On November 9, a new name appeared on the Swiss stock exchange. However, this was neither an IPO nor an initial listing. Instead, Dufry changed its name to "Avolta". A few days earlier, the shareholders of the travel retailer had approved the name change by a large majority at an extraordinary general meeting in Basel. In this way, the company took account of the takeover of the Italian service station operator Autogrill. "Avolta translates our strategy into a common brand identity that reflects the needs of our travelers and places them at the center of our focus and initiatives," CEO Xavier Rossinyol explained when the move was announced at the beginning of October. The management sees the new company name as a vehicle on the way to "Destination 2027". Under this slogan, the company has set its sights on nothing less than a revolution in the travel experience.
What is certain is that the latest merger has created an industry giant: Avolta has more than 1,200 locations at airports, seaports, freeways, cruise ships and other tourist hotspots. Through this network, the company reaches around 2.3 billion travelers in more than 75 countries. According to the management, Avolta is not dependent on a specific region, sales channel or type of passenger. In terms of turnover, the business is split almost equally between the three lines "Duty-free", "Duty-paid" and "Food & Beverage". Geographically, the EMEA region with Europe, the Middle East and Africa sets the tone (see charts). So far, neither the broad positioning nor the new name has really caught on on the stock market. In fact, the Avolta share fell below the CHF 30 mark for the first time in more than a year immediately after the introduction of the "AVOL" ticker. In view of high inflation and tense geopolitics, the entire industry is not having an easy time with investors at the moment. However, the new forged travel retailer has performed significantly weaker than the European sector to date in 2023.
Even the latest interim report was unable to change the underperformance. The upturn in travel gave a strong boost to business over the summer months. In the third quarter of 2023, Avolta increased sales (core, net excluding fuels) organically by 16% to CHF 3.7 billion. The operating result (core Ebitda level) reached CHF 401.7 million in the reporting period, resulting in a margin of 11.0%. For the current final quarter, the CEO announced the prospect of continued solid development. According to Rossinyol, the cost synergies resulting from the integration of Autogrill are materializing faster than expected. The targeted CHF 85 million should be realized in 2024, one year earlier than planned. In view of the substantial debt capital, any relief should be good for the balance sheet. In the third quarter of 2023, net debt amounted to just over 2.6 times core EBITDA. Leverage is set to fall to 1.5 to 2.0 as part of the strategy. In addition to the issue of debt capital, the dilution of shareholders could be a stumbling block on the stock market. Dufry financed the takeover of Autogrill largely by issuing new shares.
The management is currently trying to convince investors of its plans and "Destination 2027". This week, those responsible are taking part in conferences in Miami and Paris. A roadshow is also planned in the French capital. Even if the promotional tour cannot give the mid-cap any new momentum, a double-digit percentage return is possible with the soft-callable barrier reverse convertible (BRC). The coupon on the new issue is 10% p.a. There is partial protection for this opportunity: as long as Avolta does not fall to or below the barrier of 59% of the initial level during the term, the issuer will repay the nominal in full. Otherwise, the investment would be linked to the performance of the underlying security. Due to the integrated soft callable function, early termination and repayment of the BRC is possible.
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