Strong Long-term Investment Opportunity
Since its listing in 2005, Dufry has pursued a consistent strategy focusing on profitable growth and cash generation to create value for shareholders and bondholders alike. In the first phase, the company accelerated growth mainly through acquisitions, and more recently shifted towards a more balanced growth profile including both organic growth and acquisitions, while increasing its cash conversion capability and funds available for capital allocation decisions.
Despite the temporary challenges that our industry and the company are facing due to COVID-19, we strongly believe that travel retail is a resilient industry, which will continue to benefit from the secular passenger growth trend. Industry associations expect a return to pre-Covid passenger numbers by the end of 2023 or beginning of 2024. The willingness of people to travel was also confirmed by Dufry’s continued customer insights’ surveys, showing clear indications of our customers’ propensity to engage at the same level or even more in duty-free shopping when travelling. Travel retail is considered an integral part of the overall travel experience, and customers continue to be interested in the attractive product assortment, now also with an increasing focus on sustainable products in addition to exclusivities and novelties. Staff interactions continue to be sought after when browsing through the stores and travelers feel comfortable with the safety and security measures in the airport environment.
Pure-player in the resilient travel retail channel
The strong underlying fundamentals of travel retail – secular long-term global passenger growth fueled by a growing, more affluent population in many countries, as well as the still high fragmentation of the industry – are cornerstones of Dufry’s investment case. Dufry has a track record of organic growth in line with regional passenger developments and passenger mix; growth acceleration through M&A; strong cash generation capability on the back of an attractive risk profile based on our diversification by geographies, channels and sectors. Dufry’s diversified footprint supported the company even in 2020 and 2021 when facing a global pandemic, by balancing region-specific travel restrictions. Most importantly, the company’s strong cash generation capability will be further supported by the successful implementation of its reorganization and the expected structural savings in a normalized environment. Dufry has already proven throughout 2021 the delivery on communicated cost savings and related translation into Equity Free Cash Flow, which in the second half of the year already nearly reached 2019 levels. Dufry expects an EFCF recovery even before returning to a 2019 turnover environment, providing a strong base for future capital allocation. For a detailed view please see Dufry’s investment case.
Only pure-play to invest in travel retail.
Dufry’s capital allocation policy has been adapted to the current environment with the objective to protect liquidity during the recovery. Dufry targets deleveraging in line with the recovery trajectory, reaching below 5x Net Debt / Adjusted Operating Cash Flow by 2022, and a mid-term leverage level in line with pre-crisis of 2.75 – 3.25x. We expect attractive shareholder value generating opportunities for profitable growth to arise in the short- and medium-term and will thoroughly assess any investment from a value accretion point of view once the business has started to recover sustainably.
In the context of the evolution of the COVID-19 pandemic and the continued limited visibility on the recovery trajectory throughout 2021, the Board of Directors has proposed to the General Meeting of Shareholders 2021 not to pay a dividend in order to safeguard the short-term liquidity of the company. Under consideration of the still lower turnover levels compared to 2019, the Board of Directors has decided to propose to the 2022 General Meeting of shareholders to suspend the dividend payment for the 2021 business year as well. The Board of Directors will consider a re-initiation of dividend payment in line with recovery.
Member of the SMI MID (SMIM) Index
With a market capitalization of CHF 4.099 billion as per December 31, 2021, Dufry is part of the SMI MID (SMIM) Index on the SIX Swiss Exchange, which includes the 30 biggest publicly listed companies in Switzerland not already represented in the Swiss Market Index (SMI).
Included in the SXI Sustainability 25 Index®
Dufry became a component of the SXI Switzerland Sustainability 25 Index® Price (SSUSTX) in September 2021. This index measures the development of Swiss companies which are considered sustainable according to a measurement framework provided by Sustainalytics, a provider of ESG research and analysis. All stocks in the index universe are screened for their sustainability score by Sustainalytics. The top 25, representing leaders within their respective global industry, are selected for inclusion in the new index.
Dufry’s share price started the year at CHF 55.6, reached a high of CHF 68.24 in March due to positive news flow on progressing of vaccination campaigns and easing of travel restrictions ahead of the summer season, with a low of CHF 40.00 in early December related to market concerns on the impact of variants on travel, in addition to global supply chain challenges and inflation developments. Dufry’s share price development was often driven by external news-flow during 2021, reflecting news and expectations regarding the pandemic. The Company’s initiatives to restructure the organization, implement sustainable cost savings, strengthen the financial position and enhance liquidity have been successfully executed throughout 2020 and 2021.
