docInvestors Presentation Full-year Results 2007 PDF • 2.78 MB
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Investors Presentation Full-year Results 2007 PDF • 2.78 MB
Investors Presentation Full Year Results 2007 Disclaimer Full Results 2007 March 2008 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 Key Facts FY 2007 Full Results 2007 March 2008 Strong turnover growth of 15.1% whereof 6.1% organic Particularly strong growth in Scandinavia and Asia & Destination Management GOP-Margin increased by 60 bps to 22.2% Best ever net result Best ever cash flow from operating activities and free cash flow Transformation process on Group level, restructuring in Switzerland and UK on track 5 Acquisitions completed: Three acquisitions to strengthen position in premium market One acquisition to further improve market position in Scandinavia One acquisition to expand into new markets High amortisations of intangible assets from several acquisitions Shoestring launch in UK, Germany, Italy and Spain Proposal to the AGM 2008: Dividend payment of CHF 17.00 per registered share B 3 Full Results 2007 March 2008 Acquisitions 2007 share of direct sales consolidation per annualized turnover in CHF million Dorado Latin Tours, CH 70% CV Travel, UK 100% Les Ateliers du Voyage, France 68% UTE Megapolus Group, Russia 30% Falk Lauritsen Rejser A/S, Denmark 100% 4 April July July September September 8 35 22 51 74 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 Full Results 2007 March 2008 Highlights FY 2007 2006 2007 Turnover Organic growth CHF 4 082 m + 15.1 % + 6.1 % CHF 4 699 m Gross profit (GOP) Gross profit – margin CHF 883.8m 21.6 % + 17.8 % + 60 bp CHF 1 041.5 m 22.2% EBITDA EBIT EBIT – margin CHF 168.5 m CHF 121.7 m 3.0 % + 16.6 % + 15.3 % CHF 196.5 m CHF 140.2 m1) 3.0% Net result Basic earnings per share CHF 116.7 m CHF 39.02 + 16.8 % + 19.3 % CHF 136.3 m CHF 46.54 Cash generation out of Net Working Capital CHF 65.4 m + 10.4 % CHF 72.2 m CHF 190.3 m CHF 152.6 m + 35.0 % + 36.6 % CHF 256.9 m CHF 208.4 m CHF 48.1 m + 21.6% CHF 58.5 m Cash flow Free Cash flow KEP ROIC 5 ∆ 16.1 % 1) Includes amortisation of intangible assets of around CHF 12.5 m (2006: CHF 5.6m) 16.4% Full Results 2007 March 2008 Above average growth Turnover (CHF million) 5'000 cagr = 10.5% *) caogr = 7.3% + 15.1% 4'000 + 8.7% 3'000 + 10.7% + 3.0% 2'000 1'000 3'295 3'581 3'688 4'082 4'699 2003 2004 2005 2006 2007 0 6 caogr = compound average organic growth rate *) without BTI Full Results 2007 March 2008 Summary by SBU FY 2007 Turnover EBIT 2007 2006 Δ% 2007 2006 Δ% Switzerland 1 001 975 + 2.7 20.2 18.5 + 9.2 Scandinavia 992 25 802 0 + 23.7 44.6 - 10.4 29.1 0.0 + 53.3 Europe 752 669 + 12.4 21.4 19.4 + 10.3 UK 770 698 + 10.3 44.1 52.9 - 16.6 1 273 1 013 + 25.7 48.3 34.6 + 39.6 13 7 + 85.7 - 38.4 - 32.8 - 17.1 4 699 4 082 + 15.1 140.2 121.7 + 15.3 (CHF million) whereof New Ventures Asia & Destination Mgmt Corporate Group 7 Full Results 2007 March 2008 SBU Switzerland CHF million 2007 2006*) Δ% Turnover 1 001 975 +2.7 EBITDA 45.7 45.1 +1.3 EBIT 20.2 18.5 +9.2 EBIT-margin 2.0% 1.9% +0.1%pts ROIC 9.5% 8.6% +0.9%pts Most specialist operators posted record results Ongoing strong margin pressure in package holiday sector Improved EBIT-margin after two consecutive years of downturn *) restated ex Las Payitas Remains the highest in the market Restructuring process for Kuoni CH launched during 2007 is on track Successful repositioning of Helvetic brand - double digit growth rates for summer season 2008 Spring 2008: Announcement of close collaboration between Swiss and Kuoni 8 Swiss takes over Edelweiss Air leads to reduction of capacity