (10.6%) (12.5%)
Profit from continuing operations 90.4 1.6% 31.0 0.6% n.s. n.s.
Profit from discontinued operations 25.0 0.4% 13.6 0.3% 83.3% 76.5%
Profit attributable to: 115.4 2.0% 44.6 0.8% n.s. n.s.
owners of the parent 103.4 1.8% 37.0 0.7% n.s. n.s.
– non-controlling interests 12.0 0.2% 7.6 0.1% 57.6% 44.7%

1 Unlike the income statement included in the consolidated financial statements (Section 2.1.2), to better highlight the profit attributable to non-controlling interests for both 2010 and 2009, this figure is shown net of non-controlling interests in the Flight segment (€ 6.8m) which are instead deducted from the profit from discontinued operations

Revenue

Autogrill closed 2010 with consolidated revenue of € 5,703.5m, an increase of 7.1% on the previous year’s € 5,325.4m (+4.5% at constant exchange rates).

The following graph highlights the organic change in revenue by identifying the effects of exchange rates fluctuations and the sale of the Flight business.

Change in Revenue – 2010
(€m)

Change in Revenue – 2010 (€m)

The table below summarises the trend in sales by business segment in 2010 and 2009. See Section 1.4 (Business segments) for a more detailed description of sector performance.

(€m) 2010 2009 Change
2009 At constant
exchange rates
Food & Beverage 4,027.8 3,787.3 6.4% 3.4%
Travel Retail & Duty-Free 1,675.7 1,538.0 9.0% 7.0%
Total 5,703.5 5,325.4 7.1% 4.5%

EBITDA

For 2010 Autogrill reports consolidated EBITDA of € 605.4m, an increase of +7.3% (+4.4% at constant exchange rates) on the previous year’s € 564.1m, which included € 11.3m in ordinary income attributable to prior years.

The following table summarises the trend in EBITDA by segment in 2010 and 2009. See Section 1.4 (Business segments) for a more detailed description of sector performance.

(€m) 2010 2009 Change
2009 At constant
exchange rates
Food & Beverage 438.9 433.6 1.2% (1.7%)

10.9% 11.4%

Travel Retail & Duty-Free 193.6 156.9 23.4% 21.2%

11.6% 10.2%

Corporate and unallocated (27.2) (26.5) 2.7% 2.7%
Total 605.4 564.1 7.3% 4.4%

10.6% 10.6%

Change in EBITDA – 2010
(€m)

Change in EBITDA – 2010 (€m)

EBITDA amounted to 10.6% of revenue, in line with the previous year. The synergies achieved through the integration of Travel Retail & Duty-Free operations and the strengthening of measures to reduce operating costs (adopted in 2009) offset the rise in personnel expense, especially in the United States and Italy, and the impact in Italy of the less favourable sales mix.

Change in EBITDA margin – 2010

Change in EBITDA margin – 2010

Depreciation, amortisation and impairment losses

In 2010 depreciation, amortisation and impairment losses amounted to € 328.0m, down from € 330.0m in 2009, due to a decrease in impairment losses.

Impairment on goodwill losses

Goodwill on the Dutch motorway operations was written down by € 22.2m in 2010, reflecting the reduced competitiveness of the hotel services that this unit provides on a major scale in addition to Food & Beverage.

EBIT

EBIT of € 255.2m showed an increase of 13.8% (+9.8% at constant exchange rates) with respect to the previous year (€ 224.3m), despite the higher charge for amortisation, depreciation and impairment losses.

Financial expense

Net financial expense in 2010 came to € 74.9m, down from € 93.2m in 2009. This reflects the reduction in net debt, thanks to the substantial generation of cash by all of the Group’s business units. The average annual cost of debt was 4.1%, compared with 4.3% in 2009.

Income tax

Tax decreased from € 100.0m in 2009 to € 89.4m.

The impact of taxes on the consolidated pre-tax profit was 49.7%, compared with 76.4% the previous year. Excluding IRAP, the average effective tax rate came to 43.2% (67.1% in 2009), as results from one unit to the next were less polarised than last year and projections are more favourable as to the recoverability of tax losses.

Net result from discontinued operation

The net profit for the Flight segment in 2010 amounted to € 25.0m (€ 13.6m in 2009), and includes the gain of € 11.1m on the disposal of this business.

Profit for the year

Profit attributable to owners of the parent in 2010 came to € 103.4m (€ 37.0m the previous year), after non-controlling interests of € 12.0m (€ 7.6m in 2009).