Dufry’s trading volume continued to be healthy in 2021. The average daily trading volume was approximately CHF 61.2 million. The SIX Swiss Exchange remains an important trading platform, where the average daily volume of Dufry shares reached CHF 28.8 million in 2021. Dufry’s trading volumes are mainly concentrated at the SIX 46% and BATS Chi-X OTC 47% platforms.
We continued to receive strong support from our broad shareholder base. The most important participations (>3 %) as of December 31, 2021, were Advent International, Qatar Investment Authority, Alibaba Group, Richemont and Franklin Resources, representing approximately 30.4 % of our share capital.
Dufry has a free float of close to 73 %, which is well balanced, with shares being held by institutional investors in the most important investor regions such as the United States, the United Kingdom, APAC, Switzerland and also across Europe.
Strong investment track-record for bondholders
Dufry has been a well-established investment opportunity in the bond market ever since the issuance of its first Senior Notes in 2012. On the one hand, the bond market represents an important source of financing for the company, while on the other hand, our low operating leverage, as well as the strong and resilient cash flow generation capabilities, are characteristics welcomed by the fixed income market.
Long-term financing strengthened.
In Q1 2021, Dufry has initiated the refinancing process of its debt positions with upcoming maturities until 2023. Overall, CHF 1,619.9 million have been successfully refinanced by end of April. Dufry made use of a diversified product mix including convertible bonds, senior notes and bank debt, thereby optimizing terms in the current market environment. In detail, Dufry issued CHF 500 million new convertible bonds due 2026 with a 0.75 % coupon and CHF 87.00 conversion price, while early converting its existing CHF 350 million 2023 convertible bonds. Further, Dufry priced EUR 725 million 3.375 % Senior Notes due 2028 and CHF 300 million 3.625 % Senior Notes due 2026, which were used to refinance existing bank debt. Dufry had also concluded a comprehensive set of initiatives to strengthen its capital structure and liquidity position in the previous year 2020. With the entire refinancing, the company further strengthened its financial structure. Dufry’s Senior Notes are currently rated (B+) by Standard & Poors and (B1) by Moody’s. However, we have set a longer-term target to achieve again a BB / Ba3 rating, respectively.
Dufry also has a bank credit facility in place totaling CHF 512 million (USD 550 million) maturing in 2024. In addition, Dufry has access to a Revolving Credit Facility of CHF 1,403 million (EUR 1,300 million), which is fully undrawn. As per end of December 2021, Dufry had CHF 219.0 million of COVID-19 related governmentbacked loans. The overall maturity profile shows an average maturity of 3.9 years and a weighted average interest of 2.6 %.
Fair and comprehensive market communication
Dufry is committed to open and transparent communications with the financial market to present our equity story and investment opportunities. We pursue a constant, open dialogue with investors, analysts and the media through direct phone and email exchanges, regular roadshows and conference attendance, oneto- one meetings and dedicated investor days, either in person or virtually.
Senior management presents and discusses financial performance on a regular basis and we provide the financial community and media with in-depth reports and information through press and analyst conferences, conference calls and webcasts. In this context, Dufry releases quarterly trading update statements for Q1 and Q3 and publishes full financial results for the half-year and full-year periods.
As part of our 2021 Investor Relations activities, senior management and the Investor Relations team invested 47 days to meeting investors directly or virtually through roadshows and conferences in Europe, North America and Asia, during which we met around 1035 investors in one-to-one or group meetings and many more in presentations. Apart from meetings, the Investor Relations team answered 662 calls and emails in 2021. This results in a total of 1,701 contacts with investors and analysts. For contact details of our Investor Relations team, please see the contact section in the top right hand corner of this page.
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More about Dufry
Learn more about the Dufry group in more depth:
Dufry will attend and be represented at the conferences and exhibitions related to the travel retail industry listed below. We are looking forward to meet you there.
Retail Brands Our Retail Brands
You may know of Dufry through one of our many other retail brands. If you would like to connect directly with one of these, please see the below links to our entire portfolio.