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Aéroports de Paris SA - "2025 Pioneers": the new strategic roadmap of Groupe ADP based on a 2022-2025 financial trajectory
FINANCIAL RELEASE
February 16 , 2022
Aéroports de Paris SA
" 2025 Pioneers ": the
2022-2025 strategic roadmap of Groupe ADP
to build a new sustainable airport model
Groupe ADP has adopted a 2022-2025 strategic roadmap to build the foundation of a new airport model geared towards sustainability and performance, in line with societal and environmental expectations. This strategic roadmap is associated to a financial trajectory.
In this long-term vision, the group wishes to make its airports multimodal and energy hubs designed and operated in a sustainable way. It aims at excellence in hospitality and fluidity for its passenger customers and operational and environmental performance for its airline customers. Finally, it develops a multi-local approach to a culture of innovation and responsibility by placing its action at the heart of the regions in which it operates.
The "2025 Pioneers" strategic roadmap is a first step in this long-term transformation by defining the priority projects and actions for the period 2022-2025. It proposes 20 objectives for 2025, divided into 3 strategic priorities:
The presentation of this strategic roadmap is available at the following link: Investors day.
At the heart of the industrial transformation initiated for 2025 Pioneers is the evolution of airports towards multimodal and energies hubs:
This roadmap is set at the group level. It is shared with TAV Airports, the GMR Airports roadmap will resonate with 2025 Pioneers. This roadmap is based on a financial trajectory allowing the Group to return, by 2025, to its pre-crisis performance under the impulse of the gradual return of traffic to 2019 levels and of a strong financial discipline in operations and investments. This consolidated financial structure should enable the Group to guarantee a fair return to its shareholders, with a level of dividend pay-out equivalent to the one offered before the crisis.
A gradual return of traffic to 2019 levels
The Groupe ADP expects a gradual return of traffic to pre-crisis levels, faster abroad than in Paris Aéroport, given the expected dynamics of TAV Airports and GMR Airports.
It therefore assumes Group traffic in 2022 to be between 70% and 80% of the 2019 level and expects a return to the 2019 level between 2023 and 2024.
Similarly, it assumes that Paris Aéroport's traffic will be in 2022 between 65% and 75% of the 2019 level, in 2023 between 85% and 95%, in 2024 between 90% and 100% and in 2025 between 95% and 105%. The level of traffic reached in 2019 should be recovered between 2024 and 2026 and exceeded from 2026 onwards.
A commercial strategy for v alue creation and customer satisfaction
The Groupe ADP is launching a new retail and hospitality concept and brand, called Extime. Extime capitalises on all the know-how deployed for several years in the Paris hubs and in the Group, and regroups it in a single brand, in order to make it an instrument of international conquest, within and outside the Groupe ADP's airports.
The preferred deployment model is that of a franchise, with a franchisor, Aéroports de Paris, providing the Extime franchise and its know-how to franchisees.
The value creation strategy is based on 4 levers: (i) stimulating contributing traffic via an ambitious Aviation Marketing policy focused on the most contributing destinations, including China; (ii) stimulating demand ahead of the arrival at the airport via a high-performance digital ecosystem consisting of a loyalty programme Extime Reward and Extime Pass, as well as a marketplace www.extime.com; (iii) an integrated business model, with the majority of operations carried out by companies at least 50% owned by the Group, bearing the Extime name, and being genuine champions in their field of activity with optimised business models; and (iv) a field of expression mainly in the airside area of airports in places called "Boutique Terminaux", which aim for excellence in design and architecture, in service and reception, and in the range of brands and concepts.
This new, more comprehensive strategy for retail and hospitality in the airside area is leading to a change in the definition of Sales per passenger, which will now include all retail activities in the restricted area: shops, bars and restaurants, foreign exchange & tax refund counters, commercial lounges, VIP reception, advertising, and other paid services .
The objective is to move, according to this new scope, from €25.3 per passenger in 2021 to €27.5 per passenger in 2025.
D iscipline to promote a gradual return to the financial performance of 2019
ADP SA's operating expenses are expected to decline from €32 per passenger in 2021 to between €16 and €18 in 2024 and 2025, close to identical to the 2019 level.
Under the positive effects of the anticipated recovery in traffic described above, the new commercial strategy and the cost control policy, Groupe ADP expects to return by 2024 to an EBITDA level higher than that of 2019, i.e. €1,772 million. The EBITDA to revenue ratio should be between 30% and 35% in 2022 and 2023 and between 35% and 45% in 2024 and 2025.
Financial discipline will be reflected in a controlled investment policy, while ensuring that an average investment of more than 50% is secured for the maintenance of assets and for safety and security. Investments will average nearly €1 billion per year between 2022 and 2025 for the Group, and will be between 550 and 600 million euros in 2022, between 750 and 800 million euros in 2023, between 650 and 750 million euros in 2024 and between 800 and 900 million euros in 2025 for Paris Aéroport.
Based on group traffic assumptions between 70% and 80% and Paris Aéroport traffic between 65% and 75% in 2022 compared to 2019 levels, Groupe ADP anticipates a positive Net Result Attributable to the Group from 2022 onwards.
