Second half surge boosts Alpha

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Alpha Airports Group has announced preliminary results for the full year to January 2004, with sales surging 9% in the second half

Alpha Airports Group has announced preliminary results for the full year to January 2004, with sales surging 9% in the second half. This helped the company post a 5% growth in sales for the full year to £440.9m ($657m). Pre-tax profits from continuing operations rose 2% to £21.7m ($32m), with profits up almost 9% in the second half, although with exceptional items, profits fell 16%.

Alpha ceo Kevin Abbott said: "Following a challenging first half, I am pleased with our progress in the second half. Over the past five years, Alpha has transformed its business model to adapt to a very different aviation market. We continue to concentrate on our core business offerings and with a healthy balance sheet and strong management team, we are well positioned to take the business forward."

Group Performance

After a difficult first half, hit by the Iraq war and SARS, when sales improved only 1% and pre-tax profits (from continuing operations but before goodwill amortisation and exceptionals) declined 7.8%, the group's performance improved in the second half, with sales up over 9% and pre-tax profits (from continuing operations but before exceptionals and goodwill amortisation) up nearly 9% compared to the same period last year.

An Alpha statement said: "During the year we made significant capital investment (£12.2m/$18.1m) in many of our airport shops and retail catering outlets, principally at Nottingham East Midlands, Exeter, Dublin, Birmingham and London Heathrow airports."

Retail

The company reported strong growth in the UK market after last year's redesign. The Alpha Airport Shopping "pink" shops generated a 15.5% like-for-like sales advance compared with 2002/03. Alpha said: "We are delighted to have been awarded a seven year duty-free concession by Newcastle International Airport, with construction underway to open expanded Alpha "pink" shops in May 2004. All but two of our 15 stores have been rebranded "pink".

Alpha's World News specialist stores generated a 9% like-for-like sales growth, and its new Glorious Britain destination gift format generated like-for-like 47% sales growth, predominantly at London Heathrow, earning the Highly Commended Specialist Retailer of the Year award at the Frontier Awards.

Alpha's US duty-free stores posted a 17% sales surge with passenger figures up 8% year on year.

Sales in its Asian business rose 20%. "With the $80m expansion of the Bandaranaike International airport in Sri Lanka underway, we are delighted to have been recently awarded new, expanded arrivals shops in better retailing locations under a new, extended contract. Major investment is planned in these facilities and other development opportunities, both in Sri Lanka and across the Indian sub-continent."

Overall, the airport retailing business grew 13.2%, with profit growing 29.4%. The weakness of the US dollar held back second half sales and profits progress in pound sterling terms, and this effect is likely to continue in 2004/05, said the group.

Flight Services

Over recent years in the UK, Alpha has focused on short-haul service development with network airline clients at regional airports. The company has switched from being a traditional flight catering business to predominantly a catering logistics partner.

Alpha said: "In 2003/04, our inflight retail business, focused on food, beverage and gift sales onboard short-haul airlines continued its growth, with sales up over 15% on last year. Conversely, as expected our UK flight services business, serving scheduled and charter airlines, experienced an 8% reduction in sales, caused primarily by the withdrawal of free meals for passengers onboard many of our charter airline customers. Those holiday companies that have introduced a meal addition policy, where holidaymakers pay extra for their inflight meals, have experienced a 73% up-take by travellers. Such meal-additional policies have not only reduced Alpha's sales revenues, but also introduced uncertainty, complexity and thus indirect cost into our service delivery programmes for our charter airline customers, thereby reducing Alpha's profit."

Strategy

Alpha said it will continue to focus on retailing and catering for airlines and airports. "In retail, with our recent successes across many UK regional airports, we are focusing our efforts on maximising the performance and extending the range of services offered to our existing UK airport partners, and seeking European opportunities to extend our network. EU enlargement from May onwards will have a negative impact on sales and profits within our UK retail business; however, the investments we have made, and continue to make in our people to drive customer penetration in our stores is expected to offset most of this impact."

Alpha said the new financial year had started well, with sales up 10% on a like for like basis. "With a clear focus on delivering strategic and operational progress, we anticipate a year of growth and improved performance."

In other news, Alpha has promoted Avril Appleyard to the position of group communications director, reporting directly to group ceo Kevin Abbott.

Appleyard was previously corporate communications manager with Alpha Retail. She joined Alpha 12 years ago as a graduate trainee shop floor manager, before moving to in-store marketing and promotions roles across Alpha's retail portfolio followed by business to business marketing positions.

Over the past two years she has co-ordinated the brand identity project for the retail operations, which saw the roll-out of the distinctive pink livery across Alpha Retail, Alpha Retail Catering and Alpha In-flight Retail. As part of her new role Appleyard will introduce the branding across Alpha Flight Services.

She has also been one of the driving forces behind Alpha Heroes, the awards programme open to all Alpha employees across the UK. The awards ceremony took place last night.

Further news on this event will appear on TRW this week.