Investors Presentation Interim Results HY 2007

Transcription

1 Investors Presentation

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. 2

3 Key Facts HY 2007 Transforming organization to Style, Smart and Destinations Divisions New management in UK and Switzerland addressing performance issues New Ventures expanding the brand Shoestring across Europe Five acquisitions in the premium sector Penetration of new markets (Belgium and Russia) Enhancing capital structure Ongoing share buyback program First ever net debt position Organic growth at 5.1% EBIT improvement to CHF 5.7 m (vs. CHF 0.5 m) Increased free cash flow of CHF m Strategic Targets 2009 confirmed Clear focus on creating shareholder value 3

4 Acquisitions 2007 share of direct sales consolidation per annualized turnover in CHF million Dorado Latin Tours, CH 70% April 8 CV Travel, UK 80% July 35 Les Ateliers du Voyage, F 50% July 22 UTE Megapolus-Group, Russia 30% September * 51 Falk Lauritsen Rejser A/S 100% September 74 4 Combined these acquisitions account for additional annual turnover of approx CHF 190 m 2006 acquisitions were made with an annualized turnover of approx CHF 290 m *) subject to the approval of the Russian competition authorities

5 Highlights HY 2007 Improvements HY 2007 vs HY 2006 HY 2007 total Turnover Organic growth % % + CHF 274 m CHF 2.0 bn Gross profit (GOP) Gross profit - margin % - 20 bps + CHF 55.0 m CHF m 21.0% EBIT n/a + CHF 5.2 m CHF 5.7 m 1) Net result % - CHF 4.6 m CHF 3.5 m 2) Free cash flow % + CHF 1.7 m CHF m 1) Includes depreciation on intangible assets of CHF 5.3m (HY 2006: CHF 0.9m) 2) HY 2006 was positively influenced by a tax provision release of CHF 10 m 5

6 Turnover driven by organic growth and acquisitions (in %) Organic 5.1 Acquisitions/ Divestments Currency effect Total Growth 6

7 Summary by SBU HY 2007 Turnover EBIT (CHF million) HY 2007 HY 2006 Δ % HY 2007 HY 2006 Δ % Switzerland Scandinavia/ New Ventures n/a Europe UK Asia & Destination Mgmt Corporate Kuoni Group n/a 7

8 SBU Switzerland CHF million HY 2007 HY 2006 Δ% Turnover EBIT Turnover growth mainly acquisition driven (Kontiki, Dorado) Distinct drop in demand for beach holidays especially in Q2 led to: Lower load factors and hence Lower margins Despite considerable capacity cut Good performance of Kuoni premium products mainly Cruises, USA, Indian Ocean, Asia as well as World Class CEO Switzerland leaves Kuoni, responsibility handed over to Stefan Leser 8

9 SBU Scandinavia/New Ventures CHF million HY 2007 HY 2006 Δ% Turnover EBIT n/a New Ventures EBIT 2.9 Norway continues excellent performance Further result improvements achieved in Sweden Strong long-haul sales out of Denmark Strong direct sales at 67% Lower risk profile as of HY2 due to the redelivery of two aircraft (A-330) New Ventures: start-up costs for project Shoestring 9

10 SBU Europe CHF million HY 2007 HY 2006 Δ% Turnover EBIT Strong demand and improved margins in all markets Organic growth in Spain of > 30% Italy and France showing growth rates of around 10% Italy gaining market share on destinations like Mexico/Caribbean, USA, Oceania High growth rates in France towards Maldives and Mauritius Holland achieving a rise in turnover of > 13% Expansion into Belgium Continuous high growth rates achieved by upscale Emotions product 10

11 SBU UK CHF million HY 2007 HY 2006 Δ% Turnover EBIT Top line growth acquisition and currency driven Persistently difficult market environment mainly for stay-put holidays 11 Particularly for charter destinations like Maldives, Mombasa, Cancun Specialists being very successful (Kirker, Journeys of Distinction and Travel Collection) Direct sales at > 70% Premium products outperforming the market (launch of new World Class Europe brochure in HY2) Acquisition of CV Travel as of June 30 Nick Hughes, new MD, started August 15

12 SBU Asia & Destination Mgmt CHF million HY 2007 HY 2006 Δ% Turnover EBIT First time consolidation of Asian Trails and Distant Frontiers Growth rates for DM Europe and USA at 14% and 12% respectively Japan and Middle East as source markets continue to perform very well Low USD rate helps increase attractiveness of destination USA Continuous good performance of DM Africa India turnover growth by 38% Visa Facilitation Services (VFS) roll out UK contract to more regions 12

13 Financial Result CHF million Financial result HY HY Lower interest income due to: Ongoing acquisitions Payment of dividend Ongoing share buyback 13

14 Net Result CHF million Net result HY HY HY 2006 result positively impacted by release of tax provision in the UK of CHF 10 m Net result per registered share B CHF 1.14 (HY 2006: CHF 2.71) 14

15 Strong financial position Solid equity ratio of 27.2% (vs. 33.5% ) Decrease as a result of dividend payment and ongoing share buyback program Net liquid funds of CHF 53 m Liquid funds CHF 628 m including advance payments by customers of CHF 575 m Financial debts of CHF 59 m First ever net debt position of CHF 6 m Free cash flow of CHF 130 m (CHF 128 m) 15

16 Net Cash Flow Cash as at 1 Jan 07 Cash flow operating activities Cash flow investing activities Cash flow financing activities FX Cash as at 30 Jun 07 16

