The LSG Group Remains on a Path of Growth
Neu-Isenburg, Germany – The LSG Group, a wholly owned subsidiary of Deutsche Lufthansa AG, is looking back at yet another year of growth in terms of reve-nues and earnings. While the company benefitted from the general increase in passenger numbers, it further broadened its products and services portfolio for airline customers with a sharper focus on the increasingly important on-board-retail segment. Additionally, it strengthened its commitment to the global convenience-retail and European-train-services markets.
The company closed the 2016 business year with consolidated revenues of EUR 3.2bn, which is a 5.7 percent jump (adjusted for currency-related factors: + 7.5 percent) over the previous year. Changes in the group of consolidated companies led to a revenue growth of EUR 42m. The Group achieved an Adjusted EBIT (Earnings Before Interest and Taxes) of EUR 104m, EUR 5m above the 2015 figure, despite significantly higher transformation expenses. At 3.3 percent, the Adjusted EBIT margin was unchanged from last year’s level. The EBIT was also hit by significant impairment losses and fell by 29.4 percent to EUR 60m.
“We are increasingly meeting very unique customer requirements under the umbrella of the LSG Group,” said Chief Executive Officer Erdmann Rauer. “Meanwhile, our traditional catering services, providing culinary expertise and seamless logistics, are being marketed under the well-known LSG Sky Chefs brand. Moreover, we are transforming our company to become more B-to-C focused and evolving into a retailer in order to help airlines gener-ate ancillary revenues with our Retail inMotion brand.” With the complete takeover of Re-tail inMotion in early 2016, the LSG Group laid an important foundation for this strategically important development.
In addition, the company has initiated adjustments to its production network in Europe, including various individual measures, such as outsourcing at certain sites, closing some facilities and establishing a pilot central-production unit. At the administrative and opera-tional level, ongoing initiatives to further improve quality and efficiency by means of pro-cess standardization and optimization also continued to unfold.
Furthermore, important contracts with American Airlines, Eurowings, LATAM, Air China and 7-Eleven were signed or renewed. New production facilities for airline and retail cus-tomers in Santiago de Chile and airline catering in Chicago began operations in early 2016. At the same time, the company’s joint venture agreements at Hangzhou and Chengdu airports (both in China) were renewed. For its part, equipment subsidiary SPIRIANT was able to secure new contracts with Singapore Airlines, Eva Air and Thai Airways after assigning a dedicated team in Hong Kong. Likewise, the convenience-retail business in North America, China and Latin America expanded further.
“Looking ahead, we will keep concentrating on developing new products and services in close proximity to our customers and the markets while strengthening the LSG Group’s position as the leading provider of end-to-end on-board products and services,” added Erdmann Rauer. “We are prepared to find the right answers in an unpredictable environ-ment. This is what has brought us this far and will continue to be key to our success in the future.”
For fiscal year 2017, the LSG Group expects a slight surge in revenues and a significantly lower Adjusted EBIT compared to 2016. The expected decrease in earnings is mainly due to the transformation of the business model, particularly in Europe. The LSG Group will also moderately invest in acquisitions in selected markets. This year, it plans to open a new facility in Lagos, Nigeria. It will also support its major convenience-retail customers in entering new markets by offering its local expertise and network.