risk as of winter season 2008/09 Kuoni will provide the land arrangements on the Swiss website i.e. increased access to direct customer base Full Results 2007 March 2008 SBU Scandinavia CHF million 2007 2006 Δ% Turnover 992 802 +23.7 EBITDA 47.3 30.7 +54.1 EBIT 44.6 29.1 + 53.3 4.5% 3.6% +1.2%pts 55.0 -10.4 29.1 -- +89.0 37.4% 16.0% +21.4%pts EBIT-margin EBIT: Scandinavia New Ventures ROIC Scandinavia Exceptional year: New Ventures: 9 Over proportional increase of internet bookings Lower risk profile: Novair comprising now three A321 only Acquisition of Falk Lauritsen strengthened market position in Denmark Good performance additionally supported by bad summer weather # 2 tour operator in Norway and Denmark Shoestring launched in UK, Germany, Italy and Spain Expansion into the Russian market with acquisition of UTE Megapolus Full Results 2007 March 2008 SBU Europe CHF million 2007 2006 Δ% Turnover 752 669 +12.4 EBITDA 27.0 24.6 +9.8 EBIT 21.4 19.4 +10.3 2.8% 2.9% -0.1%pts 29.0% 23.2% +5.8%pts EBIT-margin ROIC 10 Almost all countries achieving double digit growth rates All organic with exception of France (acquisition of Les Ateliers du Voyage) Successful expansion into Belgium Newly introduced B2B online booking system in Italy supported double digit growth Spain successfully introduced premium product; achieved highest growth rate of + 18% Full Results 2007 March 2008 SBU UK CHF million 2007 2006 Δ% Turnover 770 698 +10.3 EBITDA 53.6 56.9 -5.8 EBIT 44.1 52.9 -16.6 5.7% 7.6% -1.9%pts 17.1% 22.7% -5.6%pts EBIT-margin ROIC Double digit top line growth again The various acquisitions entailed sizable amortisation of intangible assets of CHF 7.9 m (vs. CHF 2.4 in 2006) – negatively affecting EBIT New CEO started mid August launched among others following initiatives: 11 Newly acquired specialists made substantial contribution Revamped market image and strengthened presence in B2C marketing Streamlining product portfolio – focus on high-value products Optimizing brochure program Intensify exchange of expertise between Kuoni UK and the acquired specialists Redesigned World class product performed very well throughout the year SBU Asia & Destination Mgmt CHF million 2007 2006 Δ% Turnover 1 273 1 013 +25.7 EBITDA 58.6 42.1 +39.2 EBIT 48.3 34.6 +39.6 3.8% 3.4% +0.4%pts 18.2% 13.7% +4.5%pts EBIT-margin ROIC Substantial top line growth of > +25% alongside with improved profitability Change in product mix to more premium oriented products DM for the first time ever exceeding the CHF 1 bln threshold 12 Visa Facilitation Services (VFS) – built up more than 200 offices in 39 countries Almost 20% turnover improvement in China Organic growth + 18% Turnover increase in India (+ 53.1%, CHF 230 m) mainly as a result of VFS Global Full Results 2007 March 2008 DM Europe reported record high results Sharp growth of FIT (Foreign Individual Travelers) of ~ 50% (20% of DM Europe’s sales) Strong demand for US destinations again, helped by a weak USD Further expansion / strengthening of position in Southern Africa with opening of DM office in Namibia Full Results 2007 March 2008 Net Result CHF million Net result 2007 2006 Δ% 136.3 116.7 + 16.8 Favorable tax rate in 2007 as a result of profit mix Record Net result Net result per registered share B +19.3% to CHF 46.54 (2006: CHF 39.02) Proposal to the AGM of April 18, 2008: CHF 17.00 per registered share B 13 Strong financial position Solid equity ratio of 32.2% (vs. 33.5% 31.12.2006) Net liquid funds of CHF 158 m Liquid funds CHF 609 m including advance payments by customers of CHF 451 m Financial debts of CHF 69 m Net cash position of CHF 89 m after: Several