LSG Group invests in sustainable growth
Proactive transformation of the delivery model well under way
Neu-Isenburg, Germany – The LSG Group, a wholly owned subsidiary of Deutsche Lufthansa AG, reports that 2015 was another year of increased revenues. While its core business, airline catering, continued to benefit from growing passenger volumes, it was also influenced by a fragmentation in demand, meaning that customers are increasingly requesting different products, services and concepts.
The LSG Group closed its 2015 business year with consolidated revenues of EUR 3.0bn, which is a 14.8 percent increase (adjusted for currency-related factors: + 6.1 percent) over the previous year. Changes in the group of consolidated companies led to a revenue growth of EUR 13m. The Group achieved an EBIT (Earnings Before Interest and Taxes) of EUR 85m, EUR 10m above the 2014 figure. This result, however, is burdened by expenses and accruals associated with the company’s transformation of its delivery model in response to the rapid changes in demand. The company’s Adjusted EBIT amounted to EUR 99m (compared to EUR 88m the previous year), which was higher than the EBIT, primarily due to extraordinary goodwill amortization and depreciation in some of its markets.
“We are proactively addressing our customer’s needs and adapting our structures and competencies accordingly in order to reach our future goals more effectively,” said Chief Executive Officer Erdmann Rauer. “At the same time, we are continuing to expand successfully in the areas of train services and convenience-retail deliveries by winning new customers and entering new markets. All this proves our organization’s flexibility and steadfast commitment to shaping our future.”
The LSG Group posted sales increases in almost all of its markets thanks to a repeatedly strong customer retention rate and new business contracts. State-of-the-art customer service centers were opened in Tampa and Chicago, U.S., and construction began in Santiago de Chile, Nairobi, Kenya, and Lagos, Nigeria. In Vilnius, Lithuania, and Moscow-Vnukovo, Russia, however, LSG withdrew due to adverse economic and political conditions. Meanwhile, its license agreement in Yangon, Myanmar, and joint venture agreement with Goddard in Latin America and the Caribbean were extended by 10 and 20 years, respectively.
“Going forward, our top priority will be to strengthen our existing partnerships and create new ones that will enable us to further enhance our portfolio,” added Erdmann Rauer. “One major milestone reached in this regard was the full acquisition of Retail inMotion/Media inMotion in early February, which will enable us to meet consumer and customer needs in relation to onboard retail and entertainment better than ever. As for the rest of 2016, we will focus on implementing a number of internal reorganizational programs. Our willingness to adapt will remain crucial to our success and future. We know that we have the knowledge, experience and commitment necessary to get this done across our worldwide network.”
For fiscal year 2016, the LSG Group expects revenues and an Adjusted EBIT slightly above the previous year’s level. The result will, however, be affected by one-time expenses related to the transformation of the business model, particularly in Europe and North America. The programs that have already been initiated in order to improve performance and seek expansion into adjacent markets will be pursued further.
The LSG Group is the world’s leading provider of end-to-end on-board products and services. These include catering, onboard retail and entertainment, onboard equipment and logistics, consulting and lounge services. The company’s dedication to culinary excellence and expertise in logistics has led to its successful entry into adjacent markets like train services and convenience retail. Its catering activities are marketed under the “LSG Sky Chefs” brand name, through which it delivers 591 million meals a year and is present at 211 airports in 50 countries. In 2015, the companies belonging to the LSG Group achieved consolidated revenues of € 3.0 billion.