Finally, from 2023 onwards, group plans a dividend policy based on a pay-out ratio of 60% of the Group's share of the Net Result Attributable to the Group, in line with the pre-crisis level, supplemented by the introduction of a pay-out floor set at €1 per share in 2023 and €3 per share in 2024 and 2025.
Groupe ADP's net debt to EBITDA ratio is expected to decline from a range of 6x to 7x in 2022 to a range of 4.5x to 5x by 2025.
"After a period marked by an unprecedented crisis that has had a lasting impact on the air transport sector,
Groupe ADP wishes to promote a new long-term airport model that will create sustainable value for the company and the
territorie s and provide a new impulse for its employees and the entire airport community. It intends to build its leadership by relying on a
pioneer approach to the global and structural transformation of its activities and businesses. The "2025 Pioneers" strategic roadmap, which for the first time is group-wide, proposes 20 objectives,
testifying , by 2025, of the implementation of the first concrete actions of this long-term transition. This strategic roadmap is part of a financial trajectory characterised by the gradual return of traffic to the 2019 level as well as a demanding financial discipline in terms of cost evolution and investment control which should enable
Groupe ADP to return to its pre-crisis financial performance level by 2025. The deployment on retail and hospitality activities
of the new Extime strategy, in Paris then abroad , will be decisive in the
g roup's search for competitiveness thanks to the implementation of a franchise concept that is new to the airport industry.
Extime carries a promise of excellence not only in terms of retail performance and customer satisfaction, but also in terms of profitability and productivity of retail operations. As a result,
Groupe ADP will be able to guarantee a fair return of its value creation to all its shareholders. "
Summary of traffic assumptions, forecasts and targets 2022-2025
These forecasts are based on the assumption of no new restrictions or airport closures due to the health crisis, of a stable business model in Paris, and of no abnormally high volatility in exchange rates and inflation rates. Any negative change in relation to these assumptions could have an adverse effect on traffic volumes and the 2025 financial indicators. They are also based on the consolidation scope at the end of 2021, with no assumption of developments up to 2025.
Summary of strategic roadmap indicators
Agenda
Link to the webcast in french / Link to the webcast in english
Phone lines:
United Kingdom : +44 (0) 2071 928 338
France: +33 (0)1 70 70 07 81
United States: +1 646 741 3167
Access codes:
French: 7038837
English: 9726517
A replay of the conference will be available on Groupe ADP (https://www.parisaeroport.fr/en/group/finance)
Registration link
Phone lines:
United Kingdom : +44 (0) 2071 928 338
France: +33 (0)1 70 70 07 81
United States: +1 646 741 3167
Access codes:
French: 6338097
English: 5489189
Disclaimer
This presentation does not constitute an offer to purchase financial securities within the United States or in any other country.
Forward-looking disclosures (including, if so, forecasts and objectives) are included in this press release. These forward-looking disclosures are based on data, assumptions and estimates deemed reasonable at the diffusion date of the present document but could be unprecise and are, either way, subject to risks. There are uncertainties about the realization of predicted events and the achievements of forecasted results. Detailed information about these potential risks and uncertainties that might trigger differences between considered results and obtained results are available in the registration document filed with the French financial markets authority on 18 March 2021 under D.21 0149, retrievable online on the AMF website www.amf-france.org or Aéroports de Paris website www.parisaeroports.fr.
Aéroports de Paris does not commit and shall not update forecasted information contained in the document to reflect facts and posterior circumstances to the presentation date
Investor Relations: Audrey Arnoux, Head of Investor Relations +33 6 61 27 07 39 - invest@adp.fr
Press contact: Lola Bourget, Head of Medias and Reputation Department +33 1 74 25 23 23
Groupe ADP develops and manages airports, including Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget. In 2021, the group handled through its brand Paris Aéroport more than 41.9 million passengers and 2.1 million metric tons of freight and mail at Paris-Charles de Gaulle and Paris-Orly, and more than 118.1 million passengers in airports abroad. Boasting an exceptional geographic location and a major catchment area, the Group is pursuing its strategy of adapting and modernizing its terminal facilities and upgrading quality of services; the group also intends to develop its retail and real estate businesses. In 2021, group revenue stood at €2,777 million and net income at -€248 million
Registered office: 1, rue de France, 93 290 Tremblay-en-France. Aéroports de Paris is a public limited company (Société Anonyme) with share capital of €296,881,806. Registered in the Bobigny Trade and Company Register under no. 552 016 628 . Gr oupeadp.f r
1 See the detailed list of the 20 objectives in the annex to this press
release.
The previous definition was sales from airside shops
divided by the number of departing passengers (CA/Pax) in Paris .
Revenue and other ordinary income less purchases and operating expenses excluding depreciation/impairment of tangible/intangible assets .
4 The 2022 financial forecasts are based on the following exchange rate assumptions: EUR/USD = 1.21, EUR/TRY = 11.21, EUR/JOD = 0.84 and EU R /INR = 90.33.
5 Group traffic from the airports of Delhi, Hyderabad, Mactan-Cebu and Almaty from 1 January 2019.
6 Extime Sales/Pax: Sales per passenger in the airside activities: shops, bars & restaurants, foreign exchange & tax refund counters, commercial lounges, VIP reception, advertising and other paid services in the airside area.
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