It wasn’t easy to keep the bar straight with empty highways and airports. For those who, like Autogrill, base their turnover on mobile consumption – the group has over 4,000 points of sale and 60,000 employees in 30 countries – 2020 was a difficult and busy year. That Gianmario Tondato da Ruos conducted with management to secure the people and the income statement, redesign the organizational model and calibrate the efforts to go through this difficult phase explains the CEO of Autogrill. Last week, the group controlled by Edizione of the Benetton family started the process for a capital increase of 600 million which marks a turning point.
The worst past?
The pandemic will still proceed in waves but the arrival of vaccines is starting to change prospects. In the last quarter of 2020, air traffic in the US stabilized around a value of 65-70% lower than the previous year, from the collapse of more than 90% in March and April. In Italy we have noticed a greater resilience of the motorway channel which, after having suffered a reduction in traffic of over 80%, stood at around -35% in the last weeks of the year. Now everyone agrees that there will be a recovery. What is not yet known when, but will be there, and therefore it is important for Autogrill to prepare before the market restarts.
Why a capital increase now?
Most of our international competitors have already made capital increases to face the crisis while we have preferred to concentrate on trying to understand how to deal with this discontinuity. When the first lockdown took place, in two weeks we redesigned the production model of each business division. The income statement was secured and the workforce reduced through the use of layoffs and other similar instruments envisaged in the other countries where we are present. Painful headcount cuts have been made at executive level. Fortunately, we had a level of debt that allowed us to focus on the reorganization and thanks to a loan of 300 million backed by the Sace guarantee we were able to manage current needs. This work has yielded results. We have managed to redefine the organizational model while maintaining a positive level of cash generation for individual stores, despite very low traffic volumes. I think that having waited was better because this now gives us more strength and credibility with the market.
What are the new capital for?
Now that we have done “our homework” and secured the business model, we can resume the growth path envisaged by the strategic plan. The crisis, as we have already seen in the past, offers moments of discontinuity with the possibility of creating value for those who are financially stronger.
Possibility to make acquisitions. Do you have this in mind?
It is clear that where the losses in turnover have been greater, opportunities to create value will arise: for example, the airport channel in North America. In the markets where we are already strong, ie the United States and Europe, it is easier to find opportunities. Our capital strengthening will also give us organic opportunities, taking over from poorly capitalized operators and the possibility of external growth, in line with the pre-covid capital allocation declarations. I would say that the basic assumption of the strategic plan presented in 2019, namely the creation of value, remains valid. This crisis is like a great pause but the leitmotif of our plan will always remain the same.
Once the pandemic is over, what changes will remain?
The Covid emergency has brought out models that already existed but for which such sudden growth was not expected. I am thinking of ghost kitchens, of the world of delivery. Habits have changed and consequently the operating model of catering has changed. The menus have changed heavily to intercept a larger audience. Consumer environments have transformed: outdoor spaces will need to be rethought and privileged over internal spaces. We will go to restaurants more and more by booking, even in fast food restaurants.
Could the revolution brought about by the pandemic also create opportunities for some divestment?
The underlying theme of our strategic plan is the creation of value and therefore if we should have assets that are valued in an important way by the market and whose disposal is consistent with our strategy, there is no reason why we should not evaluate the sale. We can decide to exit less performing businesses and reinvest in others with greater growth and cash generation. The important thing is to be ready.