Avolta Q3 profit below estimates on FX drag; margin, cash flow rise

Investing.com -- Avolta AG (SIX:AVOL) on Thursday reported record free cash flow and lower leverage for the first nine months of 2025, offsetting a slightly weaker third quarter that missed revenue and profit expectations, with the Swiss travel retailer citing steady margins and strong October trading.

Equity free cash flow rose 13% year on year to 503 million Swiss francs ($554 million), the highest on record, while net debt fell to 2.45 billion francs at the end of September. 

The company said leverage declined to 1.9 times core earnings, within its target range of 1.5 to 2 times, despite a 129 million-franc share repurchase under its 2025 buyback program.

Total turnover for the first nine months reached 10.61 billion francs, while core turnover, excluding fuel sales adjustments, stood at 10.41 billion francs. 

Core revenue grew 5.8% at constant exchange rates and 5.4% organically, though reported growth was 2.3% after a 3.5% currency impact.

Core EBITDA came in at 1.07 billion francs, giving a 10.2% margin, up 30 basis points from a year earlier. Third-quarter EBITDA rose about 2% to 453 million francs, lifting the quarterly margin to 11.9%, or 37 basis points higher year on year, according to Jefferies research.

Third-quarter free cash flow rose 24% to 287 million francs, which Jefferies said was about 15% above market consensus of 249 million francs. 

Core turnover in the quarter was 3.79 billion francs, down 0.9% from a year earlier and about 3% below analyst estimates of 3.91 billion francs, the broker said. 

Organic growth reached 4.8%, compared with 5.7% a year earlier, reflecting continued stability in passenger volumes and spending.

“The increase in the 9M EBITDA margin (+30bps to 10.2%) reflects an active approach to cost and productivity, while the record EFCF performance and continued deleveraging demonstrates our financial discipline,” chief executive Xavier Rossinyol said in a statement.

Jefferies said regional organic growth in the quarter exceeded 6.1% in Europe, the Middle East and Africa, Asia-Pacific and Latin America, while North America recorded a 0.1% organic decline. 

The company reported that organic growth accelerated to 6% in October, led by improving trends in North America.

Avolta, formed from the 2023 merger of Dufry and Autogrill, reaffirmed its medium-term targets through 2027, including 5% to 7% annual organic growth, a 20 to 40 basis-point yearly improvement in core EBITDA margin, and a 100 to 150 basis-point annual rise in free cash flow conversion. It expects a 3% negative currency translation effect for the full year.

The retailer expanded its footprint during the quarter, entering Japan with a food and beverage concession at Kansai International Airport and securing long-term retail and dining contracts at Atlanta, San José, Dallas Fort Worth and San Antonio airports in the United States.