Shareholder s Meeting. March 11, 2004

Transcription

1 Shareholder s Meeting March 11, 2004

2 The perfect storm for the tourism industry A terrible year R E S I D U A L I M P A C T SARS Spring 2003 Iraq conflict War declared March 20, 2003 Casablanca terrorist attack May 2003 GLOBAL RECESSION G.Bush s speech War preparations January 2003 Bali terrorist attack October 12, 2002 Civil war Ivory Coast Winter O F 9 / 1 1

3 These events impacted our business: A terrible year Number of customers (000) Comparable revenues ( millions) Operating result ( millions) ,810 1,696 1,667 1,609 (3) (6) Good resilience at the operating level despite lower volumes

4 but we met our targets We met our objective of generating positive free cash flow: 42 (214) (52) (12) We met our objective of reducing debt: (423) (396) (421) (389)

5 and good resistance of Club Med in France Evolution of holidays packages sells in France in 2003 : -3.7%* Source Syndicat National des Agents de Voyage (SNAV) Evolution of Club Med revenue in France : -0.8%* Club Med in France over performed the market * From January 1 st to December 31 st, 2003

6 2003 key figures

7 Key figures ( millions) Consolidated revenues Operating result Group net result Capital expenditure 10/31/02 1,744 (3) (62) /31/03 1,609 (6) (94) 74 Free cash flow Net debt (12) 42 (421) (389)

8 Activities Variation Number of customers incl.. Club Med customers incl.. Jet tours customers 1,811,000 1,534,000 1,696,000 1,429, % - 6.8% 277, , % Like-for for-like revenues 1,667,000 1,609, % Like-for for-like revenues Stay/HD % Capacity in hotel days 14,941,000 14,174, % Hotel days sold (1) 10,309,000 9,490, % Occupancy rate 69.0% 67.0% pts (1) Huts and 2T villages : % 3 and 4T villages : - 3.4%

9 Consolidated Revenues Change 2003 vs 2002 : ( millions) (reported) Winter : % Summer : % Full Year : % (like for like basis) Winter : % Summer : % Full Year : % (1) (2) (3) 2002 (1) (2) Change impact Perimeter (3) (4) Price / Mix Volume (4) 2003

10 Analysis of results from the core business ( millions) 2002 Operating result Full year 4 o/w Summer 2 Change impact 7 5 Volume impact (58) (57) Mix/Price effect Others (5) (9) 2003 Operating result 0 (16)

11 Operating result by zone and business ( millions) Europe Africa Asia America Core business subtotal Tour Operating Other BUs Total Group F.year o/w Sum (41) (28) 4 2 (1) 2 (6) (3) (3) 1 F.year 2003 o/w Sum (5) (5) (21) (23) 0 (16) 1 1 (7) (3) (6) (18)

12 Result statement ( millions) Revenues Operating result Net financial expense Net income from equity companies ,744 (3) (32) ,609 (6) (45) 0 Net exceptional expense (8) (56) Tax (6) 21 Goodwill amortization Minority interests Groupe net result (10) (8) (3) 0 (62) (94)

13 Net financial expense ( millions) Credit cards transaction fees Interest expense Others 2002 (9) (21) (8) (27) (1) Net financial expense excl.. change impact (30) (36) Realized & unrealized exchange gains & losses (2) (9) Net financial expense (32) (45) Cost of debt 4.86% 5.62% Average debt

14 Exceptional items ( millions) Net exceptional expense (8) (56) Capital gain on asset disposals 12 Definitive closure of rented villages (15) Sub-total resegmentation of capacity Elimination of loss-making activities (CMW Montreal & CM Gym) Restructuring (3) (27) (18) Other (8) Taxes (6) 21 Corporate income tax (5) Differed taxes 26

15 Result statement ( millions) Revenues Operating result Net financial expense Net income from equity companies ,744 (3) (32) ,609 (6) (45) 0 Net exceptional expense (8) (56) Tax (6) 21 Goodwill amortization Minority interests Groupe net result (10) (8) (3) 0 (62) (94)

16 Balance sheet ( millions) 10/31/02 10/31/03 10/31/02 10/31/03 Tangible & intangible assets 1, Shareholders equity & minority interests Financial assets Provisions Working capital Net financial debt ,285 1,096 1,285 1,096 Gearing 66.7% 79.7%

17 Total borrowings and lines of credit ( millions) Bonds with warrants OCEANE bonds Capital leases and long-term loans Medium-term line of credit 10/31/ /31/ Total confirmed and available borrowings and lines of credit Net debt

18 Debt maturity ( millions) OCEANE bonds Capital leases and long-term loans Medium-term line of credit 10/31/ /15/ Total confirmed and available borrowings and lines of credit Average maturity 33 months 45 months

