gategroup delivers solid performance Donnerstag, 14. November 2013 - 06:38

Nov. 14, 2013 - gategroup delivers solid performance

With top-line growth and its European restructuring program on track, gategroup confirms outlook for the full year

Revenue up 1.6% (+3.6% at constant currency) for first nine months
EBITDA margin for first nine months at 5.6% (6.5% in previous year) with third quarter back on prior year level of 7.9%
Profit for the first nine months at CHF 10.4 million (2012: CHF 16.2 million) with third quarter up substantially to CHF 23.2 million in 2013 from CHF 12.2 million in 2012
Cash generated from operations up 33.5% from CHF 71.9 million in 2012 to CHF 96.0 million, year to date
Restructuring program in Europe on track to deliver CHF 25 million savings in full year 2013
Third quarter performance confirms recovery from weak European performance in second half 2012 through first half 2013
Higher year-over-year fourth quarter margins expected, due to improvements in the Airline Solutions business, notably in Europe and Emerging Markets

ZURICH, November 14, 2013 ̶ gategroup delivered solid performance in the third quarter of 2013, with reported revenues ofCHF 815.7 million and an EBITDA margin of 7.9%, in line with management expectations and results for the same period in 2012. Profit for the quarter was up substantially at CHF 23.2 million compared to CHF 12.2 million, year on year. The Group also realized stronger cash flow from operations year to date, at CHF 96.0 million compared to CHF 71.9 million for the same period in 2012.

A primary contributor to gategroup’s stable performance is its restructuring program, implemented to address underperformance in Europe, which is on track to deliver CHF 25 million in savings for the full year. The program gained momentum and gategroup confirmed ongoing performance recovery, compared to weaker European performance in the second half of 2012 through first half of 2013. The restructuring measures also helped bring the EBITDA margin back on prior year level for the third quarter 2013. Due to improvements in the Airline Solutions business, notably in Europe and Emerging Markets, the Group expects to realize higher fourth quarter margins compared to the prior year.

For the first nine months of 2013, gategroup posted total revenue of CHF 2,281.1 million, representing growth of CHF 36.6 million, or 1.6% against CHF 2,244.5 million in the prior year period. At prior year exchange rates, revenue would have increased by 3.6%.

gategroup achieved an EBITDA of CHF 127.2 million (5.6% EBITDA margin) in the first three quarters of 2013 compared to CHF 146.7 million (6.5% EBITDA margin) in the prior year period.

Profit for the first nine months was at CHF 10.4 million, down from a net profit of CHF 16.2 million in the same period in 2012.

Strong cash flow

As noted, gategroup improved its cash generated from operations in the year-to-date reporting period to CHF 96.0 million, up 33.5% from CHF 71.9 million in the equivalent period of the previous year. The increase was mainly driven by improved working capital management.

gategroup’s balance sheet as per September 30, 2013, shows total equity of CHF 281.8 million, compared to CHF 349.4 million as per September 30, 2012, and to CHF 254.6 million as per December 31, 2012. Net financial debt as per September 30, 2013, was at CHF 245.7 million compared to CHF 224.8 million as per September 30, 2012, and CHF 258.5 million at December 31, 2012.

Revenue growth in both segments

In the first nine months of 2013, revenues for the Airline Solutions business increased by CHF 35.1 million from CHF 1,943.3 million to CHF 1,978.4 million (+1.8%). The business segment also continued to improve its EBITDA margin in the third quarter, despite lower than last year volumes on short-haul routes. Segment EBITDA year to date has reached CHF 122.1 million (6.2% of revenues) for the period under review, compared to CHF 133.9 million (6.9% of revenues) in the same period in 2012. As previously reported, the restructuring program in Europe is well on track to deliver savings of CHF 25 million for the full year, with approximately 70% captured through the third quarter of 2013.

The Product and Supply Chain Solutions (P&SCS) business realized a 2.7% increase in revenues to CHF 447.0 million in the first nine months of 2013 from CHF 435.1 million for the same period in 2012. P&SCS also reported an EBITDA of CHF 28.4 million (6.4% of revenues) compared to CHF 31.4 million (7.2% of revenues) in the previous year. The decrease in EBITDA was mainly driven by raw material price increases and the loss of some high-margin product sales that were not fully offset by new product sales at lower-margins.

