The Advent of a new era? - The Moodie Report

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ecent years the company has developed complementary retail services. It intends to expand globally around this twin-pronged approach as travel-related catering has logical synergies with duty free and travel retail. In 2002 Dufry ranked seventh in Generation’s league of world duty free retailers. At that time it had shops at 59 airports in 31 countries, making it the most internationally diverse duty free retailer in the world. Over the past two years former CEO Frédéric Gauchet introduced a series of sweeping changes, spinning off the distribution arm, reorganising management and procurement, decentralising regional head offices, exiting or renegotiating contracts and reducing headcount at Group 2002 results The Moodie Report PLUS the Basel headquarters (subsequently relocated) by around -42%. The recipe worked. For the nine months to September 2003, EBITDA reached CHF48 million (US$38.6 million) and EBIT CHF28 million (US$22.5 million), despite a -8% fall in like-for-like sales in the SARS and a war-hit first half. EBIT is expected to exceed well over CHF40 million (US$32.2 million) for the full year. Key management include chief procurement officer Liz Woodland, regional chief operating officers Dante Marro (Italy & Brands), René Riedi (Eurasia & Asia), Antoine d’Oiron (Western Europe & Africa) and José González (Americas). Woodland is widely credited for improving supplier relationships and bringing a more structured approach to buying. The others are some of the trade’s most experienced and respected executives. ■ Group 2003 results (nine months to September) ■ Sales: CHF 1,019 million (US$820 million) ■ Sales: CHF637 million (US$513 million) ■ EBITA: CHF61 million (US$49 million) ■ EBITA: CHF48 million (US$39 million) ■ EBIT: CHF32 million (US$26 million) ■ EBIT: CHF28 million (US$23 million) 4 Dufry’s top management Liz Woodland René Riedi Antoine d’Oiron Dante Marro José González Key Dufry travel retail locations Africa • Ghana • Ivory Coast • Morocco • Tunisia Europe • Baltic Sea • Belarus • France • Greece • Italy • Netherlands • Russian Federation • Switzerland • Ukraine Asia and Eurasia • Cambodia • Georgia • Israel • Singapore • UAE Americas and Caribbean • Aruba • Barbados • Bahamas • Bolivia • Grenada • Mexico • Nicaragua • US
9 February SWITZERLAND. Dufry, one of the world’s leading duty free retailers, is to be sold to a group headed by venture capital company Advent International for an undisclosed sum. A Dufry statement said: “Due to the joining of a new majority partner, the shareholders have asked CEO Frédéric Gauchet, to free himself as of today in order to assist them in the successful conclusion of the transaction and to take care of their other interests.” The General Assembly of the shareholders and the Board of Directors paid tribute to Gauchet “who has achieved and exceeded the objectives defined by the shareholders”. 2003 is understood to have been Dufry’s best ever as it generated significant net profits, an impressive turnaround from the net deficit and near-bankruptcy Gauchet faced when he assumed the reins in 2001. 1 March SWITZERLAND. Advent International and its partners in the acquisition of Dufry have appointed Julian Diaz as CEO of the Swiss travel retailer, replacing Frédéric Gauchet. Diaz, an experienced industry executive, has run Operadora de Aeroboutiques in Mexico and before that was a senior executive with Spanish travel retailer Aldeasa. The completion of the deal was confirmed today. Advent International, one of the world's largest private equity firms, with US$6 billion in cumulative capital raised and offices in 13 countries across North America, Europe, Latin America and Asia Pacific, heads the acquisition. Its partners in the holding company include Áreas of Spain, a member of the listed French catering group Elior and Nivada, the Mexico-based Holzer family-run watches business. Until recent years, Holzer had the Swatch Group distribution in Mexico. Juan Carlos Torres, a senior partner in Advent's Latin American deal group and the newly-appointed president of Dufry, said: “Dufry has a strong position in the travel retail market through its global coverage, attractive airport locations, presence in emerging markets, long-term concession agreements and exclusive partnership arrangements with selected airports – all of which made it an appealing investment for us.” 2 March FRANCE. Elior – the French catering services group – through its Spanish subsidiary Áreas, has acquired a 15% stake in the company Sintres. Sintres, mainly owned by investment funds managed by Advent International, has taken control of 75% of Dufry. The other shareholder in Sintres is Nivada, owned by Andre Holzer. The private equity firm Advent International has been Elior's partner for some years. In 1997, Advent International took an active part The Moodie Report PLUS Key developments around the Dufry deal as reported by The Moodie Report.com in building up the Elior group, and in the latter's IPO in 2000. It is still today a significant shareholder in Elior (see profiles of the players, pages 3/4). Following this stake in Sintres, Elior/Áreas and Advent International have decided under a common agreement to study methodologies which could be implemented later for a “progressively reinforced partnership”. Elior said: “Should no agreement be found by this date, thus Áreas can sell its stake (put option) to Advent International, who will benefit as well from a call option on the same conditions.” Elior co-chairman Robert Zolade commented: “In France and in Spain, Elior is the leader in concession catering markets, notably in airports, motorways and rail stations. For a few years Elior has also developed complementary activities in shops, which are dedicated to answering the needs of both customers and concession authorities. “By strengthening its means and know-how, this operation will allow Elior to enlarge and progressively complete its commercial offer in concession markets.” 4 March SWITZERLAND. The acquisition of a majority share (around 75%) in Swiss duty free retailer Dufry by a group headed by Advent International has been valued at around US$200 million. Ernest Bachrach, who heads Advent's Latin American operations, told Dow Jones International News the approximate price, saying the company had generated sales of CHF 660 million (US$516.8 million) last year. Further duty free acquisitions look certain. Advent's Mexico Citybased managing director Juan Carlos Torres told Dow Jones: “We have two areas of strategy. One is to improve company operations, by cost-cutting and improving margins. There are things we can do there [Dufry] like centralising. [Secondly] it's also a good platform from which to buy other duty free companies.” Torres said Advent was already in talks with other companies, but gave no details. The group said it plans to launch fund raising for a new US$300 million Latin American private equity fund during the second or third quarter of this year to capitalise on growing investor interest. 8 March 2004 ARGENTINA. Eduardo Eurnekian, the Argentinean businessman who holds a 63% stake in Aeropuertos Argentina 2000 (AA2000), has finalised the sale of Food Port, which runs AA2000's food & 5 beverage business, to Spanish group Áreas. The price was not disclosed. Food Port records a monthly turnover of ARS8 million (US2.7 million) across the 32 airports in the AA2000 network. Áreas, which already operates the Pizza Box, Cafe Cafe and La Strada restaurant chains in Argentina, will expand its food outlets in the country from 30 to 46. Eurnekian's company, Corporacion American Sudamericana (CAS), has recently paid US$30 million for the 28% stake in AA2000 held by the US group Covanta Energy Corporation. This share transfer increased the CAS holding in AA2000 to 63%. 9 March FRANCE/SPAIN. Áreas’ parent company, French catering-to-retail group Elior, plans to step up its international development in both sectors following the acquisition of a stake in Dufry, according to co-president and cofounder Robert Zolade. He made the comments during an interview with the Spanish business daily Expansión. Zolade said the role of Elior International managing director Gilles Cojan is to create a ‘group leader’ in duty free. “As Áreas has experience in airport retailing, we have been pragmatists and we have carried out the operation through our managing partner in Spain, Áreas.” Zolade said the group sees a growing travelrelated market and is also encouraged by increased limitations in the service of inflight food, which is set to boost the expenditure of the one-in-four passengers who spend on either food or merchandise in airports.
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