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ItalianoTravel Retail & Duty-Free
| Change | ||||||
|---|---|---|---|---|---|---|
| (€m) | 2011 | % of evenue | 2010 | % of revenue | 2010 | At constant exchange rates |
| Revenue | 1,820.8 | 100.0% | 1,675.7 | 100.0% | 8.7% | 10.0% |
| Other operating income | 24.1 | 1.3% | 31.4 | 1.9% | (23.3%) | (23.2%) |
| Total revenue and other operating income | 1,844.9 | 101.3% | 1,707.1 | 101.9% | 8.1% | 9.4% |
| Raw materials, supplies and goods | (765.1) | 42.0% | (733.8) | 43.8% | 4.3% | 4.8% |
| Personnel expense | (192.4) | 10.6% | (180.6) | 10.8% | 6.6% | 7.1% |
| Leases, rentals, concessions and royalties | (551.2) | 30.3% | (505.7) | 30.2% | 9.0% | 9.7% |
| Other operating costs | (107.8) | 5.9% | (93.4) | 5.6% | 15.4% | 16.0% |
| EBITDA | 228.3 | 12.5% | 193.6 | 11.6% | 17.9% | 18.6% |
| Depreciation, amortization and impairment losses | (121.3) | 6.7% | (115.4) | 6.9% | 5.1% | 5.5% |
| EBIT | 107.0 | 5.9% | 78.2 | 4.7% | 36.7% | 37.8% |
| Net financial expense | (28.1) | 1.5% | (44.0) | 2.6% | (36.1%) | (36.0%) |
| Adjustment to the value of financial assets | 1.4 | 0.1% | 1.3 | 0.1% | 9.8% | 9.8% |
| Pre tax profit | 80.3 | 4.4% | 35.5 | 2.1% | 125.9% | 129.4% |
| Income tax | (16.3) | 0.9% | (7.1) | 0.4% | 130.1% | 133.1% |
| Profit attributable to: | 63.9 | 3.5% | 28.4 | 1.7% | 124.9% | 128.5% |
| — owners of the parent | 61.5 | 3.4% | 26.9 | 1.6% | 128.7% | 132.6% |
| — non-controlling interests | 2.5 | 0.1% | 1.6 | 0.1% | 58.5% | 58.5% |
Revenue
Travel Retail & Duty-Free closed the year with revenue of € 1,820.8m, an increase of 10% with respect to the previous year’s € 1,675.7m (+8.7% at current exchange rates), showing an excellent performance at most of the airports served. In Europe and other countries alike, this excellent result was caused by an increase in average spending per passenger, which made it possible to outperform the increase in traffic. Adjusting for the Group’s exit from certain contracts (Delhi, Maldives and Madeira), growth on a like-for-like basis and at constant exchange rates would be even higher (11.8%, +10.5% at current exchange rates).
Area-by-area performance is described below:
Europa
Revenue for 2011 came to € 532.1m, up from € 493.8m in 2010 (+7.8%), compared with traffic growth of 6.0%24. The best performer was Barcelona, where revenue rose 19.1% to € 101.4m against traffic growth of 17.8%, thanks to the concentration of Ryanair flights at this airport and the increase in flights to the Middle East and Asia. Although traffic was slightly down (–0.4%), due to a decline in domestic traffic, sales at Madrid airport increased by 3.8% to € 177.6m as a result of the larger number of passengers flying outside Europe; sales at airports in the Canary Islands also did well (+15%) on the strength of the shift in tourist flows away from North Africa.
In the United Kingdom, revenue in 2011 climbed from £ 673.4m25 in 2010 to £ 746.1m (+10.8%), compared with traffic growth of 5.2%26. Performance has held up very well thanks to rising sales at Heathrow, which came to £ 357.2m (up 12.9% versus traffic growth of 5.5%), and an increase in average spending per passenger. Results were also solid at the other major British airports served: Manchester (+10.2%), also thanks to the opening of new locations, and Gatwick (+7.5%), where work on the South Terminal location helped improve the flow of passengers.
