LAGARDÈRE SERVICES : TRAVEL FOR GROWTH! INVESTOR DAY LAGARDÈRE. Paris 28 May 2014

Transcription

1 LAGARDÈRE SERVICES : TRAVEL FOR GROWTH! INVESTOR DAY LAGARDÈRE Paris 28 May 2014

2 AGENDA A new Lagardère Services An attractive market on which Lagardère Services is well positioned A sustained growth exceeding expectations A widely demonstrated operational excellence An ambitious Vision for the future 2

3 LAGARDÈRE SERVICES IN A SNAPSHOT Lagardère Services IFRS key financials ( m, 2013) 3, , , Sales -22 HO costs & non-core Recurring EBIT 3

4 AN AMBITIOUS TRANSFORMATION STRATEGY ANNOUNCED IN 2012 Investor Day June 12,

5 IN DISTRIBUTION, NEW INVESTORS SEEKED TO DEVELOP AND REINVENT THE BUSINESS LS Distribution can be further developed and reinvented. It requires investments Lagardère Services is not ready to consent since its strategic focus is Travel Retail Lagardère Services initiated a process in 2013 to find investors willing to support this project Process is progressing according to plan 5

6 IN TRAVEL RETAIL, 328M ADDITIONAL SALES SINCE 2011 FROM INTERNAL GROWTH 1 Lille station 5 PoS to be opened: Eric Kayser, Marks & Spencer, Subway, Trib s, So! Coffee Frankfurt station 1,000 sqm food court opened in May 2013 Kamps, Burger King, Rustichelli, etc. Warsaw airport 10-year contract 3,000 sqm to be opened in early 2015: Aelia Duty Free, Armani, Longines, Ralph Lauren, etc. Non-exhaustive Los Angeles airport 7 PoS opened in 2013 or to be opened in 2014: Petrossian, James Beach, Cantina Laredo, Ill Forks, etc. ADP SPP 2 Core DF +14% Sales Fashion +95% + 328m Shenzhen s new terminal 13 mono-brand luxury fashion boutiques opened in March 2014: Hugo Boss, Versace, Montblanc, etc. Singapore airport Sales +46% Duty Free & Luxury Travel Essentials Foodservice JV with SNCF JV established in PoS to be modernized Malaysia Lonely Planet opened in March 2013 Discover Malaysia opened in May Internal growth being defined as life-for-like growth and growth from tenders won 2. Sales Per Passenger 6

7 IN TRAVEL RETAIL, 258M ADDITIONAL SALES SINCE 2011 FROM EXTERNAL GROWTH 1 Non-exhaustive Gerzon 12 PoS in Schiphol airport over 2,400 sqm Key development in Luxury Fashion Coffee Fellows c. 20 PoS in train stations in Germany Exclusive masterfranchise in Travel Retail Duty Free & Luxury Travel Essentials Foodservice Airest 2 c. 200m sales in over 200 PoS in 11 countries, mainly in airports Key development in Foodservice Rome Duty Free 3.4bn over 14 years 8 PoS in Rome airports over more than 4,800 sqm Strategic entry in Italy + 258m DFS NZ PoS at Gold Coast, Adelaide, and four airports in NZ On-line sales platform Consolidation of our operations in Pacific Unimex c. 20m sales in PoS in Prague airports Consolidation of our operations in Czech Republic 1. External growth being defined as growth deriving from acquisitions of companies. Including Retail Spain and Duty Free Switzerland 2. Airest also operates in Duty Free & Luxury 7

8 GROWTH PROFILE ON TRACK AT MID-PLAN Guidance June 2012 (From 2011 to 2016) Achievements Sales 1 +10% per annum +10.5% CAGR Ebitda 1 margin +0.5 pt to +1.0 pt over five years +0.3 pt after two years 1. Proportional view 2. LS travel retail pro-forma perimeter i.e. including Retail in Spain and Duty Free in Switzerland 8

9 BEYOND FINANCIAL GUIDANCE, A TRULY GLOBAL TRAVEL RETAILER Global reach: 30 countries, 150 airports Largest integrated Travel Retailer LS travel retail presence in airports (As of April 30 th, 2014) Largest Travel Retailers by sales 1 ( bn, 2013) Estimates Top 100 airport in terms of PAX volume Other airport Duty Free & Luxury Travel Essentials Foodservice 1. LS travel retail consolidated ACI, The Moodie Report 9

