gategroup reports solid 2011 results under challenging market conditions

gategroup, the leading independent global provider of onboard products and services, demonstrated its resilience once again in the face of continued global economic uncertainty and uneven performance within the airline industry, its major customer base. 



Carriers in gategroup’s core markets in Europe and North America trimmed capacity in an effort to firm up pricing and to contain climbing costs amid slackening demand. Other external factors that impacted gategroup in 2011 included the strength of the Swiss Franc, our reporting currency, against the Euro and US Dollar, and the earthquake and ensuing events in Japan. 



“Confronted by economic and industry uncertainty, gategroup was able to sustain its revenue base in 2011 and further consolidate its position in core markets as well as expand its footprint in emerging market segments,” said Chief Executive Officer Andrew Gibson. 



The reported profit for the year was CHF 58.7 million, a 17.6% increase over the previous year’s CHF 49.9 million. Group revenue was CHF 2,688.1 million on a reported basis, essentially unchanged from 2010’s revenue of CHF 2,700.0 million. Adjusted for foreign currency differences, however, revenue was CHF 3,040.4 million, an increase of 12.6%. 



Revenue performance in 2011 was boosted by the impact of acquisitions in Canada and India completed at the end of 2010. These acquisitions contributed positively to Group earnings before interest, taxes, depreciation and amortization (“EBITDA”) results, but overall were below the Group’s average margin. 



EBITDA was CHF 201.7 million, up 6.4% in constant currencies, resulting in an EBITDA margin of 7.5% on a reported basis and 7.6% in constant currencies reflecting trading performance and other one-time adjustments for 2011. 



Operating profit, meanwhile, was up marginally to CHF 114.8 million on a reported basis and up by 15% in constant currencies. Cash flow from operating activities was down from CHF 124.4 million in 2010 to CHF 60.9 million, due principally to a lower EBITDA (including foreign exchange effects), a higher build-up of working capital to fund growth in new business and funding of pensions. 



Basic earnings per share were CHF 2.05 in 2011 versus CHF 2.39 the previous year, down 14.2% on 28.8% higher weighted average number of shares outstanding. 



“In a weakened market with adverse currency changes, gategroup delivered a solid result,” Gibson said. “The business model and strategy continued to prove itself,” he said, noting that the Company renewed 85% of existing contracts that came up for renewal and won 37% of all new contracts up for bid where the Company was not the incumbent. 



The Board will consider a return to shareholders in line with its stated dividend policy and will include a proposal in the invitation to the Annual General Meeting. 



Notable developments in 2011 included: