Chairman's message

Gilberto benetton

Dear Shareholders,

At Autogrill we have been investing in growth for years and this has enabled our Company to achieve good results despite the persistent fragility of the world economy and the deepening of the recession in certain important countries in the euro area. It also helps to explain how Autogrill managed in such an unpromising scenario to post sales of over six billion euros for the first time, a result that reflects the character and resilience of a structurally internationalized Group.

Our determination to respond to the changing dynamics of mobility has gradually led us to increase our Food & Beverage and Travel Retail operations in airports, whose growth is intrinsically tied to global economic trends. It is in this channel and in rail (that is driven by the development of High-Speed networks) that we will be concentrating our resources and investments, while our approach to motorways, where the business is more exposed to the GDP trends of individual countries, will continue to be more prudent.

While the Food & Beverage and Travel Retail businesses recorded growth in all the airports where the Group operates, the European motorway channel, including the Italian network, was characterized by weak demand and structural issues. Here, the persistent recession caused a further reduction in both light and heavy traffic (in the latter to a greater extent than expected), leading to a drastic reduction in travellers’ spending.

Given the obvious overcapacity and the rigidity of contracts on European motorways, a review of our business model has become unavoidable. It is not a question of abandoning the channel but of investing in a new concept of the “motorway stop-off” and one that is well represented in the newly opened Autogrill Villoresi Est, a laboratory of innovation and sustainability that offers a glimpse of a future in which the motorway commercial offering and the operating structure will both be as cutting edge as they already are in our airports.

Over the course of the year Autogrill continued to strengthen its Travel Retail operations, securing all the contracts up for tender in Spanish airports and entering new markets (including Brazil and Germany). It also expanded its Food & Beverage operations in economically dynamic countries such as Turkey and the Arab Emirates.

2013 will be another difficult year for the global economy. Yet air transport, according to IATA estimates, seems to be growing at a global level, except in Italy.

Pressure on margins even in the airport channel and growing investment commitments will not however deflect us in our determination to expand in this channel with both business sectors.

This, along with our priorities of improving operating and commercial efficiency and continuing to produce positive results in terms of revenues and profitability, is why we have decided to separate our two main businesses by means of a proportional partial demerger of Travel Retail & Duty Free from Food & Beverage.

The demerger serves an industrial purpose but also offers the potential to create greater value for all shareholders.

The separation of the two businesses will also facilitate possible business combinations and promote growth by promoting more agile decision-making processes, as well as giving financial markets improved visibility of their different strategies.

In short, it means bringing into sharper focus the value of the Group’s experience, its brands and its managerial resources so that we can continue, well into the future, turning aspirations and ambitions into powerful realities.

 

Gilberto Benetton