Avolta Ag Unsp/Adr

reminder that all participants will be in listen-only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. Webcast viewers may submit their questions or comments in writing via the relative field. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Xavier Rossignol, CEO of Volta. Please go ahead, sir.

Thank you very much. Good afternoon. Good morning, everybody. Thank you for being here today in this trading update of Volta for the quarter one results. Before we go into the details of what has happened in the last quarter, let me give you a little bit of frame of what Volta is about. we will go to the nature of the presentation. Avolta today is not only the leading company in the space of travel experience, travel retail and travel F&B, but we also have the largest and widest network in the industry, being present in 73 countries with more than 1,000 locations and more than 5,000 points of sale. But not only the size of the network is relevant, but it's also that we are present on the three key segments of the travel experience, F&B, duty-free, and duty-paid. So we have the opportunity to combine these three segments in delivering a higher and better experience for the travelers. And we are already doing that. We are cross-selling through these segments. We are giving promotions. When you have a coffee, you can buy something extra in the duty-free and vice versa. We are already using the capacity of delivering hybrid concepts. And we have a few examples today, but we have more than 20 hybrid concept lounge where we combine F&B and retail. But also the three segments and the size of our network gives us a complete and parallel access to travelers' information and travelers' data. Geographically, but also on the three segments. We can understand the travelers better than anybody else. And we use this data to continuously improve our offering. But it's not only our capacity to grow faster than others, it's also the size of our network that decreases the risk of external factors affecting this growth. The size of our network allows us to cope with external shocks in a much softer manner than anybody else. But it's not only growth and resilient growth. It's also we do it with a very strict financial discipline. That's why on top of growing top line, we can expand margins and equity free cash flow. And we can commit at the same time on investing in the business, deleveraging and paying a yearly dividend. And all this, and now I'm moving to page five, is thanks to a very clear strategy that we presented in September 22 and that we have been implementing step by step without exception. Since the presentation of the new strategy, I think this is the sixth or seventh quarter where we publish results in line or ahead of expectations. This new consumer centricity focus on the combination of the different offerings, but also the use of data, the use of entertainment, the use of smart stores is allowing us to grow sales faster than the growth of passengers. We also have a very clear geographical strategy growing on our core businesses in the Americas, North and South, and in Europe, but growing faster in Asia-Pacific. Asia Pacific today represents 5%, but not long from now, it will probably double our share to 10% of our total revenues. And we do all that with a very clear focus on operational performance. We will deliver on the synergies fully of the merger this year, a year ahead of what was initially disclosed. And we keep the cost discipline on everything we do. We keep our focus and our commitment to our people and our ESG. But everything we do in our strategy has a consequence in our P&L and in our cash flow, as you can see. Revenues, margins, cash flow, and deleveraging. Now moving to the specifics of the quarter, Quarter one, after a very successful 2023, confirms all the key points we mentioned in the last few quarters. An organic growth of 8.6%. Year-to-date April, 7%. For me, this is a more relevant number because it includes Easter both in 2024 and 2023. It's at the top of the range of our outlook. Expansion of margins, EBITDA margin by 40 basis points, again, on the top range of our outlook. Equity free cash flow, negative because it's always negative on the first quarter of the year because we prepare for quarter two and quarter three. But the best first quarter equity free cash flow since we report that measure. good financial performance, but also a strong execution, step-by-step on everything we set on hybrids, on smarter stores, on entertainment, on data, on digital engagement. And that also pays off on the relationship with our landlords. In number of extensions and in number of new locations, we win. And you have a few examples here in all the regions. If we'll explain that, but all these improvements are also reflected in the re-ratings, two re-ratings, the two rating agencies re-rating us significantly this year, and also another very successful refinancing, both on size and cost. So the balance sheet continues to strengthen, and the deleveraging continues as well. Expected or better than expected? Moving now to some clear figures. We reported close to 2.8 billion revenues on the first quarter, 18% growth, 8.6 organic, and as I said, for the first four months, 7% year-on-year. Clear expansion of the EBITDA margin, reaching 6.1%. A very high number for the first quarter. We all know the first quarter is the lowest quarter in profitability for Volta. And as I said, equity-free cash flow negative, but only 80 million, which is already much better than last year and already much better than any other year since we report equity-free cash flow. If we move to the next page, this good performance, it's across the board. We had an organic growth of 12% in EMEA, continuous also very strong in April. 