Avolt’s plans between geopolitics and the Swiss franc

A name change and a change of pace for the duty free and restaurant giant, 27.5% owned by the Benetton family. Avolta was born from the marriage between the Swiss Dufry and the Italian Autogrill, a name chosen because it contains the root “ox” as in flight and resembles the proverbial phrase “sometimes” in Italian. But despite a bigger-than-expected recovery in passenger traffic in 2023 and a bigger-than-estimated deleveraging, shares are languishing on the Zurich stock exchange (-18.9% over the past 12 months) and worth less than a year ago, and analysts remain cautious on the company led by Xavier Rossinyol.


Still, Avolta is the largest travel retail group in the world with representation in 75 countries, 1,200 sales and refreshment points and 60,000 employees, and which welcomes 2.3 billion passengers every year at its airports, train stations and refreshment stands. Alessandro Benetton is the honorary president of the group and together with him representing Edizione are the CEO of the holding Enrico Laghi (vice president of Avolta) and Sami Kahale (former CEO of Esselunga and vice president of the company).

Stock performance on the Zurich Stock Exchange

According to UBS estimates, only 15% of the world’s population travels by air and passenger growth averages 4-6% each year, so the sector is promising. However, only 20-30% of people moving around the airport shop in duty free and restaurants before departure, and average incomes have recently declined. However, travelers do not give up local products to take away as souvenirs.


Based on this data Avolta expects to capture more and more customers by offering new and improved shopping experiences. Already 20% of the group’s turnover comes from products that can only be purchased at these specific points of sale, and Avolta aims to improve the shopping experience with new layouts and new dedicated items to increase revenue in proportion to the increase in traffic.

However, new geopolitical tensions weigh on the tourism sector. Although Avolta is only exposed to 1% of its sales in the Middle East, passengers from the region represent 5% of international traffic, so the conflict in Israel is a risk factor for the group’s growth. After the attacks on October 7, the sale of air tickets to the affected areas, as well as to destinations in the rest of the world, really decreased drastically. After diversifying into Autogrill, which has a strong presence in catering and operations in the US through HMS Host, mitigated the risk factors of travel and duty-free regime and growth prospects for 2023 are confirmed.


Morgan Stanley believes that revenue in 2023, also penalized by an unfavorable exchange rate with the Swiss franc, will be 8% higher than pre-pandemic levels, an even better estimate than the group, which expects a 7% increase in turnover. 2019 and at the same exchange rates 20% compared to 2022. Morgan Stanley also estimates revenue growth of 7% for 2024while Avolta has yet to provide guidance for the current year and is unlikely to do so until it reports consolidated financial year 2023 data on March 7.

The group has already announced that it will achieve synergies worth 30 million francs in 2023 with the integration of Dufry and Autogrill, but the operation should be fully operational this year. In fact, Avolta estimates it will realize 85 million in synergies and significantly increase cash flow. Geopolitical risks and high rates lead Goldman Sachs (neutral with a target of 40 francs) to estimate that even for 24-25 Avolta, while improving results, will continue to trade at a discount compared to pre-Covid multiples. Jp Morgan (overweight with target of 61 francs) instead sees weakness in stocks as an investment opportunity and We expect new members to join soon: also because margins and cash flows (288 million francs in 2023) will increase by reducing leverage.

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