Avolta (AVOL) Q3 2024 TU earnings summary

Executive summary

• Reported CHF 10.1 billion in cumulative revenue for the first nine months of 2024, with organic growth of 6.6–6.8% and like-for-like growth of 6.8% (8% excluding Argentina FX effect); this marks the seventh consecutive quarter of strong performance.

• EBITDA margin increased by 40 basis points year-over-year to 9.9%, with EBITDA at CHF 1,012 million (+13.2% YoY); equity-free cash flow (EFCF) reached CHF 445 million, up 45.9–46% year-over-year.

• Diversified operations across 73 countries, with balanced business lines: duty-free, duty-paid, and food & beverage each representing about a third of revenue.

• Strategic initiatives included the launch of the Club Avolta loyalty program, expansion through hybrid retail concepts, and the acquisition of Free Duty in Hong Kong, adding CHF 250 million in APAC revenue.

• Announced cancellation of 6.1 million treasury shares (4% of issued share capital) in 2024 as part of capital return policy.

Financial highlights

• EBITDA exceeded CHF 1 billion, with a 40 basis point improvement year-to-date and 60 basis points in Q3 alone; Q3 EBITDA margin reached 11.6%.

• EFCF for the first nine months was CHF 445 million (+45.9–46% YoY); Q3 EFCF was CHF 232 million (+65% YoY).

• Leverage reduced to 2.16x net debt/EBITDA, the lowest in over 14 years, with net debt at CHF 2,617 million.

• Refinanced revolving credit facility, extending maturity to 2029 and reducing annual interest expense by CHF 10 million.

• Weighted average debt maturity is 4.1 years; debt split: USD 25%, EUR 32%, CHF 35%, GBP 4%, Others 4%.

Outlook and guidance

• Maintains medium-term organic growth target of 5–7%, annual EBITDA margin improvement of 20–40 basis points, and EFCF conversion improvement of 100–150 basis points as a percentage of EBITDA.

• Expects Q4 performance to be similar to Q3, with full-year organic growth at the upper end of the 5–7% range barring extraordinary events.

• Target leverage of 1.5x–2.0x, with flexibility up to 2.5x for business opportunities.

• Focus on organic growth, bolt-on acquisitions, and shareholder returns via dividends and buybacks.