LSG Sky Chefs confirms sustainable turnaround and strives for further expansion

Highest operating result in the company history – Profitable growth – Upgrade to Industry Leadership

Neu-Isenburg – In the business year 2007, LSG Sky Chefs solidified its leading position in a market environment which is still characterized by strong competition and consolidation. While consolidated revenues rose by 5.2 percent to 2.4 billion EUR, the company earned the fruits of its restructuring efforts and doubled its operating profit to 100 million EUR.

At today’s annual press conference, CEO Walter Gehl mentioned three key pillars of LSG Sky Chefs’ rigorous and extensive cost-cutting efforts: the elimination of loss-makers, the sizable reduction of overhead and continuous improvements in operations.

In the coming years, LSG Sky Chefs will engage in a company-wide program known as “Upgrade to Industry Leadership.” It includes optimization measures that will be applied specifically at the regional level, as well as cross-regional and cross-functional activities. The program aims to strengthen and extend LSG Sky Chefs’ market leadership.

The airline catering business will further grow through geographic expansion in the emerging markets of Eastern Europe, the Middle East, India and China as well as through more solidified customer relationships. For its Solutions business, which includes all onboard activities that go beyond catering, the company sees further po-tential through new partnerships.

The joint venture with Kühne + Nagel, established in fall 2007, opens access to more than 400 distribution centers in 55 countries. Based upon this network, a new procurement subsidiary in Hong Kong, with immediate access to the world’s largest procurement market for in-flight products, will further optimize the company’s logistical flow of products and materials.

In order to meet the increasing demand for frozen foods in all continents, LSG Sky Chefs will open two new frozen-food production facilities in Qingdao, China and Pittsburgh, U.S. and expand its existing facility in Alzey, Germany. In order to support the low-cost carriers’ goal of increasing their ancillary revenues through onboard retail, the company has launched a new partnership that allows it to now offer complete and integrated onboard retail systems.

For 2008, Walter Gehl sees challenges in “the potential further consolidation in the airline and the catering industries, the yet uncertain impact of the U.S. financial crisis, the increase in oil and raw materials prices as well as unfavorable exchange rates.” “I am, however, confident that we will achieve further profitability and revenue growth on market level,” he concluded.