Declining passenger numbers impact sales in the travel retail sector

The Nuance Group today released its financial results for 2009 which strongly reflect the impact of the global economic crisis on the travel retail sector.

On a like-for-like currency-adjusted basis, consolidated sales declined by 0.9 per cent in 2009, much less than the decline in passenger numbers experienced across the Group. An Operating Profit (EBITDA) of CHF 56.5 million was recorded. As a result of a positive efficiency programme initiated globally and the renewal of more than half of the Group’s concession portfolio by value, the outlook for 2010 and beyond is cautiously optimistic.

While consolidated sales fell by 0.9 per cent on a like-for-like, currency adjusted basis, reported consolidated sales fell by 7.9 per cent to CHF 1,582 million, impacted by adverse currency movements and new and discontinued operations.

Sales were materially impacted by declining passenger numbers and weakening consumer confidence, especially over the first half of the year.

An EBITDA of CHF 56.5 million was recorded which resulted in a positive net profit of CHF 0.5 million.

Roberto Graziani, President & CEO of The Nuance Group, commented: “While currency impacts resulted in consolidated sales falling by 7.9 per cent, 2009 will go down as a relatively successful year for The Nuance Group. Through various initiatives, we were able to limit the sales decline on a like-for-like currency adjusted basis to just 0.9 per cent in the biggest economic crisis in the post war period. Our adjusted sales decline was much less than the reduction in passengers we experienced and was achieved in a climate of declining consumer confidence.”

“In addition, a broad ranging efficiency project initiated globally across the business added some variability to our cost structure and allowed us to limit the impact of the sales decline on profitability,” Mr Graziani said. “Most importantly, we were able to use 2009 as a time to consolidate the future of our company. This year was an extraordinary year for Nuance in terms of renewals and contract extensions. On a weighted average sales basis, we were able to renew more than 50 per cent of our portfolio, materially extending our average concession length and providing an excellent and secure base for us to pursue growth in the coming years. The work done in 2009 means that the business now has a lower cost base with the prospect of an improving economic environment. This should ensure that Nuance’s profitability bounces back quickly as passenger traffic and consumer confidence recover.”