acquisitions Dividend payment Share buyback CHF 100 m (terminated October 2, 2007) Best ever free cash flow of CHF 208 m (2006: CHF 153 m) deriving from improvement of operational performance Currently no new share buyback program 14 Full Results 2007 March 2008 Full Results 2007 March 2008 Cash flow 2007 CHF million Unrivaled cash generation development in this industry FCF cagr = + 43.1 % 250 256.9 200 208.4 190.3 150 153.7 152.6 133.7 120.5 100 100.8 50 74.4 49.7 0 2003 cagr = compound average growth rate 15 2004 2005 FCF CF 2006 2007 Full Results 2007 March 2008 KEP statement on Group level CHF million 2006 2007 Kuoni Economic Profit CHF million 60 40 NOPAT Average invested capital 102.5 637.1 121.3 739.4 20 0 -20 20.0 22.4 2004 2005 48.1 58.5 2006 2007 16.1 16.4 2006 2007 -29.7 -40 ROIC 16.1% 16.4% WACC 8.5% 8.5% ROIC-WACC spread 7.6% 7.9% 2003 ROIC in % 20 15 10 KEP Δ KEP 16 48.1 25.7 58.5 10.4 5 0 5.5 2003 10.8 11.3 2004 2005 Full Results 2007 March 2008 ROIC in the Kuoni Group in % 40 35 30 25 37.4 20 29.0 15 23.2 16.0 10 5 8.6 22.7 17.1 18.2 13.7 16.1 16.4 9.5 0 Switzerland Remark: Scandinavia*) Europe UK 2006 Asia & DM 2007 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 17 Kuoni Group WACC Group 8.5% Customer access in tour operating Full Results 2007 March 2008 Third Parties 51% Own Shops 17 % Internet 14% B2C * Call Center 18% 2006: 11% Share of direct customer access: UK: Scandinavia: Switzerland: Europe: 57% - mainly through call centers 69% - 38% through internet 42% - mainly through own shops 22% - main contributors are Benelux and France Groupwide: 49% is sold through direct channels 18 * B2C and B2B on Internet: 25% Full Results 2007 March 2008 Outlook Bookings for Tour Operating of Kuoni Group in CHF as at March 10, 2008 + 12 % Switzerland + 8% Scandinavia + 41 % France + 12 % UK - India + 27 % 6% (in GBP + 6%) This represents no guidance for 2008 – indication only. 19 Group information 20 Full Results 2007 March 2008 Cornerstones of Kuoni‘s strategy Full Results 2007 March 2008 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 Create value added: differentiation and/or better pricing “Own“ consumers Focus on asset-light business model Efficient processes, effective procurement 21 „Asset-light,… Leverage intangible assets Develop “Kuoni” into number one brand Exploit consumer knowledge and intimacy Develop people & knowledge Leverage technological Achieve high profitable growth Grow organically and through acquisitions Increase presence in high- growth geographic markets Increase weight of high- growth segments Accelerate innovation opportunities …intangible-rich, …high growth“ Strategic targets Value drivers Strategic initiatives Turnover Growth Cost efficiency 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 Capital efficiency Further improvement of Working Capital Management Optimization of Cash Management on group level Investment and acquisition decisions based on strict hurdle rates 22 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 Full Results 2007 March 2008 Targets 2010 (excl. acquisitions) Ø 6 – 8% p.a. Sustainable EBIT improvement ROIC 18% – 20% Full Results 2007 March 2008 Organisational setup CEO M.E. Katz *) Assurance Management SBD STYLE R. Wilhelm Kuoni UK IT Human Resources Branding Corporate Communications SBD SMART/BU SPIRIT/BU SWITZERLAND S. Leser BU Switzerland S. Leser SBD SMART S. Leser BU SPIRIT F. Brusselmans Kuoni France Scandinavia Kuoni Netherlands Kuoni Italy Norway Kuoni Austria FINANCE M.E. Katz Sales Asia Pacific Corporate Controlling Sales Europe & USA Business Analysis Global FIT / MidEast Sweden Russia Destination