IR-Presentation Interim Results Half Year 2008

Transcription

1 IR-Presentation Interim Results Half Year 2008

2 Disclaimer This presentation contains certain 'forward-looking statements', which can be identified by use of terminology such as 'expect', 'expectation', 'intend', 'continue', 'achieve', 'maintain', 'improve', 'foresee', 'anticipate', 'outlook', 'forecast', or similar wording. Such forward-looking statements reflect the current views of management and are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance or achievements of the Group to differ materially from those expressed or implied herein. Should such risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation. Kuoni is providing the information in this presentation as of this date and does not undertake any obligation to update any forward-looking statements contained in it as a result of new information, future events or otherwise. IR-Presentation Interim Results HY August

3 Key Facts Interim Results HY 2008 Strong turnover growth of 9.9 % Over proportional strong organic growth of 9.5% Important negative currency effect GOP-Margin unchanged at 21.0% Considerable EBIT improvement to CHF 13.9 m ( %) Strong organic growth Positive effect EURO 2008 Exceptional positive impact out of Edelweiss Air transaction EBIT Margin doubled to 0.6% Considerable improvement of net profit to CHF 21.3 m (vs. CHF 3.5 m) Exceptional positive effect after litigation with Hogg Robinson Continuous growth of cash flow from operating activities (+11.2%) and free cash flow (+ 1.2%) Continued external growth - 5 acquisitions completed New positioning of Kuoni as a global brand initiated with openings of flagship stores in Zurich and London Introduction of a contemporary logo New uniformly designed catalogues Innovative product lines Strategic targets for 2010 confirmed IR-Presentation Interim Results HY August

4 Strong Organic Growth In % of turnover + 6.1% - 5.7% + 9.5% + 9.9% Organic Acquisitions Currency Growth in CHF IR-Presentation Interim Results HY August

5 Acquisitions / Divestments 2008 share of direct sales consolidation per / annualized turnover tour operating deconsolidation per in CHF million consolidate deconsolidate Conference & Touring GmbH, Germany B2B January 1 28 Unique Travel GmbH, Switzerland 25 % January 1 6 Golf Plaisir Resebyra AB, Sweden 100 % July 1 19 Direkt Reisen, Switzerland 100 % July 1 53 Desert Adventure Tourism, Dubai B2B July Retail Austria July EdelweissAir, Switzerland October *) *) third party sales IR-Presentation Interim Results HY August

6 Highlights Interims HY 2008 HY 2007 % HY 2008 Turnover Organic growth CHF m CHF m Gross profit (GOP) Gross profit margin CHF m 21.0 % CHF m 21.0% EBIT CHF 5.7 m CHF 13.9 m Net result CHF 3.5 m CHF 21.3 m Cash flow Free Cash flow CHF m CHF m CHF m CHF m IR-Presentation Interim Results HY August

7 Summary by SBU Interims HY 2008 Turnover EBIT CHF million HY 2008 HY 2007 Δ % HY 2008 HY 2007 Δ % Switzerland ) ) Scandinavia whereof New Ventures Europe UK Asia & Destination Mgmt ) 2) Corporate Group ) Restated excluding Las Playitas 2) Restated including Las Playitas IR-Presentation Interim Results HY August

8 SBU Switzerland CHF million HY 2008 HY 2007*) Δ% Org% Fx% Acq% Turnover EBIT *) restated ex Las Payitas Positive, gradual turnaround confirmed Successful relaunch of the Helvetic Tours brand for summer season Main impact on sales in second half year Organic growth despite substantial capacity reductions in the long haul charter business Clearly lower demand for Kenya after riots EURO2008 impact lower than expected Higher volumes achieved to the US, Canary Islands, Egypt, Caribbean and Far East Closing of sale of Edelweiss Air to Swiss as planned on Positive one time effect of CHF 5.7m due to depreciation no more being applied on the EDW fixed assets According to IFRS IR-Presentation Interim Results HY August

