BAA retail makes strong contribution in testing year

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BAA net retail income played a strong part in boosting BAA profits for the full year to March 31, in results announced today.

BAA net retail income played a strong part in boosting BAA profits for the full year to March 31, in results announced today. Net retail income rose 6.5% to £510m ($826m) in the year while net retail income per passenger rose 1.5% to £4.01 ($6.50).

World Duty Free (WDF) sales rose 2.9% to £352m ($570m) and operating profit rose 8% at WDF to £22m ($36m). Overall, group pre-tax profits (after exceptional items) were up 3.8% to £538m ($871m) and revenue from continuing businesses increased 2.5% to £1.9bn ($3bn) on passenger growth of 4.7% (to 127.7m) for the year.

BAA group retail director Brian Collie said: "The past year has imposed some of the most testing conditions ever faced by our retail operations, with almost every recent international crisis having a direct and substantial impact on the travel sector. To deliver such a strong performance in hostile market conditions is the clearest indicator that our retail strategy is robust and powerful enough to deliver sustained success. I believe this is because of our continued focus of assessing the needs of our customers and giving them what they want, all the while enhancing their experience of travelling through our airports. Combined with our commitment to long term investment, we are well positioned to consolidate our performance in the future."

World Duty Free

World Duty Free operating profit increased to £22m (against £18m last year), driven by a 3% rise in sales alongside improved margins and continued cost control.

BAA said: "Legislation to ban tobacco advertising was passed in February and has reduced tobacco sales in line with our expectations.

"The strength of WDF's supplier relationship strategy was demonstrated in the perfumery, which accounts for almost half of WDF's business, and liquor categories. The summer fragrance campaign, developed through close cooperation with suppliers, delivered sales of £3.6m ($5.8m), on over 150,000 bottles of fragrance. In its peak week, the campaign accounted for 9% of the company's total fragrance sales.

"In liquor, the category has also seen sales benefited from a five-tier promotional calendar in different product types, offering customers promotions on their favourite brands throughout the year.

Fourth quarter summary

In the fourth quarter net retail income across the group grew by 0.9% to £109.5m ($177m). This was despite the impact of the build up to the conflict in Iraq, SARS and the timing of the Easter holiday. However, net retail income per passenger fell to £4.02 ($6.50).