Avolta Ag Unsp/Adr

I am Moira, the conference call operator. I would like to remind you 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 Rossinyol, CEO of Avolta. Please go ahead, sir.

Thank you very much. Good morning, good afternoon, good evening, everybody. Thank you for attending this trading update for the first quarter of 2026 of Avolta. My name is Xavier Rossinyol. and I'm here with our CFO Yves Gerster. I'm going to go straight to the highlights in page four of our presentation. We have presented today strong and positive results for the first quarter of 2026. Our core turnover reached 2.9 billion Swiss francs with an organic growth of 4.7%. Without the estimated effect of the Middle East crisis, our organic growth would have been 5.9% on the first quarter of the year. Core EBITDA has reached 190 million, which implies a margin of 6.6%, which is 20 basis points better than last year for the same period. Equity free cash flow has been negative, as it is always on the first quarter of the year because of the seasonality, on $164 million, affected by some net working capital effects due to new operations that Yves will explain in detail in a few minutes. Those are strong and positive results in a context that is, number one, the lowest quarter for us. Number two, with effects on seasonality, like Easter, the Orthodox Easter, the beginning and the end of the holy month of Ramadan, between March and April. And of course, the Middle East crisis. Despite all those conditions, we have reported a strong quarter number one. Because of that, we reconfirm once more our focus on our capital allocation policy. Leverage has reached 2.1 times net debt to EVIDEA, which is another decrease year on year. Yesterday, our General Assembly approved the proposal of the board to distribute 1.15 Swiss francs per share as a dividend. which implies a growth of 15% versus the dividend of last year. And we are progressing in the announced share buyback for 2026 of 225 million Swiss francs. And today we are confirming again that what we are seeing, particularly in the Middle East, but also the expected consequences on a wider sense, we regard them as temporary. Not affecting our core business and therefore we are confirming our mid-term outlook today. Moving to the next slide. I think looking at the performance by region helps to explain the strength of our business. Organic growth has been in the first three months of the year, 2.5% in a year. the region most affected by the Middle East crisis, 3.9% in North America, 6.9% in Latin America, and 17% in Asia Pacific, yielding the 4.7 I already mentioned before, which will be close to 6% without the Middle East. I consider more interesting in this page to look at the last column. Over the years that April and March need to be seen together because it's when you have the effects I mentioned before that are purely seasonal. When you look at that, you see a very clear numbers. EMEA is slightly negative, 0.6% organic, the effect of the Middle East. An effect that is higher on the lowest season quarters than in the full year. is one of the regions less or least seasonal according the year and EMEA is one of the most seasonal regions. So the weight of the Middle East in quarter one is the highest and much less in quarter two and especially in quarter three. North America, a very strong performance of 5.4% in combination of March and April. We see very good signs in North America. Latam, 3.8%, but that was temporarily affected by some of the security concerns in Mexico that affects the number of tourists. We are seeing an improvement on the numbers after those events. And very strong APAC, both on like for like and on change of scope, as we've been consistently saying we want to grow everywhere, but we are underrepresented in Asia Pacific. All in all, organic growth for March and April combined has been 3%. and we think the estimated effect of the Middle East during those two months have been another 3%. Therefore, without the Middle East would have been an organic growth of 6%. In North America, maybe just to mention that we regard the potential effects of the Spirit Airlines Chapter 11 extremely limited. They represent 1.5% of the overall domestic traffic in the US, Significantly less for our portfolio and based on previous experience and already recent announcements, we believe other airlines will take the potential passengers. So we consider that a very limited effect, if any. Moving to the next slide. A little bit more deep dive into the Middle East. We said when the start of the crisis that Middle East, direct and indirect, represents around 3% of our turnover on a full year, a little bit more on quarter one, quarter four, less in quarter two and quarter three. We have seen a limited effect. March and April is pretty good. You can see that the effect has been 3%. Already in May, We do have experience. on some of the spillover effects this crisis has on oil price, potential ticket prices. Oil goes up and down over the months and over the years. We know that now it's in particularly high levels, but we think also those effects, despite being negative, it will be on a limited measure for our oil portfolio. We do have limited visibility like everybody else. But we don't believe anything that is happening today is structurally affecting neither the industry nor our core business model. Together with our diversification geographically, and it's very interesting because the first few months of 2026 are showing some regions performing better, others worse. Like last year, but they were in a different trend. The geographical diversification do matter in this business. Also the channel diversification, we have retail and we have food and beverage. And I think it's of particular interest to point out that apart from the effect on sales, the effect in results and cash flow are always more limited. because our cost base has flexible components and as we have shown over the years, in every crisis we can take decisions and we can focus on protecting the profitability both on EBITDA, net earnings, and also in working capital. Moving to the next slide. Today is a trading update. It's not the moment to make A full review of how we are running the business, but I thought it was important to put a slide to reassure that, yes, we are focusing on managing the temporary headwinds, but we are also continuing in our commercial data and digital transformation. We keep focusing in all the key aspects of the growth engine, from the hybrids to the entertainment, to the local stores, to the pricing, the assortment, et cetera. And we are progressively increasing our focus on data and digital. You know those figures, but I'd like to remind them from time to time. Of the 10 billion people traveling a year, we have exposure to 2.5 billion. We had last year 682 million customers. and today our Club of Volta has 18 million members. Two million more than in our last reporting date. Club of Volta members represent 8% of the sales and the growth on partner link accounts year on year stands now to 132%. This data organized in a proper way with the transactional data Airport data, passengers data, net promoters scores, data from our POS, et cetera, et cetera, and the partnership with Volta Next, that is our platform for startups, all that together keeps improving the way we manage the business and allows us to use more data to optimize that business. And in every aspect I just mentioned, we are always trying to get the best monetization possible. Moving to the next slide, which is becoming a classic because we have been showing exactly the same slide for quite a few years now. But I think it's important in these troubled times to confirm a steady direction. Geopolitics is affecting us like it's affecting everybody else. And I want to be very clear. Do we take the current events extremely serious? We monitor them on a daily basis, at airport basis. And when necessary, we take decisive actions where and when it's needed. And if we need to do more because things go on one direction or the other, we will do. But said that, we regard what is happening as temporary and it's not affecting the way we address our strategy and our operating model. And thanks to our diversification, that's why today we feel comfortable confirming our medium-term outlook of an organic growth of 5-7% on turnover, an EBITDA margin expansion of 20-40 basis points per year, and a further increase of at least 100 basis points on the equity free cash flow conversion. And as we feel comfortable on our mid-term outlook, we are also comfortable in reconfirming once more our commitment to the capital policy The Capital Allocation Policy. Number one, investment in the business. Investment in the shops, investment in the restaurants, investment in the business development, investment on the digital transformation. Potential, meet the small size M&A, always focusing on the accretion that they will deliver, finance with our own resources, and of course with an extreme focus on ROIC that for us is fundamental. Second, continuing the deleveraging. Our target leverage is one and a half to two times net debt to EBITDA. We are in that level on a full year basis with a possibility to go 2.5 on a temporary basis if we will do an M&A. And the third priority is very clear. The excess cash goes to shareholders. A yearly dividend that we have committed to be at least a third of the equity free cash flow. And yesterday, I said earlier, our General Assembly approved that for this year, we will distribute 1.15 Swiss francs per share, which is an increase of 15%. It's the third year in a row that we distribute an increased dividend. And if there is more excess cash, we will be doing share buybacks. And we did one in 24, one in 25, and we are We announced we will do one in 2026. The combination of the dividends and the three share buybacks will give you more or less a billion Swiss francs that we will have distributed directly to the shareholders. And with that, I hand over to Yves. Thank you.

