Italy's Autogrill, which runs restaurants and bars at airports, motorways and railway stations around the world, is looking at possible acquisitions in related sectors in the next few years, when it will have €1.5 billion for M&A.
Autogrill, controlled by the Benetton family, is interested in convenience stores, and newly listed US grab-and-go food retailer Hudson is "interesting", but the company is not up for sale, according to Autogrill CEO Gianmario Tondato Da Ruos.
Tondato also said Paradies, owned by Lagardere, was an attractive convenience retail operator, but declined to say if the Italian company had any concrete deal under negotiation.
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Presenting the group's financial targets for the 2019-2021 period, Tondato said the group wanted to more than double revenue in the convenience retail sector after some bolt-on acquisitions made in recent years.
"Sales coming from the convenience retail business will be around €200 million by the end of this year, we want to boost them to €500 million rapidly," the CEO said.
Autogrill, which has recently preferred smaller acquisitions over big mergers, entered the sector when it bought Stellar Partners and Avila in North America.
Other potential M&A targets could be found in the supply chain, logistics and, in general, services to travellers.
"It's no longer the usual [M&A] suspects, Elior etc, anymore, there is a wider world to look at," the CEO said.
He ruled out the possible listing of Autogrill's North American unit HMSHost to raise cash for the purchase of a large rival.
Revenue And Free Cash Flow Expectations
In its plan, Autogrill sees revenue growing on average by 4.5%-5% annually over the next three years to 2021.
The group said it would bet on airports and train stations to drive revenue, while further reducing its toll-road business after selling its Canadian motorway operations.
With a 2021 free cash flow expected to be five times that of 2018, Autogrill said it would have €1.5 billion to use for growth, in addition to €900 million in capex to be spent on the renewal of existing contracts.
"I appreciate the focus on cash generation and the target set by the company," said Alberto Checchinato, an analyst at brokerage house Fidentiis.
The group said it aimed to lift its underlying core profit margin, a measure of profitability, to around 10% of revenue in 2021 from below 9% last year.
Revenue is expected to reach €5 billion at the end of 2019, a €300 million rise from €4.7 billion in 2018, driven by North America and the International channel, which includes Northern Europe and Asia.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is seen at between €450 million and €470 million this year.