19 Cash flow statement ( millions) Cash flow Change in working capital Change in provisions Funds from operating activities Capital expenditures * (78) 68 (151) 2003 (17) (74) Disposals Free Cash Flow (12) 42 * Of which the collection of receivables on tangible assets

20 Outlook for Winter 2004

21 Winter 2004 Winter offer is still diversified Europe America Asia VILLAGES OPENED THIS WINTER

22 Winter 2004 Capacity by zone: (in thousands of HD) Winter 03 Winter 04 Vs 2003 Europe 3,040 2, % Ski 1,620 1, % Sun 1,420 1, % Asia % America 1,852 1, % TOTAL WORLDWIDE 5,807 5, %

23 Winter 2004 Capacity by category: (capacity in %) Winter 02 Winter 03 Winter 04 14% 10% 9% 54% 55% 58% 29% 31% 30% Cruise ships and villas 3% 3% 3% TOTAL 100% 100% 100% Further improvment in the product mix

24 Winter 2004 Like-for for-like revenue for 1 st quarter 2004: +4.1% (in million of euros) Q1 03 Q1 04 Change Reported revenue % Like-for like-revenue* % * Comparable scope of consolidation and exchange rates

25 Winter 2004 Winter 2004 bookings (vs winter 2003) at March 6, 2004 Like-for-like revenues Cumulative*, at December 8, 2003 Cumulative, at March 6, 2004 Europe +0.5% America +8.3% Asia -1.4% Total Club Med +1.7% +0.2% +14.3% -0.2% +2.6% * For memory, published on December 15 th, 2003

26 Club Med s business model has evolved thanks to the deployment of our strategic priorities

27 Profound changes in the tourism industry Since 2001, we ve seen an exceptional global environment, temporary hostile to tourism, but the industry should grow over the long term (WTO datas) Changes in consumer demand New reservation habits: last minute bookings, the Internet, low costs offers New consumer concerns: - Safety - Well-being, your body as temple. Looking for low price or quality: customers are ready to pay what it takes for Incomparable vacation quality We decided to move up market and modify Club Med s business model

28 Club Med s business model has evolved since 2001 Thanks to the deployment of our strategic priorities to: make our financial results less sensitive to business cycles Eliminate loss-making activities Optimize the offer and operating profitability ensure growth by winning market share Expand indirect distribution differentiated by type of market Use the product to leverage the brand

29 Eliminate loss-making activities America: strong recovery in business in 2003 (21)m (41)m + 21m + 2m (10)m + 4m + 1m + 2m (1) (2) (3) (4) (5) (6) (1) Volume (2) Total All Inclusive (6) Mix / Price (3) Net change in capacity (4) Change impact (5) Fixed costs The 2002 loss from American operations was halved in 2003 Return to operating breakeven confirmed for 2004

30 Eliminate loss-making activities Club Med World Montreal: closed in April 2003 Club Med Gym: insufficient profitability outside Paris Six gyms closed in 2003 Expected sale of 11 unprofitable gyms for 2004 Corporate structures reorganized and moved to a new location Profit in 2004 and estimated margin of 10% in 2005

31 Optimize the offer and operating profitability We ve shifted our offer up market to meet demand and optimize the variable margin Lessons from 2003: Customers have followed our repositioning: number of HD sold 03 vs 02 : -7.9% o/w: % in 2 T - 4.5% in 3 T +0.8% in 4 T New villages success reflected in volume, mix/price and satisfaction Trancoso Four-trident family village Occupancy rate: 63% including 74% in winter 2003 (high season) Record customer satisfaction rate La Palmyre Three-trident family village Average occupancy rate summer 03: 67% including 88% in August Among the four highest customer satisfaction rates in Europe Profitable as from the first season: average gross operating margin of 38%

32 Optimize the offer and operating profitability We ve shifted our offer up market to meet demand and optimize the variable margin News in 2004 Openings: - Three Tridents for all, El Gouna (Egypt) Management contract - Three Tridents Family, Coral Beach (Israel) - Four Tridents for all, Marrakech La Palmeraie (Morocco) Upgradings: - Upgrade from 3 to 4 tridents, Cherating (Malaysia) - Upgrade from 3 to 4 tridents + extension, Chamonix (France) - Room renovation, Turks and Caicos (Turquoise) Projects for 2005 Four Tridents Ski Family, Pesey Nancroix (France) Upgrade from 2 to 3 tridents, les Boucaniers (Martinique)

33 Optimize the offer and operating profitability We ve shifted our offer up market to meet demand and optimize the variable margin Significant change in portfolio quality Number of beds % huts and 2T villages 34% 9% % 3 and 4T villages 66% 91% Significant change in portfolio statistics New village openings 18 Renovated villages 68 Villages with extended capacity 14 Upgraded villages 21 Village closings 40 A new CLUB MED

