Annual Review 2011 - The Nuance Group

The Nuance Group
Annual Review 2011 Review of 2011
Our marketplace
Travel retail market overview
In 2011, the global Duty Free market continued its recent
upward trend and delivered a very strong performance,
with global sales reaching US$46 billion. Key drivers
included improved market conditions and rising
consumer confidence as well as strong passenger traffic
growth and a markedly enhanced performance in
emerging market regions such as China, Brazil and India.
Compared to last year, the travel retail market grew by
18%. This figure is to some extent distorted by the
weakening US Dollar, and real market growth closer
to 14% up on 2010.
With a 60% share, airports constitute by far the largest
channel within the industry, and generated some
US$28 billion in global sales in 2011, up 19% on the
previous year. This increase was achieved on the back
of robust performances from developing markets,
such as Asia and Latin America, together with improving
growth rates in Europe and North America. In Europe,
we saw growth driven primarily by Russian and Eastern
European travellers, as well as by a general recovery in
passenger movements, which had been impacted by
the Icelandic volcanic ash event. In the Oceanic region,
the strong AUS/NZD Dollar continues to negatively
impact PSR.
With future growth estimated to reach 8–10% per year,
it is clear that the industry is back on a positive track.
The bounce back experienced across all categories in
2010 continues apace, with all showing positive rises,
especially P&C, liquor and luxury goods.
In our view, international air travellers will reach three
billion by 2015, underlining the bright future faced
by the industry. Although air travel will continue to be
tested by global events and other issues, it continues to
demonstrate great resilience harnessed to an ability to
overcome potential uncertainties. Industry estimates are
for 5% growth per annum over the next three years.
Building on last year’s achievements
2010 was an excellent year for Nuance and we built further
on these foundations with an even better performance in
2011, with revenue of CHF 1,867.5 million and an EBITDA
of CHF 112 million (6% of revenue). These are the
Group’s best ever results, as we improved revenues and
profitability across most regions. The Nuance Group has
delivered great performance on par with the market,
with the exceptional performance of our airport
operations in Asia and North America helping to deliver
total growth of 8% 1 .
Dynamic growth across Asia resulted in an estimated
uplift of some 22% 1 for the region. However, our Asian
business performed better still, delivering 26% growth1 and achieving record revenue for the third year. This
robust performance was aided by the success of various
initiatives undertaken in the year, as well as strong first
year results in Hong Kong and Singapore. Similarly, in
North America, revenue grew by almost 12% 1 , compared
to growth of 9% 1 for the overall market.
In 2011, passenger traffic performed strongly across
Europe and this was reflected in revenue, where we
experienced an increase of 3% 1 . In some markets, such
as Turkey, where we benefited from the refurbishment
of our stores at Antalya’s T1, we recorded significant
growth versus 2010, as well as rising passenger
numbers and increased spending from Eastern and
Northern European travellers. However, despite growing
traveller numbers, the region is not without its challenges.
Strengthening currencies such as the Swiss franc and
Swedish krona continue to have a significant impact on
customer behaviour in these important markets.
Our Australian operation was negatively affected by the
strengthening of the Australian Dollar against major
currencies (vs. USD +12%,vs. NZD + 3%, vs EUR +7%).
However, with a range of initiatives improving passenger
spend rate, TNG Australia grew by 2%.
Whilst airport retail comprises over 93% of Group
revenues, the positive trend was also apparent in our
Retail Services & Distribution division, which achieved
almost 36% growth over the year.
1 Adjusted for currency – use 2010 exchange rate
20