Avolta's Q3 organic sales growth misses expectations, shares slide
Recasts throughout, adds analysts, CEO's comments
By Anastasiia Kozlova and Amir Orusov
Oct 31 (Reuters) -Swiss duty-free retailer Avolta AVOL.S slipped as much as 2.6% on Thursday as the third-quarter organic sales growth fell short of expectations due to weakness in its Americas market, analysts said.
The company's sales were affected by slower growth in North America and a decline in Argentina, even as other regions showed strong growth, analysts said.
Avolta reported Q3 organic growth of 5.7%, below analysts consensus of 6.3%.
However, analysts at Vontobel and JP Morgan said the robust margin performance in the quarter and the increase in equity free cash flow by 65% may offset the 'slightly shy' organic growth.
Avolta said in a statement it would return excess cash to shareholders via dividends and potential share buybacks over the coming years.
"We are a global company and of course everything that happens inevitably can have an impact, but the size of our network allows us to compensate the negatives in one place with positives in another place," Chief Executive Xavier Rossinyol told Reuters in an interview.
The Basel-based company confirmed its medium-term guidance and full-year outlook at the top end of its mid-term targets.
The company is targetting core turnover growth at constant exchange rates of 5-7% per year, and an annual improvement in core profit margins of 20-40 basis points.
MERGERS & SYNERGIES
After the acquisition of Autogrill last year,Avolta has become a company with a business model focused on synergies in airport retail and the food & beverage (F&B) space, Rossinyol said.
The company is now focused on delivering organic growth with some very selective bolt-on acquisitions in the right markets, in line with its strategic objectives, he added.
Avolta confirmed previously expected synergies from the Autogrill acquisition to rise to 85 million francs in 2024.
Last month Avolta also announcedits plans to acquire 100% of Free Duty from Hong Kong-based NWS Holdings 0659.HK. The full effect of the acquisition, which has not closed yet, will be seen in 2025.
($1 = 0.8655 Swiss francs)
Reporting by Anastasiia Kozlova and Amir Orusov in Gdansk; Editing by Eileen Soreng
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