34 Optimize the offer and operating profitability Reduce fixed costs Reduce corporate overheads (non-village workforce cut by 20% between 2001 and end of 2003) Deploy structural measures to enhance village productivity Introduce a program to optimize purchasing Make fixed costs more flexible to align them more closely with business levels Sign management contracts (El Gouna, Coral Beach...) Outsource tasks with no value added for Club Med

35 Changes in Club Med s business model since 2001 Profitability threshold lowered by 15% between 2001 and 2003

36 Ensure growth by winning market share Expand indirect distribution differentiated by type of market - in France: be strong at home - in Europe Use the product to leverage the brand

37 Expand in France to be strong at home Expand indirect distribution differentiated by type of market update on new sales outlet openings At 12/31/03: target of 600 additional sales outlets confirmed Between April and December: 1,500 sales people trained Objectives and initial results Increase market share outside Paris 70% of sales from new agencies Attract new customers 47% new customers during the summer Winter rate > 15 pts French average New agency sales of 4 T villages > French average To date, new agencies represent 5% of winter 2004 sales in France, in line with our expectations Validates the strategy to expand indirect distribution

38 Expand in the rest of Europe Expand indirect distribution differentiated by type of market Belgium Sales outlets Italy Focus on 1,000 agencies Increase in revenues from the 1,000 selected agencies 100% 75% Others 50% 1,000 selected agencies % % Winter 2003 Winter % of individual Belgian sales at December 8, % in June 2003 Contribution from the 1,000 agencies to total Italian sales: up 4 points from winter 2003

39 Use the product to leverage the brand Attract consumers A Brand Create new needs Product Innovation Leverage customer relationships Services Sell successfully Marketing Support

40 Use the product to leverage the brand A Brand The only tourism brand recognized worldwide: - 97% in France - 87% in Belgium - 93% in the USA Higher ad spending in 2004 (in France, three times more than our nearest competitor) Services Before, During and After program - continuous customer support - Club Med trip planning Club Med Amex / Finaref card - Payment card - Loyalty program - Easy payment terms Product Innovation 3 new concepts: - Spa village in Phuket - Freestyle in Europe - «Riad» in Marrakech Booking Bonus : - Advantages for early bookers - Makes prices more flexible outside the high season Marketing Support 1,200 Club Med sales people worldwide to support distribution Pioneer in Trade Marketing Ongoing training for travel agents A highly effective booking system

41 Conclusion Today s business model is: More reliable More flexible With a lower profitability threshold A renewed,, open-ended ended product offer o meet customer expectations Together with the elimination of loss-making activities and reinvigorated marketing in France and strategic countries, Club Med s s modified business model should allow us to lift operating income back up and secure it at record levels (around 100 million)

42 Appendices Key figures by season Statistics by season Number of clients by issuing countries Reported revenues by zone and activity Like-for-like revenues by zone and activity Number of beds by type of operation Capacity and occupancy rates by zone Analysis of results by zone and activity EBITDA / EBITDAR Capital expenditure

43 Key figures by season Winter Summer Full year ( millions) Reported revenues ,744 1,609 Capital expenditure (83) (40) (68) (34) (151) (74) Disposals Operating result (4) 12 1 (18) (3) (6) Net result (25) (29) (37) (65) (62) (94) Net debt (end of period) (392) (436) (421) (389) (421) (389) Free cash flow 6 (6) (18) 48 (12) 42

44 Statistics by season Winter Summer Full year (in K units) Club Med customers ,534 1,429 Jet tours customers Total Customers , ,810 1,696 Hotel days sold 4,017 4,013 6,292 5,477 10,309 9,490 Average stay 6.21 d 6.28 d 6.98 d 6.93 d 6.72 d 6.64 d Capacity in HD 5,864 5,807 9,077 8,367 14,941 14,174 Occupancy rate 69.1% 69.1% 69.0% 65.5% 69.0% 67.0% Travelling GMs % travelling GMs 42.5% 41.9% 54.8% 50.0% 49.6% 46.4%

45 Number of clients by issuing countries (in K clients) France Belgium Italy Switzerland Germany Netherlands Great Britain Israel Turkey Austria Spain Russia South Africa Greece Others TOTAL Europe Africa 1,098 1,194 1,258 1,090 USA - Canada Mexico - Caribbean TOTAL North America Japan Australia Malaysia Singapore Others TOTAL Asia Pacific TOTAL South America GROUP TOTAL 1,570 1,710 1,782 1, , ,429

46 Reported revenues by zone and activity ( millions) Asia 8.1% 131 Vs 10.1% in 02 TO 16.3% Vs 16.0% in Other activities 4.0% 64 Vs 4.2% in France 36.4% Vs 33.9% in 02 America 12.6% Vs 12.6% in 02 Rest of Europe 22.6% Vs 23.2% in 02 Total: 1,609 million in 2003

