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gategroup announced updated growth objectives through 2015. In a presentation to be given in London at the company’s second Investors Day, gategroup CEO Andrew Gibson outlined a revenue growth target through 2015 of CHF 600 million driven by existing business development and new business development. This objective represents revenue growth of 20-25 percent over the four-year planning period from CHF 2.7 billion in 2011 to CHF 3.3 billion in 2015.
gategroup is also targeting additional potential revenue growth of 10-20 percent through execution of its mergers, acquisitions and alliances (MA&A) strategy, which includes consideration of a large transaction or a series of smaller, accretive bolt-on acquisitions that augment the Group’s business strategy.
In aggregate, the combination of existing and new business development combined with MA&A activity is targeted to deliver 30-45 percent growth over the coming four years. While this may appear aggressive, Gibson noted that on a constant currency basis, gategroup achieved revenue growth of 16 percent over the last two year period.
"gategroup’s focus is on balanced, sustainable and profitable growth," he said, adding that the company’s strategy remains firmly in place to capture growth within the existing core customers, the airline industry, while cultivating additional business around gategroup’s existing centers of activity and assets. These efforts will be supported through divisional development initiatives, Company-wide campaigns, and new ventures, including potential entry into adjacent markets where gategroup’s products and services can naturally be extended.
Over the planning period, the targeted margin before interest, taxes, depreciation and amortization (EBITDA) would be between 8.0 to 9.5 percent, with the potential for an additional 1.5 percentage points through MA&A activity. Overall, the return on invested capital (ROIC) is targeted to exceed 12 percent and cash generated from operations before interest and taxes to range from 5 to 7 percent of revenue. The plan assumes: No material change in 2011 foreign exchange rates; cost structures and contract pricing remain at current levels; revenues for existing gategroup businesses increase in line with IATA-growth factors; and revenues will be augmented by new business development and MA&A actions.
Developing and managing true partnerships with airline customers is the key to success, Gibson said, noting that gategroup recently realigned its business to execute more effectively against these defined opportunities.
"We firmly believe that sustainable growth must be delivered through a managed portfolio of options. We aim to achieve this by capturing organic growth, leveraging our existing management and physical assets for new business development, and making sensible accretive acquisitions," Gibson said.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