10 AN EXPERIENCED TEAM TO FURTHER GROW IN TRAVEL RETAIL Emmanuel de PLACE COO LS travel retail ASPAC Vincent ROMET COO LS travel retail EMEA Luc MANSION CFO Frédéric RENAULT EVP HR & Communication Dag RASMUSSEN Chairman & CEO Frédéric CHEVALIER EVP Strategy 10

11 AGENDA A new Lagardère Services An attractive market on which Lagardère Services is well positioned A sustained growth exceeding expectations A widely demonstrated operational excellence An ambitious Vision for the future 11

12 TRAVEL RETAIL: A HIGHLY SPECIALIZED NICHE IN THE RETAIL WORLD Café Leffe, Tours railway station The Fashion Gallery, Changi airport Traveler Brand hubiz, Warsaw metro station A multi-channel and multi-category industry 12

13 A 88BN MARKET Travel Retail market size ( bn, %, 2013) Estimates S = 88bn S = 88bn Foodservice 35bn, 40% Travel Essentials 13bn, 14% 24% 12% 40% 55% 32% 9% 54% 37% RoW 27bn, 31% Duty Free & Luxury Fashion 40bn, 46% 64% 60% 45% 30% 37% 37% 35% 27% ASPAC 32bn, 36% Europe 29bn, 33% Airports 37bn 42% Stations 14bn 16% Others 1 37bn 42% Airports 37bn 42% Stations 14bn 16% Others 1 37bn 42% 1. Incl. ferries, inflight, downtown stores for Duty Free & Luxury, highways, hospitals, museums for Foodservice 13

14 AN ATTRACTIVE INDUSTRY THANKS TO SOUND DRIVERS FUELLING TOP LINE GROWTH Travel Retail market growth = PAX 1 growth x SPP 2 growth Travel Retail market growth PAX = growth x Category growth Stores commercial effectiveness + + Nationality mix Growth over the past 10 years + 7% - 10% p.a Expected growth over the next 10 years + 5% - 8% p.a Number of passengers 2. Spend per passenger 14

15 SOUND DRIVERS FUEL TOP-LINE GROWTH (1/2) PAX GROWTH ILLUSTRATION Sound long-term air traffic perspectives Air traffic evolution (billions of passengers, ) Global trends supporting rail traffic Length of high-speed railway lines (thousands of km, ) CAGR RoW 0,4 0, ,9 0, % 5% 2% World North America % +138% ASPAC 1.4 Europe % 2012 actual Under construction Planned, ACI, Frost & Sullivan May

16 SOUND DRIVERS FUEL TOP-LINE GROWTH (2/2) SPP GROWTH ILLUSTRATION Category growth Commercial effectiveness Heathrow Terminal 2 Nationality mix Top 10 spending nationalities Weight in airport 1 metrics (share of total international pax and of core duty-free sales, ) Berlin Hauptbahnhof 20% 5% 6% 28% PAX Core Duty Free sales 1. Aéroports de Paris, Aeroporti di Roma, Prague Vaclav Havel airport, Nice airport 16

17 LAGARDÈRE SERVICES WELL POSITIONED TO BENEFIT FROM INDUSTRY GROWTH LS travel retail consolidated breakdown by channel and business line ( bn, %, 2013) 2% S = 2.9bn Foodservice 0.2bn, 7% Travel Essentials 1.5bn, 52% 36% 9% 25% Duty Free & Luxury Fashion 1.2bn, 41% 62% 91% 59% 16% Airports 1.8bn 60% Stations 0.6bn 22% Others 0.5bn 18% 17

18 ATTRACTIVE INDUSTRY TRIGGERING HIGH RETURN, YET WITH VERY DIFFERENT P&L PROFILES An Infrastructure Manager (IM) has a duty-free contract to tender / a subsidiary running the duty-free to outsource Illustrative Option A The IM favors high rents spread over contract duration Travel retailer key financials Variable rent (in percent of sales) Cumulated rent (in ) Capex & downpayment (in ) EBITDA (in percent of sales) ROCE (in %) Iso-IRR Option B The IM favors cash now against lower rents in the future Travel retailer key financials Variable rent (in percent of sales) Cumulated rent (in ) Capex & downpayment (in ) EBITDA (in percent of sales) ROCE (in %) Lagardère Services is rebalancing its development strategy and targets all kind of options Low High 18

19 GROWING SOPHISTICATION REQUIRED TO SEIZE GROWTH AND MAINTAIN PROFITS Marketing Operations SNCF: 300 PoS, the vast majority to be refitted within 18 months Business development and more! Abu Dhabi Airports unveils upcoming tender, Feb