47 Like-for-like revenues by zone and activity Changes 2003 vs 2002 ( millions) Winter Sum. 03 vs 02 Europe % - 8.2% - 4.1% Asia % % % America % + 3.0% + 9.8% Core business 1,334 1, % - 8.7% - 3.9% Tour Operating % - 7.9% - 0.9% Other activities % - 5.2% - 5.5% Group + 2.4% - 8.4% Group 1,667 1, % - 3.5%

48 Number of beds by type of operation in 2003 (in number of beds*) Owned Partners Leased Management Total Europe 18,397 5,465 27,210 2,151 53,223 Asia 1,615 1,445 1, ,543 America 3,004 1,520 5,054-9,578 Total 23,016 8,430 34,117 2,781 68,344 % of total 33.7% 12.3% 49.9% 4.1% 100.0% For information, in 2002 % of total 35.9% 16.0% 42.6% 5.5% 100.0% * Excluding villas and cruise ships

49 Capacity and occupancy rates by zone Winter Summer Full year (en K unités) Europe Africa Capacity 3,088 3,040 6,534 5,705 9,622 8,745 Occupancy rate 79.4% 76.4% 72.9% 72.2% 75.0% 73.7% Asia Capacity ,919 1,902 Occupancy rate America 53.7% 50.2% 60.8% 44.7% 57.2% 47.4% Capacity 1,812 1,852 1,588 1,675 3,400 3,527 Occupancy rate TOTAL 59.8% 66.3% 57.6% 54.7% 58.8% 60.8% Capacity 5,864 5,807 9,077 8,367 14,941 14,174 Occupancy rate 69.1% 69.1% 69.0% 65.5% 69.0% 67.0%

50 Analysis of results from the core business ( millions) Revenues 1,392 1,282 Margin on variable costs % of revenues 59.5% 60.7% Fixed selling costs Fixed operating costs (201) (582) (180) (560) Overheads OPERATING RESULT (41) (38) 4 0

51 Analysis of results in Europe ( millions) Like-for-like F.year o/w Summer Reported 10/31/02 10/31/ Op. result Revenues Margin on var. costs Fixed selling costs Fixed operating costs Overheads Operating result 1, (122) (373) % of revenues 55.3% 56.3% (117) (370) (22) (22) % of revenues 3.9% 2.7% Change impact Volume impact Mix/Price Adjust. capacity and real estate Fixed costs Others 2 0 (56) Op. result (3) (46) 35 (2) 2 2 (3)

52 Breakdown of fixed costs for villages in Europe Change in village fixed costs (2002 vs 2003) New village (La Palmyre) ( millions) (6) Re-opening of Rebound-plan village (Djerba la Douce) (8) Elimination of unprofitable villages Savings generated by capacity optimization - Temporary closures and postponed opening Increase in property costs Difference 2002 versus (5) 0

53 Analysis of results in Asia ( millions) Like-for-like F.year o/w summer Reported 10/31/02 10/31/ Op. result 6 4 Revenues Change impact 1 2 Margin on var. costs Fixed selling costs Fixed operating costs 108 (27) (68) 85 % of revenues 51.9% 54.5% (23) (60) Volume impact Mix/Price Fixed costs (23) 2003 Op. result (5) (5) 8 3 (15) 4 - Overheads (7) (7) Operating result 6 (5) % of revenues 2.9% -3.2%

54 Analysis of results in America ( millions) Like-for-like F.year o/w summer Reported 10/31/02 10/31/ Op. result (41) (28) Revenues Margin on var. costs Fixed selling costs Fixed operating costs Overheads Operating result (52) (141) % of revenues 58.1% 59.0% (41) (130) (12) (7) (41) (21) % of revenues % - 7.9% Change impact o/w amount on revenues Volume impact Mix/Price Adjust. capacity T.A.I. Fixed costs 4 3 (30) Op. result (21) (23) 2 (10) 4 4 (6) (2)

55 Jet tours operating result ( millions) Revenues Semi-net margin % of revenues 9.8% 10.5% Other costs (26.8) (27.4) Operating result (0.4) 1.0

56 Other BUs operating result ( millions) Operating result Club Med World Paris (3.5) (4.1) Club Med World Montreal (5.1) (1.1) Club Med Gym 1.7 (1.9)

57 Update on Club Med Gym Revenue trends: ( millions) Change Memberships recorded during the year Share of these memberships falling in the following year (20.4) (21.4) (1.0) Carried forward from previous year (2.1) Club Med Gym revenues (1.3)

58 EBITDA / EBITDAR ( millions) Operating result Amortization (3) (6) EBITDA % of revenues 5.1% 4.8% Rents EBITDAR % of revenues 11.9% 12.2%

59 Capital expenditure ( millions) Capital expenditure Tangible assets Intangible assets Financial assets Total Disposals Deconsolidation Sale and lease of the buildings Others (71) (116) (61) (10) (75) (31) - (10)