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Dufry posts 9 month results, announces rebrand

Dufry, the world’s largest airport retailer, has unveiled a corporate rebrand as organic growth slides in the first nine months of 2015, with turnover increasing 43.9% post-World Duty Free acquisition.

Dufry hopes its new corporate logo will provide a "common starting point" as it consolidates three well-known brands
Dufry hopes its new corporate logo will provide a “common starting point” as it consolidates three well-known brands

In addition to publishing its financial report, the Switzerland-based retailer also revealed a new branding strategy and corporate structure to “integrate and align” its three “well-recognised” duty free brands: Dufry, Nuance and World Duty Free.

The new corporate logo draws on the company’s Swiss heritage and uses a shopping basket motif in reference to the group’s key retail activity. In addition, a “WorldWide, WorldClass” identifier will be introduced.

According to Dufry’s statement, the new branding provides a “common starting point” for the corporate culture and identity for all group employees.

Corporate branding will be consistently rolled out in all markets, while the three customer-facing identities will be continued and used “according to brand recognition at country or regional level”. Other brands, including Hellenic Duty Free and Hudson, will also be continued and implemented on a case-by-case basis.

Going forward, Dufry says it will assess each project individually to determine the most suitable brand for use.

A new corporate structure

As of 1 January 2016, the Dufry will operate under a new divisional and operational structure as a result of its recent acquisitions.

The new structure will consist of five divisions, led by a new “Group Executive Committee”: Southern Europe and Africa; UK, Central and Eastern Europe; Asia, Middle East and Australia; Latin America; and North America.

The GEC will be comprised of the following:

Dufry new GEC

In addition, Dufry has said it will “further increase” its process of “standardization” and “centraliasation” across its procurement, logistics, IT, finance, legal, and marketing departments.

Julian Díaz, Dufry Group CEO, described the new group structure as a “key element” in the company’s further development. “We want to continue to grow profitably – by increasing our sales, foster gross and operational margins, while reducing net working capital requirements – and for this we need to adapt our structure and re-think the way we work after the two recent transformational acquisitions.”

He congratulated the newly appointed colleagues and thanked José Carlos Rosa, who is set to leave the GEC, for his “commitment and dedication” to the company. Rosa will continue to serve as CEO of Lojas Francas de Portugal, a joint venture owned by TAP Air Portugal and Dufry.

Nine months 2015 results

The company’s latest financial report includes the contribution of World Duty Free (WDF), which was Dufry-consolidated from August onwards.

Group turnover increased by 43.9% for the first nine months of 2015, reaching CHF 4,216.3 million, up from CHF 2,930.9 for the same period the previous year.

Reported organic growth fell -4.9%, impacted by declines in the Russian and Brazilian markets.

EBITDA grew 22.5% to CHF 508.0 million, with an EBITDA margin of 12.0%. Cash generation “continues strong” with free cash flow standing at CHF 327.1 million (+18.2% year-on-year) excluding transaction costs and restructuring operations.

WDF like-for-like growth reached 5.0%, with gross new openings contributing 2.4%, with Dufry particularly noting new and refurbished shops in Athens and Milan Malpensa airports.

Changes in scope – including acquisitions and divestments – contributed 48.3% to the turnover growth. 29.7% of this was from the Nuance acquisition, and 21.6% from WDF.

Dufry out the translational effect from Swiss franc movements at 0.5%

Julian Diaz says he is "confident" of Dufry's "resilience"
Julian Diaz says he is “confident” of Dufry’s “resilience”

Selected regional highlights

EMEA and Asia saw turnover at constant exchange rates fall 9.7% in the year to September to CHF 779.0 million, from CHF 941.2 million.

Overall, said Dufry, European markets performed well except in those locations with high exposure to Russian passengers. Greece was “partially mitigated” by the “record number” of tourists visiting the country. In Africa, the business “started to stablilise” in Q3 following the retailer exiting market operations in Tunisia.

Region America I (Central America, Caribbean, Argentina, Ecuador, and Uruguay) grew 7.3% to CHF 586.0 million. In local currencies, growth was 9%.

Region America II, which includes Brazil and Bolivia, shrank to CHF 382.6 million, from CHF 382.6 million. In local currency the “development was nearly flat”, said Dufry. The devaluation of the Brazilian real “intensified” in Q3, “lowering the purchasing power of Brazilians, representing the main consumer group in the region”, the statement read.

The US and Canada saw turnover increase 9.3% to CHF 780.1 million.

Nuance operations generated a turnover of CHF 1,025.3 million in the first nine months of 2015, with Sweden, Macau, Canada and Australia posting a “good performance”.

WDF reported a turnover of CHF 630.4 million since the beginning of its consolidation in August.

Díaz said: “The performance shown by our company during the challenging period we have been facing due to the high volatility of several emerging market currencies, makes me confident on the resilience of our business model.

“Our strategy of diversification has prepared Dufry to mitigate temporary disturbances in specific markets, while benefiting from the positive long term trend in travel retail.

“Our financial solidity is also a case in point that we have shaped the Group the right way.”

Dufry announced in March it was in the process of acquiring World Duty Free Group. In an update, the company said it now holds 95% of World Duty Free shares and expects to de-list the entity from the Borsa Italiana stock exchange “by mid-November”.

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