20 Foodservice Travel Essentials Duty Free & Luxury INVESTOR DAY Paris - May 28 th, 2014 LAGARDERE SERVICES INTEGRATED BUSINESS MODEL: A DIFFERENTIATING MODEL DELIVERING TOP LINE GROWTH A central development & a local adaptation delivering growth Duty Free core business Fine Food & Confectionery Fashion & Accessories News & Convenience Gifts & Souvenirs Electronics & Media Quick Service Restaurant Full Service Restaurant Bars & Cafés Aelia Duty Free, BuY Paris So Chocolate The Fashion Gallery, Eye Love Relay, hubiz Discover Tech2Go Trib s, Rustichelli & Mangione The Flame So! Coffee, decanto L Occitane Fauchon Hermès Casino Lonely Planet FNAC McDonalds Café Leffe Starbucks Develop centrally key areas of expertise Partner with global brands Partner with landlords Select, adapt and operate locally Consolidated ( bn, % CAGR, ) % +7% % proprietary concepts partner brands 20

21 POSSIBLE INDUSTRY CONSOLIDATION, ESPECIALLY IN DUTY FREE Top Travel Retailers relative size vs. LS travel retail (Base 100 for LS travel retail, 2013 pro-forma 1 ) Estimates Travel Retail Travel Essentials Foodservice Duty Free & Luxury Top 5 19% 27% 23% 32% market share Value of relative market share , High Low #10 49 # Airest and Gerzon acquisitions fully consolidated 21

22 AGENDA A new Lagardère Services An attractive market on which Lagardère Services is well positioned A sustained growth exceeding expectations A widely demonstrated operational excellence An ambitious Vision for the future 22

23 STRONG GROWTH OF TRAVEL RETAIL OVER THE PERIOD Lagardère Services IFRS consolidated sales ( m,%, ) +0.6% 3,724 3,745 1,737 47% 1, ,493 40% Distribution Integrated Retail -14% 1,986 2,252 60% 53% +13%

24 FOLLOWING LS DISTRIBUTION DISPOSAL, A PURE TRAVEL RETAIL PLAYER, WITH 2.4bn SALES, Lagardère Services IFRS consolidated sales after Distribution disposal ( m, 2013) Total 2013 Distribution 1 Other perimeter impacts after Distribution disposal 1,493 (1,379) (114) 92 2,252 2,344 HO costs & non core ,745 2, LS Distribution perimeter to be sold 2. Curtis in the US, Retail in Spain, Duty Free in Switzerland 24

25 LS TRAVEL RETAIL CONSOLIDATED 100% UP BY 26% OVER THE PERIOD, CONSISTENTLY WITH GUIDANCE Bridge LS travel retail 1 IFRS consolidated sales to consolidated ( m, 2013) Financial markets benchmark Travel Retail benchmark 2, , , % IFRS LS Share of Proportional JV s JV s 2 100% ,986 2,127 2,267 CAGR 8.6% 10.5% 12.2% 1. Including Retail Spain and Duty Free Switzerland 2. Relay@ADP, C-Store, Dutyfly SDA, Lyon Duty Free, La Réunion, Time Newslink 25

26 INTERNAL GROWTH REMAINS THE MAIN DEVELOPMENT PATH, HOWEVER SUCCESSFUL ACQUISITIONS ARE ACCELERATING THE GROWTH LS travel retail consolidated growth breakdown by nature ( m, ) 258 2,853 2, Tenders won Existing contracts +26% 56% of total growth 44% of total growth 2011 Internal growth 1 External growth Net of the contracts terminated over the period 2. Including Retail in Spain and Duty Free in Switzerland 26

27 AN INTERNATIONAL PLAYER OPERATING ACROSS ALL GEOGRAPHIES AND ALL CHANNELS LS travel retail consolidated breakdown by geography and channel ( bn, %, 2013) Others 1 0.5bn, 18% (vs. 21% in 2011) Stations 0.6bn, 22% (vs. 24% in 2011) S = 2.9bn 13% 15% 32% 3% 27% 13% Airports 1.8bn, 60% (vs. 55% in 2011) 61% 55% 82% Western Europe 1.9bn 67% Emerging countries 0.8bn 27% Americas 0.2bn 6% 1. Incl. ferries, inflight, downtown stores for Duty Free & Luxury, highways, hospitals, museums for Foodservice 27

