gategroup continues to deliver stronger revenue and cash in a difficult environment

Deutsche Version

ZURICH, Nov. 15, 2012 – 

• Year-to-date revenues up 11.0% to CHF 2,244.5 million
• EBITDA declined 9% leading to an EBITDA margin of 6.3%, down from 7.7% in the previous period
• Cash flow generated from operations almost doubled to CHF 71.9 million from CHF 44.4 million
• Restructuring is underway to address European weakness

 

gategroup delivered strong revenue and cash from operations in the first nine months of fiscal year 2012. Revenue was up 11.0% to CHF 2,244.5 million and cash flow from operations almost doubled in comparison to the previous year reaching CHF 71.9 million. The EBITDA for the reporting period was CHF 141.7 million, representing a decline of 9% from the previous year reported EBITDA of CHF 156.2 million. The EBITDA margin for the reporting period was 6.3% compared to 7.7% in the previous year. Profit for the period was CHF 16.9 million compared to CHF 43.1 million in the prior year. gategroup is responding to the challenging market environment in Europe with a number of initiatives which are expected to have an increasing positive impact through 2013.

In the first nine months of 2012, gategroup generated total reported revenues of CHF 2,244.5 million (CHF 2,021.5 million in the previous year). The increase of 11.0% was primarily driven by organic growth, new business and acquisitions. Currency effects increased revenues by CHF 69.3 million or 3.2%.

gategroup achieved an EBITDA of CHF 141.7 million in the first nine months of 2012 compared to CHF 156.2 million in the same period of the previous year, a decline  of 9%. The EBITDA margin was 6.3%, down from 7.7% in 2011. The global business portfolio delivered positive margin development, but the consolidated EBITDA was impacted by continuing weakness in the European Airlines Solutions business. This trend follows weaker results reported at the half year.

Streamlining initiatives within the European business to address these issues, announced by gategroup in its second quarter financial report, are continuing. These initiatives include direct labour savings, indirect labour rightsizing, back office streamlining and portfolio optimization measures. A provision of around CHF 10 million was made in launching these programs in Q3 and they are expected to have an increasing positive impact through 2013. It is also noted that start-up costs for new businesses, notably in Australia and the U.K., also impacted EBITDA for the period, gategroup expects these new businesses will generate improvements to results going forward.

The net profit for the reporting period was CHF 16.9 million, down from CHF 43.1 million in the same period in the previous year. In addition to the reduction in EBITDA, higher restructuring charges and financing costs incurred in year to date 2012 have been the primary drivers of the lower net profit.

Cash flow generated from operations for the first nine months of 2012, meanwhile, was CHF 71.9 million, up from CHF 44.4 million in the equivalent period of the previous year, mainly due to improvements in the management of working capital.

gategroup’s balance sheet as of September 30, 2012, shows equity of CHF 480.9 million (CHF 469.9 million as of September 30, 2011). Net debt as per September 30, 2012, was at CHF 224.8 million (an increase of CHF 65.6 million from September 30, 2011).

In October, gategroup announced contract extensions of five and three years respectively with American Airlines and United Airlines, two of the Company’s largest customers. Both agreements include retention of catering and provisioning services by Gate Gourmet at key hub locations for the two carriers, amongst other businesses.

gategroup’s bolt-on acquisition strategy is proceeding well. Following the period end the Airline Solutions business completed the acquisition of the in-flight catering unit of Alpha Flight Services in Amsterdam, which augments the Company’s presence in that important European hub. The integration of acquisitions announced earlier in the year, namely Helios Market, Product and Production Development BV by deSter Holding BV and the purchase of two flight kitchens in Australia from Qantas Catering Group, are proceeding as planned.

Outlook gategroup’s business is seasonal, reflecting long-established consumer travel patterns and the performance of airlines, which are the Company’s primary customer base. This seasonality affects the comparability of gategroup results between quarterly periods. Typically the low seasonal volumes experienced in the 4^th quarter degrade the full year EBITDA margin by approximately 0.5 percentage points. The streamlining of the European Airline Solutions business is expected to have an increasing positive impact through 2013, however, weakness in Europe is expected to continue and further restructuring is to be expected. In addition gategroup will benefit from the acquisitions, new business gains and investments that it has recently made.

Please visit http://www.gategroup.com/index.php?option=com_content&view=article&id=565&Itemid=228for additional information on our January – September results.

 

Overview of key figures for the first nine months of 2012 (January – September)

millions of CHF	Period ended September 30, 2012	Period ended September 30, 2011	Change	Change at const. Fx
Revenue	2,244.5	2,021.5	11.0%	7.6%
EBITDA	141.7	156.2	(9.3%)	(14.9%)
EBITDA margin	6.3%	7.7%	(1.4pp)	(1.6pp)
Operating profit	66.7	93.3	(28.5%)	(36.7%)
Operating profit margin	3.0%	4.6%	(1.6pp)	(1.9pp)
Profit for the period	16.9	43.1	(60.8%)
Cash flow generated from operations	71.9	44.4	27.5
Net debt	224.8	159.2	65.6
Cash (incl. available credit lines)	362.2	512.1	(149.9)

OVERVIEW of gategroupgategroup is the leading independent global provider of products, services and solutions related to a passenger’s onboard experience. gategroup comprises the following brands: deSter, eGate Solutions, Gate Aviation, Gate Gourmet, Gate Retail Onboard, Gate Safe, Harmony, Performa, potmstudios, Pourshins and Supplair.

 

FORWARD-LOOKING STATEMENTS This publication contains forward-looking statements and other statements that are not historical facts. The words “believe”, “anticipate”, “plan”, “expect”, “project”, “estimate”, “predict”, “intend”, “target”, “assume”, “may”, “will” “could” and similar expression are intended to identify such forward-looking statements. Such statements are made on the basis of assumptions and expectations that we believe to be reasonable as of the date of this publication but may prove to be erroneous and are subject to a variety of significant uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements. Among these factors are changes in overall economic conditions, changes in demand for our products, changes in the demand for, or price of, oil, risk of terrorism, war, geopolitical or other exogenous shocks to the airline sector, risks of increased competition, manufacturing and product development risks, loss of key customers, changes in government regulations, foreign and domestic political and legislative risks, risks associated with foreign operations and foreign currency exchange rates and controls, strikes, embargoes, weatherrelated risks and other risks and uncertainties. We therefore caution investors and prospective investors against relying on any of these forward-looking statements. We assume no obligation to update forward-looking statements or to update the reasons for which actual results could differ materially from those anticipated in such forward-looking statements, except as required by law.

 

 

 

INVITATION TO ANALYSTS AND INVESTORS

 

gategroup CFO Thomas Bucher invites analysts and investors to participate in a telephone conference call regarding the 2012 third quarter results.

 

The presentation can be accessed via webcast and dial-in teleconference at 14:30 CET on Thursday, November 15, 2012.

 

To listen to the live presentation via teleconference, call the dial-in number approximately 15 minutes before the start time. Once dialled in, please follow the instructions given over the phone.

 

Direct dial-in numbers:

+41 (0)91 610 56 00 (Europe) +44 (0) 203 059 58 62 (UK) +1 866 291 41 66 (USA - Toll-Free)

 

 

To link to the live webcast of the presentation, please follow the link on our website: http://www.gategroupmember.com/index.php?option=com_content&view=article&id=419&Itemid=231