9 SBU Switzerland - Branding IR-Presentation Interim Results HY August

10 SBU Switzerland Flagship store in Zurich IR-Presentation Interim Results HY August

11 SBU Scandinavia CHF million HY 2008 HY 2007 Δ% Org% Fx% Acq% Turnover Scandinavia New Ventures n/a EBIT Scandinavia New Ventures Double digit growth rates in Sweden and Norway gaining further market share Strong demand for long haul destinations during winter months Acquisition of Falk Lauritsen contributed considerably in Denmark Almost 40% sold through internet share of direct customers at 69% New Ventures: Shoestring started its first adventure tours as of this year Bookings intake and market penetration will be monitored closely Russia posted a very satisfying increase in turnover in a highly competitive market environment Margin pressures due to overcapacity, high inflation rate and salary increases Results are still unsatisfactory IR-Presentation Interim Results HY August

12 SBU Europe CHF million HY 2008 HY 2007 Δ% Org% Fx% Acq% Turnover EBIT Good turnover growth in France mainly achieved organically Les Ateliers du Voyage contributed to the higher than average growth rate Positive organic development also in Italy Marked decline for Kenya (after riots) and China (after earthquake) substantially affected sales in all countries whereas strong demand for USA could not fully compensate Improved profitability mainly as a result of improved cost efficiency IR-Presentation Interim Results HY August

13 SBU United Kingdom CHF million HY 2008 HY 2007 Δ% Org% Fx% Acq% Turnover EBIT Organic growth of 3.2% mainly as a result of good performance of specialists Lower gross profit margin due to sales mix moving to lower margin destinations Kenya and China business with traditionally higher margin almost inexistent 94% of expected 2008 turnover already sold (as at ) Restructuring and profit improvement measures according to plan New cross selling through direct marketing and Kuoni retail for acquired specialist New brand launched soft launch May, main launch September Website redesigned Completely redesigned main brochure Worldwide 2009 Brochure range reduced from 27 to 18 for 2009 Kuoni Concierge launched Flagship store opened in Kensington IR-Presentation Interim Results HY August

14 SBU United Kingdom Branding IR-Presentation Interim Results HY August

15 SBU United Kingdom Flagship store at Kensington IR-Presentation Interim Results HY August

16 SBU Asia & Destination Management CHF million HY 2008 HY 2007 Δ% Org% Fx% Acq% Turnover EBIT Organic growth in India above 20% as a result of excellent performance in tour operating and VFS Global Doubled profitability in India in local currency China turnover negatively affected by currency (HK$ linked to US$) Profitability improved (efficient cost management) Currency affected India and China on top line by -15% 20% organic growth in DM Continued strong demand for USA Positive impact on profitability of EURO2008 (+ CHF 3.0 m) Kenya and Burma strongly affected by riots and natural disaster respectively Expansion of hotel booking engines B2B2C (used amongst others for the SWISS strategic partnership costs HY: CHF 2.5m, FY CHF 8.5m) IR-Presentation Interim Results HY August

17 SBU Asia & Destination Management in Dubai UK Visa Application Center Nigeria in Gouangzhou Biometrics in Taipei IR-Presentation Interim Results HY August

18 Corporate CHF million HY 2008 HY 2007*) Δ% Turnover EBIT *) restated incl Las Payitas K1 HY costs of CHF 2.5 m, for FY 2008 CHF 5 m as previously announced Costs for due diligence for acquisition projects not realized IR-Presentation Interim Results HY August

19 Financial Result CHF million HY 2008 HY 2007 Δ% Financial result Includes the release of provision following settlement of a legal dispute linked to the sale of BTI Central Europe (CHF 6.4 m.) IR-Presentation Interim Results HY August

20 Net Result CHF million HY 2008 HY 2007 Δ% Net result Record Net result Earnings per registered share B CHF 7.85 vs. CHF 1.14 in HY 2007 IR-Presentation Interim Results HY August