28 GROWTH FUELED BY THE FAST GROWING AND MORE PROFITABLE DUTY FREE & LUXURY AND FOODSERVICE BUSINESS LINES LS travel retail consolidated by business line (%, B) Foodservice 6% +41% 8% + 13% Travel Essentials 55% +7% 51% + 46% Duty Free & Luxury 39% 41% + +15% 41% B 28

29 DRIVING A FAVORABLE MIX EVOLUTION LS travel retail consolidated by product category (%, B) Other 26% 24% 22% Food & Beverage Print Liquor Tobacco Fashion Perfume & Cosmetics 7% 10% 17% 16% 14% 11% 6% 6% 6% 25% 24% 20% 5% 6% 11% 15% 16% 14% B 29

30 LS DISTRIBUTION DISPOSAL: A 50M IMPACT ON THE RECURRING EBIT BEFORE ASSOCIATES Lagardère Services IFRS Recurring EBIT before associates after Distribution disposal ( m, 2013) Total 2013 Distribution 1 Other perimeter impacts Pro forma 60 (56) (4) HO costs & non core (22) 6 2 (14) LS Distribution perimeter to be sold 2. Curtis in the US, Retail in Spain, Duty Free in Switzerland 30

31 LS TRAVEL RETAIL EBITDA INCREASED BY 31%, ABOVE GUIDANCE LS travel retail bridge to Normalized Operating Ebitda (proportional) ( m, %, 2011; 2013) % Recurring Ebit before associates IFRS 1 Depreciation & Amortization Normalized operating Ebitda LS Share of JV s Normalized Operating Ebitda (proportional) % 4.6% of sales 2 of sales 2 +33bps 1. Including Retail in Spain and Duty Free in Switzerland 2. Consolidated, proportional view 31

32 INCREASING INVESTMENT SUPPORTING A FASTER DEVELOPMENT PATH Annual LS travel retail consolidated growth ( m, % CAGR, ) Annual total capital expenditures incl. acquisitions in LS travel retail ( m, ) % +8% 2,853 Financial Tangibles & Intangibles 241 2,267 1, m

33 CONTINUED INCREASE OF LS TRAVEL RETAIL MATURITY RATE AND ABOVE 90% RENEWAL RATE MAINTAINED LS travel retail consolidated breakdown by contract maturity (%, ) Below one year 2.3bn 2.9bn 8% 8% Two to five years 44% 37% Renewal rate exceeds 90% Above six years 48% 55%

34 FAVORABLE EVOLUTION OF BUSINESS LINE MIX EXPECTED LS travel retail consolidated by business line (%, E) Foodservice 5% 15% Travel Essentials 55% 40% Duty Free & Luxury 40% 45% E 34

35 FAVORABLE EVOLUTION OF CHANNEL MIX EXPECTED LS travel retail consolidated by channel (%, E) Others Stations 21% 24% 16% 16% Airports 55% 68% E 35

36 AGENDA A new Lagardère Services An attractive market on which Lagardère Services is well positioned A sustained growth exceeding expectations A widely demonstrated operational excellence An ambitious Vision for the future 36

37 AGENDA A new Lagardère Services An attractive market on which Lagardère Services is well positioned A sustained growth exceeding expectations A widely demonstrated operational excellence An ambitious Vision for the future 37

38 GREAT RESULTS ACHIEVED THANKS TO OUR STAKEHOLDERS SUPPORT What we discussed today 38

39 NUMEROUS NEW CONTRACTS CURRENTLY ADDRESSABLE Illustrative Duty Free & Luxury Travel Essentials Foodservice Multiple categories And many others 39

40 CONFIDENCE IN OUR ABILITY TO CAPTURE SOME OF THESE OPPORTUNITIES Pure Travel Retailer Fantastic portfolio of concessions Winning positioning Great operational expertise 40

41 AN INCREASED FOCUS ON GROWTH External growth Duty Free & Luxury Restructure / Transform Foodservice Grow Travel Essentials Internal growth Surface reflecting sales size 41

42 GUIDANCE IMPROVED LS travel retail 1 guidance ( m, %, 2011; 2013; 2016) 2011 Guidance June 2012 (From 2011 to 2016) 2013 Guidance May 2014 (From 2013 to 2016) Sales 2 +10% per annum 10.5% CAGR % to +10% per annum Ebitda 2 margin 4.6% +0.5 pt to +1.0 pt over five years 4.9% +1.0 pt vs LS travel retail pro-forma perimeter i.e. including Retail in Spain and Duty Free in Switzerland 2. Proportional view 42