7% in North America, also continuous very strong in North America in April. Latin America, organic growth of 5%, but if you do like for like, because there are some changes of scope, is 13%, 1, 3%. And Asia Pacific, 5.5 organic. But again, like for like, if you take the change of scope, because we actively close some of the loss making activities in Asia Pacific, the like for like growth is of 21%. So very healthy growth in all four regions. Once more, confirming the high diversification of the group. On the first quarter, you can see that geographically, but also the segments, is very diversified. As I said, APEC is 5%, but we are having such a pipeline of opportunities that we think this will be significantly higher in the next couple of years. Channels, we remain an airport operator. We have most of our sales, 80%. 2% in airports, but we continue supporting the strategic segments of motorways and other channels. Category mix, very interesting. 33% is F&B. Afterwards, you have perfumes and cosmetics and food and confectionery. Some of the traditional categories have slipped down in the portfolio. If we move to the next page, it's only a couple of slides. It could be many more. But we continue on this commitment to the consumer and the traveler revolution. And we do it in a concept we call flex, which is flexible, loyalty, entertainment, and the X factor. This is what we do on our physical stores. restaurants and shops and that's what we do also on the digital engagement with the consumers during their trip before and after the trip. Flexible because today our new shops and our new restaurants are able to adapt the offering of what the passengers desire in a question of weeks instead of a question of months. So we can change the shops to the new trends, to the new brands, to the new merchandising very, very fast. Loyalty. Today, we are focusing on upgrading the existing loyalty programs, and we are at full speed to launch the new loyalty program later in the year that is going to be the first loyalty program that allows to benefit in F&B and retail in 73 countries. It's not only loyalty, we're also getting digital engagement on less frequent flyers with reserve and collect, with many other digital advantages that you can get in our stores, even if you are not a member of our loyalty program. Entertainment at full speed. And I have a nice video in a few seconds where you will see some of the things we do. And the reason why entertainment is so powerful is because it changes the mindset of the traveler. That if instead of rushing into the gate, stops, slow down, because you have something that is good for the children or good for yourself, or it's a gaming component, you slow down on the speed, you enter our store and increases the chances of a higher conversion. And again, like the hybrids, like the smart stores, like the digital engagement, is not theory. It's happening today and it's proving useful to increase customer satisfaction and increase the spend per passenger. And the X factor that is a combination of all those things that are a little bit more radical because they break the traditional boundaries of our industry. Combining F&B and retail, using retail to enhance F&B, vice versa, the hybrid startup, the pre-loves, the store technology, the digital engagement, et cetera, et cetera. I have a couple of pictures in the next slide. I could show many more. One of the pictures shows a Hudson Cafe, so it's an F&B concept, combined with Toblerone. It's the first Toblerone cafe worldwide. And it's a way to use the strength we have on the relationship with a very strong, successful and powerful brand traditionally in retail and our knowledge on F&B. Creating something unique, creating an experience that passengers have not lived before. And then you have another actual picture. They're real things. It's a pre-loft. This is a shop we opened in the Zurich airport. It's products that had an earlier life and now they put a second life in our store. And that's attract a new demographic of passengers, people who want to buy something that has been pre-loved before. That's only two examples, very small examples, but that shows that we continue developing changes in our offering. When I say so, it will show a video. It's a very short video. I think it's a very funny and interesting video. It's actual recording in one of our stores. It's in Buenos Aires. I could have chosen many more, but it's just to give you a feeling on how entertainment can also enhance your shopping experience. Could we put the video, please? Thanks for watching! So this is a video called Your Faces. But I'm sure quite a few of you smiled when you saw the video because you felt comfortable. And that's what entertainment can do also for the travelers that go through our stores. Because of all what I said, the strength of our platform, our clear strategy, and an actual deployment of all the key steps of that strategy is why we confirm once more our clear strategy. outlook. 