gategroup announces 2017 full-year results; strong growth in revenues and margins

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gategroup Holding AG published today its 2017 full-year results and Annual Report, reporting a robust increase in revenue, EBITDA and EBITDA margin in 2017. EBITDA improved by 50% in 2017 vs. 2016 and net profit more than doubled. These results underpin significant progress towards gategroup’s Gateway 2020 strategy targets.

• Revenues reached CHF 4.6 billion in 2017 (vs. CHF 3.4 billion in 2016, an increase of 35%)
• EBITDA reached CHF 300 million in 2017 (vs. CHF 200 million in 2016, an increase of 50%); EBITDA margin improved by 60 bps to 6.6%
• Net profit reached CHF 85.2 million in 2017 (vs. CHF 32.6 million in 2016, an increase of 161%)
• Improved cash generation from operations at CHF 210.2 million (vs. CH 141.6 million in 2016, an increase of 48.4%)

Strong revenue growth across all regions
Revenues grew across all five regions in 2017, totaling CHF 4,554.2 million. In Europe and Middle East revenues increased to CHF 1,778.6 million (+3.5%), in North America to CHF 1,141.6 million (+4.6%), in Asia-Pacific to CHF 345.2 million (+10.5%) and in Latin America to CHF 330.0 million (+30.5%). The newly formed South Europe and Africa region achieved revenues of CHF 982.2 million. Organic growth in 2017 has reached 7.2% (2016: 5.5%).

Over the past two-and-a-half years, gategroup has focused on the consistent, successful implementation and delivery of its Gateway 2020 strategy, which was first introduced in 2015. The strategy is based on four pillars: focus on the core, geographical expansion and the combination of commercial innovation, standardization and efficiencies. gategroup now has a much more diversified business platform for sustained growth and margin expansion which has allowed the group to deliver strong results in 2016 and 2017.

Focus on the core – high retention rate reconfirmed
gategroup has transformed itself to become the industry leader in food and hospitality with a clear focus on airline catering and food and beverage retail on board. To further sharpen its profile, gategroup exited non-core assets such as airport security and selected airport retail activities. The group’s strong track record of renewing existing and winning new contracts with an average contract retention of over 90% has been reconfirmed in 2017.

Geographic Expansion – focus on emerging markets
In 2017, gategroup continued the expansion into strategic and emerging markets such as Asia-Pacific, where a 30-year strategic joint venture with Asiana Airlines at Incheon airport (Republic of Korea) was announced. The successful integration of Servair into gategroup has resulted in the creation of the new Southern Europe and Africa region, which comprises Servair’s business in France, French territories, Italy, and Africa. As a result, gategroup now has the most global network in the industry.

Commercial Innovation – increase of speed to market
gategroup’s four Centers of Excellence (Innovation, Retail, Culinary and Technology) drive industry innovations by working closely with customers and combining efforts to bring ideas and projects to reality. The result enhances the traveler experience and supports airline customers’ goal of providing better experiences on board. Amongst others, innovative market approaches resulted in retail on board revenues increasing by more than 100% over the past two years, reaching CHF 628.4 million in 2017.

Standardization and Efficiency – simplified organization
By consolidating its brands and divisions into an organizational structure by region with clear P&L responsibility and strong central control, gategroup has further improved efficiency, enforced cost discipline, e.g. through a Zero-Based Budget approach, and pushed operational standardization. The group has also made significant progress in competitive pricing and operational leverage. This strong focus on commercial innovation combined with greater financial discipline has allowed gategroup to increase its speed to market and lower the cost base resulting in higher EBITDA margins.

Servair – key milestone
On 1 January 2017, gategroup acquired controlling interest in Servair SA from Air France. The integration with Servair and its employees progressed well throughout the year and budget targets have been exceeded. Joint projects to improve operational excellence and to optimize hub operations and logistics are well under way. The union with Servair has allowed the group to increase its presence to 60 countries and territories, expand its footprint in Latin America and Asia Pacific and achieve market leadership in France and Africa. Servair further enhanced gategroup’s culinary offering through its culinary innovation “think tank,” Studio Culinaire.

Robust cash flow statement and balance sheet
Cash generated from operations in 2017 was at CHF 210.2 million, compared to CHF 141.6 million in the previous year, due to increased EBITDA performance partially offset by higher working capital as a result of the strong growth. Overall, 2017 was a year of substantial investments and acquisition activities to set up the group for future growth.

gategroup’s balance sheet as at December 31, 2017, shows total assets of CHF 3’019 million and total equity has grown to CHF 443.9 million, compared to CHF 306.9 million as at December 31, 2016.

Net debt at the end of 2017 was CHF 712.4 million resulting in a leverage of 2.4x, an increase from 1.7x at the end of 2016.

Xavier Rossinyol, CEO of gategroup, said “Our robust 2017 financial results are a direct result of the successful new strategy we began implementing in 2015. Today, gategroup is the clear number one airline caterer and we recognize that the only way to succeed in the long term is to deliver continuous value to our customers. Our passion for commercial innovation and obsession with operational excellence have made gategroup the largest and fastest growing network in the airline catering industry today.”

“The integration of Servair provides us with a highly complementary presence in key markets where gategroup was not previously present, such as France and Africa. Servair also contributes substantially to gategroup’s ambition for culinary excellence. Geographical expansion, particularly in emerging markets and growth in food and beverage retail, has diversified the portfolio of gategroup.”

“Our Gateway 2020 strategy, which set ambitious but realistic plans to transform gategroup, is nearing the midpoint. I would like to thank all employees of gategroup, our customers, suppliers as well as our shareholders for their respective contributions and support which led to this remarkable performance.” Rossinyol said.

The complete Annual Report 2017 of gategroup is available at http://www.gategroup.com/media/1617/gategroup_ar_2017_internet_en.pdf

Media inquiries
Nancy Jewell
+41 44 533 7081
njewell[at]gategroup.com

Investors and Analysts
Dagmara Robinson
+41 44 533 70 32
drobinson[at]gategroup.com

About gategroup
gategroup is the global leader in airline catering, retail-on-board and hospitality products and services. We provide passengers with superior culinary and retail experiences, leveraging our innovation and advanced technology solutions. Headquartered in Zurich, Switzerland, we deliver operational excellence through the most extensive catering network in the aviation industry, serving 700 million passengers annually from over 200 operating units in 60 countries/territories across all continents. In 2017, gategroup reached CHF 4.6 billion in revenues with approximately 43,000 employees worldwide. For further information, please visit www.gategroup.com

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.

Note: In the event of any discrepancy or inconsistency between any translated versions of this publication, the English version shall prevail.