LSG Group: Solid Performance in 2017

Transformation of Business Model increases Flexibility and Agility

March 20, 2018

Neu-Isenburg, Germany – The LSG Group had a solid performance in 2017. Within a global market environment characterized by continued growth in all areas of its business, the company focused on further expanding its portfolio and transforming its business model to meet the highly diverse and changing requirements of its customers in the airline, railway and convenience retail industries.

The LSG Group closed the 2017 business year with consolidated revenues of EUR 3.2 bn, a slight increase of 0.8 percent over the previous year, despite the negative impact of foreign exchanges (adjusted for currency-related factors: + 3.0 percent) and the voluntary withdrawal from certain markets and customer contracts. Changes in the group of consolidated companies contributed to a growth in sales of EUR 7 million. The Group achieved an Adjusted EBIT (Earnings Before Interest and Taxes) of EUR 66 million, which is EUR 36.5 million below the 2016 figure, primarily due to the increase in transformation costs. The EBIT was hit by extraordinary depreciation on fixed assets and amounted to EUR 45 million (2016: 60 million). Adjusted for the transformation costs and the extraordinary depreciation, the 2017 result would have exceeded the 2016 figure.

“We have made great progress in many important aspects of our transformation,” said Chief Executive Officer Erdmann Rauer. “On the one hand, we have started the streamlining of our own production landscape in Europe and confirmed the viability of a network-oriented production approach for our classic catering services. This has increased our flexibility and given us more opportunities to establish a market presence in additional locations through partnerships and asset-light points of delivery. On the other hand, we have re-affirmed our leading position as a holistic onboard-retail provider by improving our technological capabilities and acquiring new customers on all continents as a result.”

Today, the LSG Group’s onboard-retail technology, marketed under the Retail inMotion brand, is used by more than 25 airlines worldwide, carrying almost 600 million passengers per year. Additionally, the company has continued to strengthen its position in the train services market.

“Looking ahead, we will keep on pursuing three strategic goals – Market Leadership, Transformation and Profitable Growth – in all of our regions and divisions,” added Erdmann Rauer. “Digitalization will be a crucial enabler in this endeavour. We are evaluating multiple opportunities to intensify the use of digital solutions in both our operational and administrative processes. This will make us more consistent and able to make the quality and efficiency of our products and services even better.”

Major areas of growth are seen in Onboard Retail and Convenience Retail because of the considerable global market potential of those segments. At the same time, the implementation of process orientation within the entire company remains a top priority in order to foster transparency and standardization.

For 2018, the LSG Group expects a slight decrease in revenues, primarily due to a substantial negative impact of foreign exchanges and a few contract withdrawals. The Adjusted EBIT is forecasted to increase due to lower transformation costs and further productivity improvements.

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.