Dufry (now Avolta) (DUFNSW; Ba2/BB; S) 1Q Earnings Call

Its noted in the call this afternoon receiving 2 notch upgrades from Moody's and 3 from S&P within a year is evidence of its BS discipline & growth - obviously some of this was on the rebound in travel/organic play but regardless it won't see much protest from credit investors - 3.375% 28s have tightened in -150bps over a year while the 31s that priced with a 20-25bp NIC early last month has traded it away in full. As we mentioned this morning we think the bar for positive rating action from here is high & hence unlikely to see another upgrade in near-term. Our screen cheap on the 28s is unch (on carry & roll); its moved another +0.3pts/-11bps in today.

• On 7% organic growth YTD (to April), it says half on spend per passenger & half on passenger numbers. It did confirm based on this indication, FY24 will be closer to top of medium term outlook range that is +5-7% organic growth/yr.
• Was asked after Airbnb, WH Smith commentary if it was seeing similar slowdown in US - clear no from it; "I know everybody wants to see that, but that's not the case".
• Notes diversified nature of business emphasising planned Asia growth from current 5% to soon 10% (see below). Though Asia reported +5% organic growth it notes impacted by contract exits, excluding which it would have been strong +21%.
• Reaffirms equity FCF that was CHF -80m was normal seasonality & otherwise strong (was up 57m yoy). Re tailwind it did receive from capex timing says it is a "small number" that will reverse in Q2.
• On further M&A says "for the time being, we don't see the need of another transformational acquisition and our focus will be to grow organically and to do some bolt on acquisitions, small ones, clear synergies when we believe there is value on that.".
• Above indicative it will continue deleveraging towards target 1-2x with little risk of it testing its M&A allowed threshold of 4.5x anytime soon.