21 Solid financial position Solid equity ratio of 24.8% (vs. 26.3% ) Decrease as a result of negative translation differences and higher dividend payment Net liquid funds of CHF -8 m Liquid funds CHF 627 m including advance payments by customers of CHF 635 m Financial debts of CHF 55 m Net debt position of CHF 63 m after: Several acquisitions Dividend payment Cash flow from operating activities amounting to CHF 159 m (HY 2007: CHF 143 m) Free cash flow at CHF 132 m Currently no new share buyback program IR-Presentation Interim Results HY August

22 Customer access in tour operating Third Parties 48% Call Center 19% Internet B2C 14% B2C * 2006: 11% Own Shops 19% SHARE OF DIRECT CUSTOMER ACCESS: UK: Scandinavia: Switzerland: Europe: Groupwide: 59 % - mainly through call centers 69 % - 39 % through internet 45 % - mainly through own shops 21 % - main contributors are Benelux and France 52 % is sold through direct channels FOR THE FIRST TIME MORE PRODUCTS WERE SOLD DIRECTLY! IR-Presentation Interim Results HY August

23 Outlook BOOKINGS FOR TOUR OPERATING OF KUONI GROUP IN CHF as at 17 August, % - Organic growth + 6% Switzerland + 6 % Scandinavia + 21 % France + 9 % UK - 14% (in GBP local currency + 1%) India + 6 % (in INR local currency + 20%) This represents no guidance for 2008 indication only. IMORTANT: Please note that these booking figures refer to Tour Operating ONLY and do not include Destination Management, VFS and Retailing. For July, representing one third of total EBIT for the year, a result above last year was recorded. IR-Presentation Interim Results HY August

24 Strategic targets Value drivers Turnover Growth Cost efficiency Capital efficiency Strategic initiatives Development of new markets and customer segments Adaptation of successful products to other markets Exploitation of new distribution potentials through e-channels Further enhancement of brand value and pull Reduced distribution cost through multi channel technology management and optimization Exploitation of new technology and synergies by Future Business & IT Architecture Effective procurement Knowledgeable, trained staff Further improvement of Working Capital Management Optimization of Cash Management on group level Investment and acquisition decisions based on strict hurdle rates Targets 2010 (excl. acquisitions) Ø 6 8% p.a. Sustainable EBIT improvement ROIC 18% 20% IR-Presentation Interim Results HY August

25 ROIC of selected players in the value chain ROIC (=NOPAT in relation to invested capital) (in %, 2007) Online Travel Agencies Tour Operating Air Transport Hotels / Resorts Expedia 5.3 Kuoni Group ) Lufthansa 11.5 Accor 14.3 Priceline Orbitz Travelport TUI Travel Thomas Cook Club Med British Airways Air France KLM Air Berlin EasyJet Hilton Starwood Marriott Sol Mélia Holidaybreak 10.4 Ryanair 10.2 NOPAT = Net Operating Profit after Taxes Invested Capital = Total Assets./. Non-interest bearing liabilities 1) Restated after adoption of IFRIC 14 Source: Annual reports, investor presentations IR-Presentation Interim Results HY August

26 Group information IR-Presentation Interim Results HY August

27 Organisational setup CEO M.E. Katz *) Speaker of the GEB Assurance Management IT Corporate Communications Marketing & Branding Human Resources Group e-business Corporate Development Corporate Responsibility SBD STYLE R. Wilhelm *) SBD SMART / BU SWITZERLAND S. Leser *) SBD Destinations R. Schafroth *) Finance M.E. Katz *) Kuoni UK BU Switzerland S. Leser SBD SMART S. Leser Shoestring Sales Asia Pacific Destination Europe Corporate Controlling Kuoni France Scandinavia Sales Europe & USA Destination USA Business Controlling Kuoni Netherlands Kuoni Belgium Sweden Sales Mid-East/India Destination Asia Corporate Treasury Kuoni Italy Kuoni Spain Norway Global FIT Destination Africa Mergers & Acquisitions Kuoni India Apollo Denmark Finance & IT Destination India Investor Relations Kuoni Hong Kong / China Falk Lauritsen Denmark Destination Arabia Legal & Compliance UTE Megapolus *) Executive Board IR-Presentation Interim Results HY August

