Italian catering group Autogrill is splitting up: the food and drinks branch on one hand and tax free activities on the other can from now on each sail their own course. It should speed up expansion, especially in emerging countries.
Opportunities in growth countries
Autogrill is active in 39 countries: the bulk of activities is providing restaurants at airports, stations and along highways: that branch is twice as big as the division that handles tax free sales at airports - their value is estimated at 4 and 2 billion euro respectively.
CEO Gianmario Tondato da Ruos believes both branches have growth opportunities in the development of travel infrastructure in China, India, Turkey, Latin America and Vietnam. “They are opening up opportunities that did not exist ten years ago”, he said in an interview with the Financial Times, but mainly if each branch goes its own way.
Declining margins in roadside restaurants
It is expected that the restaurant branch will get a downsizing after the split, to get margins back up to par. This is necessary because the activities of roadside restaurants in Italy and the rest of Europe are slowing down. For the tax free branch things are different: excluding rents, margins of that department are some of the highest in the sector.
It is still unsure if both branches will continue to work autonomously: a merger with a sector rival is not out of the question for the tax free department. It is also possible that the shares of both companies will be offered at separate exchanges: the restaurant branch would remain in Milan, but the tax free department could move somewhere else.
At the moment Autogrill is controlled by the Italian family Benetton. The board of directors has approved the project that was already announced in February. The operation itself is planned for September.