Europe Kuoni Hong Kong/China 23 Corporate Treasury Mergers& Acquisitions Destination USA Investor Relations Denmark Kuoni India Corporate Responsibility SBD DESTINATIONS R. Schafroth Shoestring Kuoni Belgium Kuoni Spain Corporate Development Destination Africa Legal & Compliance Executive Board: M.E. Katz, R. Wilhelm, S. Leser, R. Schafroth *) Speaker of the EB Destination Asia Destination India Full Results 2007 March 2008 Benefits of new organisation structure 24 Stronger focus on specific success factors STYLE: Focus on building aspirational brands and service-oriented travel offerings SPIRIT: Focus on developing businesses which are high-growth and/or are oriented to new-style business models 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 Tentative break-down of turnover post transformation Destinations Style 25 Smart Full Results 2007 March 2008 Market position # 1 Swiss tour operator and retailer # 3 in Scandinavia with own charter fleet (3 Airbus 321) Strong position as outstanding long haul tour operator in UK France Italy Netherlands # 1 in India in in- and outbound # 1 in Destination Management into the USA Amongst the leaders in Destination Management into Europe South- and East Africa Asia 26 Full Results 2007 March 2008 Market environment – Trends (1/2) Full Results 2007 March 2008 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 27 Market environment – Trends (2/2) Full Results 2007 March 2008 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 28 Implications for Kuoni Full Results 2007 March 2008 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) 29 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) Full Results 2007 March 2008 House of brands (Tour Operating) 1/2 Switzerland Luxury Segment Upper Segment Middle Segment Direct Sales Specialists Retail Airline 30 World Class Scandinavia France EmotionS Spain Italy Benelux Emozioni EmotionS Austria Russia UK World Class Germany India China Full Results 2007 March 2008 House of brands (Destination Management) Individual Travel (Global FIT - B2B) Leisure & Special Interest Groups, MICE Asia Leisure Travel MICE 31 Africa 2/2 Europe India USA Competition of internet vs other distribution channels in CH 90% none 80% slight strong 70% 60% 50% 40% 30% 20% The more complex the product the lower the internet competition. 32 Source: Credit Suisse Economic Research/SRV, 2007 Rou ex End trips urop e Rou n Eurd trips ope Bea c ex h holid Eur ay ope s F ex light Eu s rop e Be ach Eu holid rop ay e s trip s Ho tel s Cit y Fli gh ts 0% Eu ro pe 10% Full Results 2007 March 2008 Full Results 2007 March 2008 Corporate and Social Responsibility Our 4 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) 33 Full Results 2007 March 2008 Share capital structure Registered Share A Registered Share B Total 2 956 800 3 942 400 (in CHF) # of shares # of shares to be destroyed after approval at AGM 2008 New # of shares subject to approval by the AGM 2008 Nominal value 985 600 25,00% 33 600 952 000 25.00% 0.20 2 856 000 134 400 75.00% 3 808 000 1.00 Share capital 197 120 6,25% 2 956 800 93,75% 3 153 920 New share capital subject to approval by the AGM 2008 190 400 6.25% 2 856 000 93,75% 3 046 400 Not listed 100% owned by Kuoni and Hugentobler Foundation 34 75,00% 100 800 Broad international shareholder base Why invest in Kuoni? Long term growth trend of tourism sector will continue Strong market position in premium and specialist segment Solid Balance Sheet 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 35 Full Results 2007 March 2008 Thank you for your attention!
A. Meier, M.E. Katz, R. Wilhelm,
S. Leser, R. Schafroth