28 House of brands TOUROPERATING (1/2) Switzerland Scandinavia France Spain Italy Benelux Russia UK Germany India China Luxury Segment World Class EmotionS Emozioni EmotionS World Class Upper Segment Middle Segment Direct Sales Specialists Retail Airline IR-Presentation Interim Results HY August

29 House of brands DESTINATION MANAGEMENT (2/2) Leisure & Special Interest Groups, MICE Individual Travel (Global FIT - B2B) Asia Africa Europe Arabia India USA Leisure Travel MICE IR-Presentation Interim Results HY August

30 Benefits of new organisation structure Stronger focus on specific success factors STYLE Focus on building aspirational brands and service-oriented travel offerings SMART Focus on price-led offerings, with priorities on online and direct distribution DESTINATIONS Focus on building and marketing superior destination expertise and servicing excellence Additional synergies and shared programs through new leadership and shared business focus, e.g. BRANDING, MARKETING SPEND EFFECTIVENESS E-BUSINESS COST PROGRAMS, INCREASE COST EFFICIENCY People working in units with similar dynamics and priorities - enhanced opportunities for employee development IR-Presentation Interim Results HY August

31 Cornerstones of Kuoni s strategy OUR STRATEGY DESCRIBES HOW WE REACH OUR VISION TO BECOME THE WORLD S MOST SUCCESSFUL TRAVEL COMPANY Strategy of Kuoni Build on attractive business models Leverage intangible assets Achieve high profitable growth Create value added: differentiation and/or better pricing Own consumers Focus on asset-light business model Efficient processes, effective procurement Develop Kuoni into number one brand Exploit consumer knowledge and intimacy Develop people & knowledge Leverage technological opportunities Grow organically and through acquisitions Increase presence in highgrowth geographic markets Increase weight of high-growth segments Accelerate innovation Asset-light, intangible-rich, high growth IR-Presentation Interim Results HY August

32 Market environment TRENDS (1/2) EUROPEAN SHORT-HAUL MAINSTREAM SECTOR Big players have consolidated and partially reduced vertical integration Mainstream online travel agencies will increasingly face a slowdown of growth rates and losing share to suppliers websites Low-cost carriers still growing fast, but in an increasingly unfavourable environment (e.g., high fuel prices) and with much capacity on order The economic environment is expected to deteriorate, leading to moderate growth rates Capacity will not go easily away, possibly leading to a further exacerbation of price-based competition (business-model driven) EUROPEAN (LONG-HAUL) PREMIUM AND SPECIALIST SECTOR Business model remains robust (hence less incentive to discount) Sector shows significantly higher growth rates (but is also dependent from economic development) Sector is still significantly more fragmented, more consolidation to come Few long-haul low-cost carriers in the market yet IR-Presentation Interim Results HY August

33 Market environment TRENDS (2/2) EMERGING MARKETS Level of fragmentation in India, China and Russia is still high, and most travel players not specialized Large established players (traditional and online) are increasingly making emerging markets a priority Race for online travel sector is fully on (current low internet penetration is expected to grow fast) Many new airlines / low-cost carriers emerging DESTINATION SERVICES Solid growth expected, in line with overall tourism flows growth Market still very fragmented, additional (slow) consolidation expected Some ongoing commoditization of most basic offerings, push for more value added and service/product differentiation expected IR-Presentation Interim Results HY August

