gategroup reports solid 2011 results under challenging market conditions
• Revenue of CHF 2,688.1 million, flat on a reported basis; up 12.6% in constant currencies
• EBITDA of CHF 201.7 million, down 6.9% on a reported basis; up 6.4% in constant currencies
• EBITDA margin of 7.5%, down 0.5 percentage point on a reported basis
• Operating profit of CHF 114.8 million, up 1.1% on a reported basis; up 15% in constant currencies
• Profit for the year of CHF 58.7 million, up 17.6%
• Cash flow from operating activities of CHF 60.9 million, down 51.0% reported
• Basic earnings per share of CHF 2.05 versus CHF 2.39 in 2010 on a 28.8% increase in weighted shares outstanding
• Net debt of CHF 146.6 million, in line with the same period of 2010
gategroup, the leading independent global provider of onboard products and services, demonstrated its resilience once again in the face of continued global economic uncertainty and uneven performance within the airline industry, its major customer base.
Carriers in gategroup’s core markets in Europe and North America trimmed capacity in an effort to firm up pricing and to contain climbing costs amid slackening demand. Other external factors that impacted gategroup in 2011 included the strength of the Swiss Franc, our reporting currency, against the Euro and US Dollar, and the earthquake and ensuing events in Japan.
“Confronted by economic and industry uncertainty, gategroup was able to sustain its revenue base in 2011 and further consolidate its position in core markets as well as expand its footprint in emerging market segments,” said Chief Executive Officer Andrew Gibson.
The reported profit for the year was CHF 58.7 million, a 17.6% increase over the previous year’s CHF 49.9 million. Group revenue was CHF 2,688.1 million on a reported basis, essentially unchanged from 2010’s revenue of CHF 2,700.0 million. Adjusted for foreign currency differences, however, revenue was CHF 3,040.4 million, an increase of 12.6%.
Revenue performance in 2011 was boosted by the impact of acquisitions in Canada and India completed at the end of 2010. These acquisitions contributed positively to Group earnings before interest, taxes, depreciation and amortization (“EBITDA”) results, but overall were below the Group’s average margin.
EBITDA was CHF 201.7 million, up 6.4% in constant currencies, resulting in an EBITDA margin of 7.5% on a reported basis and 7.6% in constant currencies reflecting trading performance and other one-time adjustments for 2011.
Operating profit, meanwhile, was up marginally to CHF 114.8 million on a reported basis and up by 15% in constant currencies. Cash flow from operating activities was down from CHF 124.4 million in 2010 to CHF 60.9 million, due principally to a lower EBITDA (including foreign exchange effects), a higher build-up of working capital to fund growth in new business and funding of pensions.
Basic earnings per share were CHF 2.05 in 2011 versus CHF 2.39 the previous year, down 14.2% on 28.8% higher weighted average number of shares outstanding.
“In a weakened market with adverse currency changes, gategroup delivered a solid result,” Gibson said. “The business model and strategy continued to prove itself,” he said, noting that the Company renewed 85% of existing contracts that came up for renewal and won 37% of all new contracts up for bid where the Company was not the incumbent.
The Board will consider a return to shareholders in line with its stated dividend policy and will include a proposal in the invitation to the Annual General Meeting.
Notable developments in 2011 included:
• The appointment of Andrew Gibson, previously President of the North America business, as Chief Executive Officer. He was succeeded in North America by Doug Goeke. In addition, Kristin Brown was appointed gategroup General Counsel.
• Long-term global agreements with major customers Iberia and Scandinavian Airlines and a strategic partnership with Virgin Atlantic Airways in the UK. There were numerous other contract wins, many involving multiple gategroup brands.
• Creation of Gate Retail Onboard, a new platform that consolidates the Group’s extensive experience in providing onboard retail experience to customers in both the traditional and low-fare carrier segments.
• A successful launch of custom in-flight management software solutions by eGate Solutions and investments in internal IT systems to enhance the effectiveness of our operations.
• Introduction of gateOPEX, a comprehensive program to standardize best practices across global operations, and continued progress under the Total Cost Management program to improve the management of supply costs.
• Two upgrades by Standard & Poor’s on gategroup’s long-term credit rating to BB due to the Company’s “better-than-forecast” resilience in tough market conditions.
“We are confident the business model will perform well relative to market conditions in 2012. In aggregate we maintain an expectation of flat real growth in 2012 across the global portfolio with some markets performing stronger and some weaker,” Gibson said.
No definitive guidance on margins was provided given potential volatility in key regions, notably Europe and associated sub markets.
Separately, gategroup today announced that it will realign its global services and product offerings into two major businesses. Airline Solutions, which represents approximately 80% of gategroup’s total revenues, will be comprised of the brands Gate Gourmet, Gate Aviation, Gate Safe, eGate Solutions and Performa. The deSter, Harmony, Supplair, potmstudios, and Pourshins brands will be part of the Product and Supply Chain Solutions business.
As a result of the realignment, gategroup’s Executive Management Board structure has been reorganized accordingly, including the addition of two new members. Details on the reorganization are contained in a separate press release issued today.
Please see the following link on the gategroup web site for additional company information as well as the press release referenced above: https://www.gategroupmember.com/index.php?option=com_content&view=article&id=498&Itemid=228
Please see the following link on the gategroup web site for additional information on gategroup as at Feb. 28, 2012: https://www.gategroupmember.com/index.php?option=com_content&view=article&id=504&Itemid=228
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Source: gategroup
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