5 to 7% growth, organic growth per year on turnover at the top of the range for 2024. 20 to 40 basis points expansion on the EBITDA margin, again on the top of the range for 2024. Equity free cash flow conversion expansion of 100 to 150 basis points per year. And again, on the top of the range for 2024. And we come for our capital allocation policy. Focus on the leveraging one and a half to two times net debt to EBITDA as a target. And for the last few quarters, we have shown a clear commitment that. And using the equity free cash flow we have every year. One third for dividend. And yesterday, the General Assembly approved already the dividend for 2023 financial statements, 70 cents of Swiss francs per share. And two thirds for growth and deleveraging. We have said that for the time being, we don't see the need of another transformational acquisition. And our focus will be to grow organically and to do some bolt-on acquisitions, small ones, clear synergies, when we believe there is value on that. De-leverage, dividends, and strategic growth. I'll come back for the conclusion in a few minutes. Now I hand over to our global CFO, Yves Gester.

Thank you very much, Xavi. And good morning and good afternoon to everybody on the line. Xavi has already commented on the top line, so let me go to the profitability and the equity-free cash flow, starting with the EBITDA first. In Q1 2024, we have generated 168 million of EBITDA, representing 6.1% over turnover. That's an improvement compared to the previous year of 40 basis points on the top end of the indicated improvement of 20 to 40 basis point on EBITDA margin in the medium term. If we are looking at the bottom side of the screen, you will see the cash flow. The equity flow came in at minus 80 million. As you know, we have a seasonable business and Q1 is typically negative because you purchase ahead of the high season in summer. Minus 80 million represents the best equity free cash flow for a first quarter since we report equity free cash flow in 2017. And that's valid for standalone, heritage to free and also perform a combined business. If I move on to the next slide. with net debt and the leverage. Net debt increased slightly to 2.9 billion Swiss francs. That does not come as a surprise because what we have just seen on the equity-free cash flow, equity-free cash flow typically is negative in the first quarter. And also on top of that, we had a translation impact from the Swiss franc devaluation in the first quarter. This amounted to around 100 million Swiss francs. And as a consequence, net debt has slightly increased. On the other hand, leverage further decreased. And that's a very strong movement for the first quarter from 2.6 to 2.5. So very much in line to the target of 1.5 to two times. Moving on to the next slide with the net debt maturity profile of the group. The maturity profile is again very balanced. And what we see here is that we have Just on the refinancing, earlier in April, we have refinanced the 800 million euro bond with a new euro 500 million bond with a 4.75% coupon, now maturing in 2031. So long-term refinancing. On top of that, we have 300 million remaining, which we'll keep until maturity in October this year, with the intention to repay it with cash on the balance sheet. Moving on to the next slide, which is the last slide of my presentation. We have received two rating improvements by Moody's and Standard & Poor's earlier this year. This is a consequence of further improvements we have received over the last 12 months, two by Moody's and three by S&P Global Rating. Moody's went from BA.3 to BA.2, stable outlook, S&P global rating from BB flat to BB+. This is a consequence of the good performance of last year, our capital allocation, which we have communicated earlier about six months ago, and also the resilience of the operations. Let me be very clear and summarize because I believe it's extremely important. To get two-notch improvements by Moody's within 12 months is something which does not happen very often. To get an improvement by S&P global rating of three notches within 12 months is also not something which happens very often. And to get a straight upgrade by S&P global rating without previous positive outlook or credit watch positive is also something which does not happen very often. It's a testament of the resilience of the combined organization, the strong operational performance, the very stable and solid balance sheet with the balanced debt maturity profile and in combination with our asset allocation and capital allocation policy and the target leverage. And having said that, I hand over back to Xavi.