Thank you very much, Xavi, and good morning and good afternoon to everybody on the line, also from my side. Looking at the financial results, core turnover came in at 2.9 billion Swiss francs, which represents an organic growth of 4.7% year-on-year. If you strip out the Middle East impact, which has affected us in the first quarter by minus 1.2%, the group would have grown at 5.9%. Core ABTA came in at 190 million Swiss francs and ABTA margin was 6.6%, an improvement of 0.2% versus the same period of the previous year. Equity-free cash flow came in at 164 million Swiss francs and leverage stood at 2.1 times net debt to ABTA, a further decrease of 0.1 times versus March 2025. Let's look into the details of the financial results on the next slide with the EBITDA and the equity-free cash flow. So what is important to note firstly on the EBITDA is that we have faced an FX headwind of around 8.8% on the turnover. This is also visible on the EBITDA. So EBITDA at constant currency would actually have increased versus last year of 8.5%. But due to the headwinds, the reported amount is lagging slightly behind the 196 million of last year. But again, as a margin, the situation has improved by 20 basis points. In regarding the FX headwinds, it's also important to note that while the impact was severe in the first quarter, we do expect it to be reduced and eased as we go along during the year. We currently do expect the full year impact to be around minus 5%. The second point is on the equity-free cash flow. Equity-free cash flow came in at minus 164 million Swiss francs versus the 104 million of last year. What is important to note here is that we had two We have opened that operation in a rush. We got awarded in the second half of December last year and had to open the stores on the 2nd of January 2026. As a consequence, because of that speed, we took over some merchandise from the previous operator in the amount of roughly 50 million Swiss franc equivalent. That merchandise came in without any payable. So from a networking capital perspective, we took the full hit of the inventory. And as you know, the Pudong operations are ramping up during the course of the year. So while we started with a small footprint already at the beginning of 2026, Not all of the stores are fully up and running and operational. That is expected to happen within the next two quarters or three quarters during the course of 2026, and therefore also the net working capital impact will fade out during the course of the year. Point number two there is an 8 million impact from the Middle East, some moderate impact in the first quarter due to the Middle East crisis. Moving on to the next slide. with a typical treasury overview with financial net debt and also leverage. As I've mentioned previously, leveraged decreased further from 2.2 times net debt to a BTA in March 2025 to 2.1 time in March 2026. So further reduction of 0.1, despite the fact that we did a 200 million share buyback last year, a dividend payment last year, and have started to buy back shares in the up to 225 million share buyback program this year already. If you look at the bottom line, you see the typical maturity profile. No material facilities coming up for renewal in the next couple of years. The next big one is 2030. However, in 2027 and 2028, in each year, we have a bond. The one in 2027, we are currently looking and preparing for the refinancing. So you can expect to hear some news from our side in the coming weeks and months. Having said that, it's also important to note that the group has currently access to around 2 billion of liquidity. So there is no refinancing risk at all. And we will execute as always this refinancing in an opportunistic way over the next couple of months. Moving on to the next slide. With the conclusion, so look what is the key takeaway from my side looking at the financial result of the first quarter. Overall, a strong result despite the Middle East crisis and in regard to the outlook, while a lot of things are remaining fluid and liquid as we are talking, I'm convinced to achieve the medium-term outlook as also confirmed before by Chawi. The key reason for that is on one hand side our resilience and global platform which we have built up over the last years. It's the strong balance sheet with the reduced leverage and it's the flexible cost structure which allows us to react if and when required in a decisive manner. And having said that, I hand over back to Xavi for the conclusion.