gategroup Holding AG published today its 2018 full-year results and Annual Report, reporting an all-time high in revenue and EBITDA in 2018.
- Revenues reached CHF 4.9 billion in 2018 (vs. CHF 4.6 billion in 2017, an increase of +8.5%)
- EBITDA reached CHF 343.9 million in 2018 (vs. CHF 300.4 million in 2017, an increase of +14.5%); EBITDA margin improved by +40 bps to 7.0%
- Improved cash generation from operations at CHF 255.7 million (vs. CHF 210.2 million in 2017, an increase of +21.6%)
Strong revenue growth across all regions
Revenues grew across all five regions in 2018, totaling CHF 4,940.4 million. In Europe and Middle East revenues increased to CHF 1,937.3 million (+8.9 %), in North America to CHF 1,216.1 million (+6.5%), in Asia Pacific to CHF 434.2 million (+25.8%) in Latin America to CHF 336.8 million (+2.1%) and South Europe and Africa region achieved revenues of CHF 1,042.5 million (+6.1%).
Organic growth in 2018 reached +9.6% (up 7.2% vs. 2017)
Revenue growth has been particularly strong in our EME and APAC segments. The EME result has been supported by very good momentum in our retail on board business as well as the consolidation of our position in the Scandinavian market. The growth of our APAC segment includes positive impacts from our market entry into the Republic of Korea as well as our enlarged contract with Virgin Australia.
gategroup has not only managed to deliver a very strong top line growth but also maintained cost discipline which overall resulted in lower overhead cost as a percentage of sales. Indirect labor cost as well as underlying operating expense ratios improved year-over-year.
Overall, these results are a confirmation of gategroup’s successful Gateway 2020 strategy, which is based on the following four pillars:
- Focus on the Core – gategroup’s distinctive culinary advantage
Culinary is at the heart of our business. In 2015 we recognized evolving passenger behaviors and the passengers’ desire for meals that cater to their individual tastes: be it healthy options, ethnic dishes or seasonal, locally-produced meals. Inspired by our roster of world-class, Michelin-starred chefs across the globe, we incorporate the latest culinary trends and utilize the latest food processing technologies to create a distinctive and superior culinary offering aimed at elevating the passenger experience.
- Commercial Innovation – utilizing technology to create an unrivaled inflight experience
Anticipating the individual needs of over 700 million passengers a year is a complex undertaking and we’ve made key advancements with the introduction of Travel Retail Technologies, our joint venture with Black Swan. By using predictive technologies, we can better understand and address passenger requirements while traveling. In collaboration with our airline customers we are creating new, customized dining concepts – whether they be epicurean, health-driven or convenience. We also recently invested in Tel Aviv-based travel, aviation and aerospace venture fund Cockpit Innovation who will provide us unrivaled access to startups that will further accelerate our innovation strategy. The excellent work of our commercial teams has allowed us to win key renewals in 2018, including Virgin Australia and Delta, and in 2019 with SWISS in our home country of Switzerland. The successful integration with Servair also continues and we are pleased that our Southern Europe and Africa region has delivered another year of excellent results.
- Geographic Expansion – Further expanding our global reach
In 2018, we further extended our geographical reach by entering new markets and expanded our presence in key, mature markets. We entered the Republic of Korea with a new, 25,000 sqm state-of-the art catering facility at Incheon Airport serving 120 Asiana Airlines flights per day. We extended our successful relationship with the Italian national flag carrier Alitalia to include the carrier’s hub at Rome, Fiumicino, serving them from a new, dedicated 8,000 sqm facility and acquired SCK Sky Catering Kitchen in Germany. Servair inaugurated a new unit in Ghana, further strengthening its leadership role in Africa and in early 2019 we launched in Bali, Indonesia. We will work to continue to expand across both our customer base and network.
- Standardization and Efficiency
Our commitment to standardization and efficiency will further accelerate the implementation of operational standards through gateOPEX. This successful program incorporates lean manufacturing and Six Sigma tenets as well as continuous improvement imperatives of operational deployment, infrastructure management and people development. We aim to ensure that all our units and kitchens around the globe are guided by the same processes and standards.
Robust cash flow statement and balance sheet
Cash generated from operations in 2018 was at CHF 255.7 million, compared to CHF 210.2 million in the previous year. Overall, 2018 was again a year of substantial investments to position the Group for future growth. These solid financial results have allowed gategroup to successfully extend key debt arrangements all the way to Q3 2021.
gategroup’s balance sheet as at December 31, 2018, shows total assets of CHF 3,081.1 million and total equity has increased to CHF 492.7 million, compared to CHF 443.9 million as at December 31, 2017. Net debt at the end of 2018 was CHF 678.5 million resulting in a net debt to EBITDA ratio of 2.0x, a decrease from 2.4x at the end of 2017.
Xavier Rossinyol, CEO of gategroup, said: “This outstanding financial performance, combined with strong sales growth and increased profitability and cash flow, is the confirmation of the successful delivery of our Gateway 2020 strategy which was first introduced in 2015 and is based on four pillars: Focus on the Core, Commercial Innovation, Geographic Expansion and Standardization and Efficiency. We remain focused on delivering value by collaborating with our customers to provide passengers with a superior culinary offering based on food trends, quality and freshness.”
“This, in combination with delivering innovative products and services that address the needs of today’s discerning passenger, we are changing perceptions of what airline catering can be. As a result, we are delighted to have won a number of new contracts and key renewals in 2018 thanks to the efforts of our excellent commercial teams. The delivery of such a strong financial and commercial performance would not have been possible without the reliability, precision and efficiency of our operational service delivery which we demonstrated successfully throughout 2018. Our focus on standardization and efficiency allows us to deliver innovative products and services consistently and cost-efficiently to customers and passengers throughout our global network.”
“In July, we were pleased to have Temasek and RRJ Capital join HNA as new investors in gategroup through a five-year mandatory exchangeable bond. Temasek and RRJ Capital bring to gategroup their investment expertise, financial strength and growth track record which complement the ongoing excellent contributions of HNA. We look forward to working with them to further accelerate the company’s growth,” Rossinyol continued.
The complete Annual Report 2018 of gategroup is available for download at:
https://www.gategroup.com/en-gb/investors/financial-reports-presentations/
Overview of key financial figures
Key Financials (CHF m)
2018
2017
2016
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Nancy Jewell
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About gategroup
gategroup is the global leader in airline catering, retail-on-board and hospitality products and services. gategroup provides passengers with superior culinary and retail experiences, leveraging innovation and advanced technology solutions. Headquartered in Zurich, Switzerland, gategroup delivers operational excellence through the most extensive catering network in the aviation industry, serving passengers from over 200 operating units in over 60 countries/territories across all continents. For further information, please visit www.gategroup.com.
Forward-Looking Statements
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