34 Implications for Kuoni EUROPEAN SHORT-HAUL MAINSTREAM SECTOR Not an area for major investments De-assetization and reduction of capacity risk (e.g. deal with SWISS International Airlines in Switzerland) EUROPEAN (LONG-HAUL) PREMIUM AND SPECIALIST SECTOR Further grow organically and through acquisitions Accelerate transformation (e.g., branding, services, e-business, innovation, cost synergies) EMERGING MARKETS Further grow organically and through acquisition (exploiting current market positions in India, Russia and China) Enter into new markets DESTINATION SERVICES Further grow organically and through acquisition (geographic expansion towards unique global coverage) Expand attractive segments (e.g., FIT, MICE, premium products/services) IR-Presentation Interim Results HY August

35 Competition of internet vs other distribution channels in CH 90% 80% 70% 60% 50% 40% 30% none slight strong 20% 10% 0% Flights Europe Hotels City trips Beach holidays Europe Flights ex Europe Beach holidays ex Europe Europe Round trips ex Europe Round trips The more complex the product the lower the internet competition. Source: Credit Suisse Economic Research/SRV, 2007 IR-Presentation Interim Results HY August

36 Cash flow 2007 UNRIVALED CASH GENERATION DEVELOPMENT IN THIS INDUSTRY CHF million 250 FCF cagr = % FCF CF cagr = compound average growth rate IR-Presentation Interim Results HY August

37 KEP statement on Group level CHF million KUONI ECONOMIC PROFIT CHF million NOPAT Average invested capital ROIC 16.8% 17.0% 5 WACC 8.5% 8.5% ROIC-WACC spread 8.3% 8.5% -35 ROIC KEP in % 20 Δ KEP Both years restated after adoption of IFRIC IR-Presentation Interim Results HY August

38 ROIC in the Kuoni Group in % WACC Group 8.5% 0 Switzerland Scandinavia *) Europe UK Asia & DM Kuoni Group Remark: Restated after first adoption of IFRIC 14 KEP on SBU level based on maximum tax rate and with local WACC KEP on Group level based on effective tax rate and group WACC *) without New Venture IR-Presentation Interim Results HY August

39 Market position No. 1 Swiss tour operator and retailer No. 3 in Scandinavia with own charter fleet (3 Airbus 321) No. 2 in Norway and Denmark Strong position as outstanding long haul tour operator in UK France Italy Benelux No. 1 in India in Tour Operating and Destination Management No. 1 in Destination Management into the USA Amongst the leaders in Destination Management into Europe South- and East Africa Asia IR-Presentation Interim Results HY August

40 Corporate and Social Responsibility OUR FOUR PRIORITIES FOR THE NEXT YEARS CHILD AND ADOLESCENT PROTECTION Kuoni has signed the Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism and implemented requested measures IMPROVING LABOR CONDITIONS Harmonize suppliers requirements within the group Build awareness and organize training among suppliers/partners Two projects of education in tourism in India and the Dominican Republic realized WATER MANAGEMENT Water saving and cleaning projects will be conducted and financed in some main destinations CLIMATE CHANGE Various Group wide carbon compensation projects (e.g. myclimate and climate care) IR-Presentation Interim Results HY August

41 Tentative break-down of turnover POST TRANSFORMATION Destinations Smart Style IR-Presentation Interim Results HY August

42 Share capital structure in CHF Registered Share A Registered Share B Total # of shares % ,00 % Nominal value Share capital ,25 % ,75 % Not listed 100% owned by Kuoni and Hugentobler Foundation Broad international shareholder base IR-Presentation Interim Results HY August

43 Why invest in Kuoni? Long term growth trend of tourism sector will continue Strong market position in premium and specialist segment Solid Balance Sheet Highest ROIC in the industry Minor share of turnover is partially 'vertically' integrated Purest play tour operator Low asset ownership Cash generation out of net working capital High free cash flow generation (low capex) Traditionally high ROIC Strong position in India and China Global Destination Management with focus on FIT and MICE IR-Presentation Interim Results HY August

44 Thankyouforyourattention. IR-Presentation Interim Results HY August