A GLOBAL AMBITION ANNuAL REPORT 2006 - Dufry

Dufry Annual Report 2006 — Chief Financial Officer
experienced one-off effects. Our operation in Dominican Republic, which we
started in late 2005, increased its contribution due to the full year effect and
opening of new shops in 2006. Net sales also increased due to the start up of
the operations in Turks & Caicos and the full year consolidation of the Young
Caribbean Group, which we acquired in the last quarter of 2005. On the other
side, the increase was partially absorbed by the reduction of the activity in
some Caribbean areas, mainly the Mexican Riviera, due to the devastating
effects of Hurricane Wilma in late 2005, which continued to impact on most
of 2006.
Region South America, which includes the newly acquired Brazilian operations,
the Bolivian and cruise line operations that were transferred from region North
America & Caribbean to region South America in 2006, achieved net sales of
CHF 371.6 million in 2006 compared to CHF 47.1 million in 2005.
Gross Profit. Gross profit jumped 57.6% to CHF 744.4 million in 2006 from CHF
472.2 million in 2005. The gross margin increased by 2.1 percentage points to
51.8% in 2006 from 49.7% in 2005. In the last three years the gross margin has
increased from 46.4% in 2003 to the current 51.8%. These improvements are
the result of the strategic focus on the most profitable product categories, like
perfumes & cosmetics and luxury products, strengthened presence in emerging
markets, and improved supplier partnerships, thanks to increased presence
in airports worldwide.
Selling Expenses. Selling expenses, net amounted to CHF 286.0 million or
19.9% of turnover compared to CHF 171.7 million or 18.1% in 2005. The increase
of the selling expenses as a percentage of turnover is mainly due to
higher concession fees of new shop locations.
Personnel Expenses. In 2006, Personnel expenses were CHF 179.5 million
compared to CHF 123.2 million in 2005. This increase reflects the higher number
of employees within our Group, as a result of our expansion through acquisitions
and new concessions. As of December 31, 2006, the number of employees
was at 6,526 compared to 4,419 at year end of 2005. Personnel expenses
as a percentage of turnover decreased to 12.5% for 2006 compared to 13.0%
for 2005.
General expenses. General expenses, net amounted to CHF 118.4 million in
2006, compared to CHF 77.2 million in 2005, mainly due to the new activities;
expressed as percentage of turnover, the ratio slightly increased from 8.1% in
2005 to 8.2% in 2006.
EbITDa. In 2006, EBITDA (before other operational income / expenses) increased
by 60.2% to CHF 160.5 million, compared to CHF 100.1 million in 2005.
The EBITDA-margin improved by 0.7 percentage points to 11.2% in 2006 from
10.5% in 2005. The improvement in the margin is mainly attributable to the
increase in Gross Profit, combined with a slight reduction on the weight of personnel
expenses. These improvements more than compensate the increase in
selling expenses.