Important contract extensions, streamlining of non-core activities

In the reporting period, gategroup has extended its long-standing contract with Swiss International Air Lines in Switzerland for food production and airside handling services for all SWISS flights departing from Zurich, Geneva and Basel. The existing agreement, which was set to expire in 2015, has been extended by four years until 2019 with an option for prolongation until 2020. The total value of the contract extension until 2019 is approximately CHF 400 million in revenues.

gategroup also was awarded a five-year extension of business with long-time customer easyJet, one of Europe’s leading airlines. The airline’s successful retail program is a benchmark in the industry and gategroup will continue to provide the complete end-to-end retail services across easyJet’s entire network. The total value of this business to gategroup is anticipated to be in excess of CHF 800 million in revenues.

As part of gategroup’s decision to streamline its operations, gategroup signed an agreement to sell its Gate Gourmet flight catering operation at Brussels airport to LSG Sky Chefs, effective November 1, 2013. The Brussels business offered limited growth for Gate Gourmet.

Outlook confirmed

gategroup confirms its 2013 full-year outlook. Thus, gategroup maintains an expectation of nominal growth in revenues across its portfolio and expects to achieve an EBITDA margin in the range of 5.5% to 6.0% for the full year. gategroup’s continuous focus on streamlining the European Airline Solutions business, ongoing integration of the new acquisitions, together with activities in all other businesses, is expected to result in a continued margin improvement and an improved financial performance for the second half of the year.

More information on our Third Quarter Report is available at: http://www.gategroup.com/index.php/investor-relations/investor-pack?layout=edit&id=609

Overview of key figures for the first nine months of 2013 (January – September)

millions of CHF	Q3 2013	Q3 2012	Change	Q1 – Q3 2013	Q1 – Q3 2012	Change
Revenue	815.7	830.6	(1.8%)	2,281.1	2,244.5	1.6%
EBITDA	64.8	64.9	(0.2%)	127.2	146.7	(13.3%)
EBITDA margin	7.9%	7.8%	0.1pp	5.6%	6.5%	(0.9pp)
Operating profit	47.9	32.0	49.7%	70.3	71.7	(2.0%)
Operating profit margin	5.9%	3.9%	2.0pp	3.1%	3.2%	(0.1pp)
Profit for the period	23.2	12.2	90.2%	10.4	16.2	(35.8%)
Cash generated from operations	59.3	63.5	(6.6%)	96.0	71.9	33.5%
Net financial debt				245.7	224.8	(9.3%)
Cash (incl. available credit lines)				312.1	362.2	(13.8%)

Invitation to analysts, investors and journalists

gategroup CEO Andrew Gibson and CFO Thomas Bucher would like to invite analysts, investors and journalists to participate in a telephone conference call regarding the 2013 Q3 results.

The presentation can be accessed via webcast and dial-in teleconference at 14:00 CET on Thursday, November 14, 2013.

To listen to the live presentation via teleconference, call the dial-in number approximately 15 minutes before the start time. Once dialed in, please follow the instructions given over the phone.

Direct dial-in numbers:

Switzerland toll: +41 44 580 00 74

UK toll: +44 2033679453

US toll-free: +18669075923

To link to the live webcast of the presentation, please follow the link on our website:

http://www.media-server.com/m/p/ezvfy3eo

OVERVIEW of gategroupgategroup is the leading independent global provider of products, services and solutions related to a passenger’s onboard experience. gategroup comprises the following brands: deSter, eGate Solutions, Gate Aviation, Gate Gourmet, Gate Retail Onboard, Gate Safe, Harmony, Performa, Pourshins and Supplair.

FORWARD-LOOKING STATEMENTS This publication contains forward-looking statements and other statements that are not historical facts. The words “believe”, “anticipate”, “plan”, “expect”, “project”, “estimate”, “predict”, “intend”, “target”, “assume”, “may”, “will” “could” and similar expression are intended to identify such forward-looking statements. Such statements are made on the basis of assumptions and expectations that we believe to be reasonable as of the date of this publication but may prove to be erroneous and are subject to a variety of significant uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements. Among these factors are changes in overall economic conditions, changes in demand for our products, changes in the demand for, or price of, oil, risk of terrorism, war, geopolitical or other exogenous shocks to the airline sector, risks of increased competition, manufacturing and product development risks, loss of key customers, changes in government regulations, foreign and domestic political and legislative risks, risks associated with foreign operations and foreign currency exchange rates and controls, strikes, embargoes, weather-related risks and other risks and uncertainties. We therefore caution investors and prospective investors against relying on any of these forward-looking statements. We assume no obligation to update forward-looking statements or to update the reasons for which actual results could differ materially from those anticipated in such forward-looking statements, except as required by law.