24 Source: AENA, January-December 2011
25 This figure differs from the originally published £636m due to the reclassification for the inclusion of wholesale sales
26 Source: BA A, Manchester Airport and Gatwick Airport, January-December 2011
Other countries27
Sales came to € 386.8m in 2011, an increase of 13.2% on the previous year’s € 352.2m (+9.8% at current exchange rates), with good results in all countries despite the exit from certain contracts. On a like-for-like basis, revenue would have grown by 22.8% (+19.4% at current exchange rates). The year’s outstanding performers were Canada (+21%), thanks to an increase in connections to Asia; Chile (+50%), due to rising numbers of travelers from Brazil and the penalizing effect of the earthquake in 2010; Peru (+32%); and Sri Lanka (+17%), where tourist flows are on the rise.
27 Mexico, Jordan, Chile, Canada, Kuwait, Peru, United States, Dutch Antilles, France, Colombia, Cape Verde, Panama, Sri Lanka, India, Italy
EBITDA
In 2011 EBITDA grew by 18.6% to € 228.3m, up from € 193.6m in 2010 (+17.9% at constant exchange rates), and outpaced the increase in sales. EBITDA includes reorganization costs of € 2.4m. The improvement in the EBITDA margin, from 11.6% to 12.5%, reflects a sales mix weighted more towards high margin products such as cosmetics, as well as an increase in passengers with non-European destinations who are more inclined to spend. One reason for the decrease in the cost of goods sold was the extension of integrated purchasing to Spain and the United Kingdom.
Change in Travel Retail & Duty-Free EBITDA margin
Depreciation, amortization and impairment losses
In 2011, depreciation, amortization and impairment losses came to € 121.3m, compared with € 115.4m the previous year (+5.5%). The increase was caused by higher impairment losses on property, plant, equipment and intangible assets (€ 8.1m) due to the non-renewal of contracts at Atlanta and Orlando airports.
Net financial expense
The significant decrease in net financial expense reflects the lower average debt of the Travel Retail & Duty-Free segment, due to cash generation and the capitalization of this segment by € 400m in December 2010.
Income tax
The increase in taxes mirrors the higher profitability of this segment. The tax rate, at 20%, was in line with the previous year.
Profit
Travel Retail & Duty-Free earned a profit of € 61.5m, with a significant increase (+132.6%) with respect to the previous year’s € 26.9m.
Net invested capital
| (€m) | 31.12.2011 | 31.12.2010 | Change |
|---|---|---|---|
| Goodwill | 598.0 | 582.1 | 15.9 |
| Other Intangible assets | 690.1 | 762.6 | (72.5) |
| Property, plants and equipment | 96.7 | 114.9 | (18.2) |
| Financial assets | 9.7 | 8.3 | 1.3 |
| Non-current assets | 1,394.5 | 1,468.0 | (73.6) |
| Net working capital | (93.7) | (116.3) | 22.6 |
| Other non-current non-financial assets and liabilities | (83.2) | (128.5) | 45.4 |
| Net invested capital | 1,217.6 | 1,223.1 | (5.6) |
| Net financial indebtedness | 639.1 | 724.8 | (85.6) |
Net cash generation
| (€m) | 2011 | 2010 |
|---|---|---|
| EBITDA | 228.3 | 193.6 |
| Change in working capital and net change in non-current non-financial assets and liabilities | (36.2) | 21.4 |
| Other non cash items | 1.6 | 0.1 |
| Cash Flow from Operation | 193.7 | 215.1 |
| Tax paid | (34.2) | (23.3) |
| Net interest paid | (29.4) | (46.3) |
| Net Cash Flow from Operation | 130.1 | 145.5 |
| Net Capex | (18.6) | (27.6) |
| Free Operating Cash Flow | 111.5 | 118.0 |
Net cash generation by the Travel Retail & Duty-Free segment remained high, despite the negative change in net working capital caused by increased contributions to British pension funds, longer collection times on credit card transactions and increased purchases of goods at the end of the year.
Net capital expenditure went from € 27.6m in 2010 to € 18.6m, and from 1.6% to 1.0% of revenue, and mostly concerned shops at Heathrow (Terminals 3 and 4), Birmingham and Manchester in the UK and the new Alicante terminal in Spain