BAA profit driven by retail success

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Traffic growth, additional retail space and interesting initiatives in World Duty Free's beauty retail business are among key factors behind BAA's 4.9% growth in operating profit in the last financial year

BAA has grown revenue by 4.7% to £1.97bn ($3.49bn) in the year ended March 31, the company revealed today. The growth was triggered by a 4.4% rise in passenger and led to a 4.9% increase in operating profit, to £616m ($1.09bn). Net retail income, including World Duty Free, grew disproportionately, by 7.5% to £548m ($970m), while net retail income per passenger increased 2.7% to £4.12 ($7.29).

The group attributed its retail success to a combination of passenger growth, particularly to non-EU destinations, and to the successful exploitation of new space. The results are particularly strong, it said, in light of the challenges BAA faced in 2003, including the Gulf war, SARS and a ban on tobacco advertising introduced in February last year.

World Duty Free itself delivered an increase in operating profit of 9.1% and achieved retail income growth of 9%, to £145m ($257m).  The group said that the tailoring of products, prices and promotions to changing passenger profiles and fluctuating currencies combined with its growing focus on fragrances and cosmetics had proved highly successful.  

BAA group retail director Brian Collie commented that BAA's retail results and its dominant position in European airport retail, where market analyst Mintel believes the group has a 28.2% market share, reflected the core strengths of the retail team ?This is an impressive and consistent performance that highlights our understanding of customers. Whatever the impact of external pressures in the past year, we have focussed on providing the best possible experience for our customers and have seized the opportunities available to us.?