17 Customer access in tour operating Third Parties 51% Own Shops 19 % Internet 12% Call Center 18% Share of direct customer access: UK: 57% - mainly through call centers Scandinavia: 67% - with highest Internet share of over 34% Switzerland: 42% - mainly through own shops Europe: 21% - main contributors are Benelux and France Groupwide: 49% is sold through direct channels 17

18 Outlook Bookings for Tour Operating of Kuoni Group in CHF as at August 19, Group + 13 % Switzerland + 5 % UK + 15 % France + 11% Scandinavia + 19 % India + 28 % Snapshot on current situation no forecast Highest ever monthly performance for July in terms of turnover and EBIT Full-year projections remain difficult to make, given the markets present volatility

19 Group information 19

20 New Organisation Structure: Why? The tourism industry is changing at a phenomenal pace: extensive consolidation increasing pressure on costs and margins changes in customer behaviour rapid growth of online channels. Profitable growth remains a key corporate priority: improve the profitability of our core business facilitate further growth in promising markets. Our ability to master these challenges will be crucial to our continued success. 20

21 Strategic focus To own and develop leading brands for exclusive travel service offerings To achieve sustainable organic growth that is clearly above overall market rates To generate additional growth through acquisitions, and derive full benefit from the same To adopt and maintain the most efficient processes in the industry To focus on customer needs in both source and destination markets To build and maintain an integrated service chain, from source to destination market 21

22 Strategic targets Value drivers Strategic initiatives Targets 2009 (excl. acquisitions) Turnover Growth Cost efficiency Capital efficiency 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 technology optimization Exploitation of synergies by Future Business & IT Architecture (leverage size and geographical presence) Increase of buying power Knowledgeable, trained staff increased sales conversion rates Further improvement of Working Capital Management Optimization of Cash Management on group level Investment and acquisition decisions based on strict hurdle rates 6 8% p.a. Sustainable EBIT improvement ROIC 18% 20% 22

23 Organisational setup CEO A. Meier Assurance Management IT Branding Human Resources Corporate Communications Corporate Development Corporate Responsibility SBD STYLE R. Wilhelm SBD SMART/BU SPIRIT/BU SWITZERLAND S. Leser SBD DESTINATIONS R. Schafroth FINANCE M.E. Katz Kuoni UK BU Switzerland S. Leser SBD SMART S. Leser BU SPIRIT F. Brusselmans Sales Asia Pacific Corporate Controlling Kuoni France Kuoni Netherlands Kuoni Italy Kuoni Austria Kuoni India Kuoni Belgium Kuoni Spain Scandinavia Sweden Norway Denmark Shoestring Russia Sales Europe & USA Global FIT / MidEast Destination Europe Destination USA Destination Africa Business Analysis Corporate Treasury Mergers& Acquisitions Investor Relations Kuoni Hong Kong/China 23 Executive Board: A. Meier, M.E. Katz, R. Wilhelm, S. Leser, R. Schafroth Destination Asia Destination India Legal & Compliance

24 Benefits Stronger focus on brands (specifically Kuoni), destinations, businesses and consumers Accessible synergies through shared business focus People working in units with a similar dynamic, and with the same job to be done Further decentralisation for optimum alignment and responsiveness to specific market needs Swift implementation of groupwide and SBD-wide programmes Enhanced opportunities for employee development Better mileage for marketing money spent 24

25 Operating Principles Business Model: Model is prevailingly 'merchant', i.e. Limited risks Asset light Low commitments setup Dynamic optimization of business model mix (risk reward trade off) Operating Model: Flexible and dynamic operating model Integration of 'traditional' with 'dynamic' elements Differentiation through appropriate processes and technology deployments Leverage of scale across countries i.e. reduction of transaction costs through economies of scale, standardization of processes and technology 25

26 House of brands (Tour Operating) 1/2 Switzerland Scandinavia France Spain Italy Benelux Austria Russia*) UK India China Luxury Segment World Class EmotionS Emozioni EmotionS World Class Upper Segment Middle Segment Direct Sales Specialists Retail Airline 26 *) subject to the approval of the Russian competition authorities

27 House of brands (Destination Management) 2/2 Leisure & Special Interest Groups, MICE Individual Travel (Global FIT - B2B) Asia Africa Europe India USA Leisure Travel MICE 27

28 Market environment - Trends Politics/demographics: Aging societies and changing social/cultural patterns More available funds for leisure activities General economic upswing Geopolitical situation remains volatile, but people get used to it Asia with excellent growth perspective for many years to come Customer segments Growth in premium segments expected in all markets High importance of brand franchise, product and service differentiation Hybrid, individualistic customers Distribution Growing importance of customer access / CRM 28 Accelerating growth of online distribution

29 Corporate and Social Responsibility Our 4 priorities for the next years Child and Adolescent protection 29 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)

30 Market position No 1 Swiss tour operator and retailer with own charter fleet (4 aircraft) No 3 in Scandinavia with own charter fleet (3 aircraft as of fall 2007) specialist to Greece Strong position as outstanding long haul tour operator in France Italy Netherlands UK strong position in long haul sector Best long haul tour operator for 25 years in a row Market leader in India in in- and outbound Market leader in Destination Management into the USA Amongst the Leaders in Destination Management into Europe and Southand East Africa as well as Asia 30

31 Share capital structure (in CHF) Registered Share A Registered Share B Total # of shares ,00% ,00% Nominal value Share capital ,25% ,75% Not listed 100% owned by Kuoni and Hugentobler Foundation Broad international shareholder base 31

32 Why invest in Kuoni? Long term growth trend of tourism sector will continue Strong market position in premium and specialist segment Solid Balance Sheet Only small part of turnover are 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 32

33 Thank you for your attention!