ARI reports overseas profits up 19% in 2015
17 May 2016
ARI’s share of after tax profits from its operations and joint ventures outside Ireland increased by 19% to €22 million in 2015. This was a 19% increase on 2014, according to its parent company, daa, which published its Annual Report today (May 18).
ARI’s overseas retail operations and investments performed strongly during 2015, with some locations enjoying double digit sales growth. ARI operates in 10 countries across North America, Europe, the Middle East, India and New Zealand and is also responsible for managing the Loop business at Dublin and Cork airports.
The daa Annual Report does not provide separate profit figures for ARI’s operations in Ireland, which are incorporated in the overall performance of the Group.
In Ireland, total sales at Dublin and Cork airports, including retail, food and beverage sales by concessionaires, increased by 20% to €273 million last year. An €8 million upgrade to the main retail area at Dublin Airport’s Terminal 1 and growing passenger numbers at Dublin helped deliver a 28% increase in sales at ARI’s directly managed stores in Ireland, as annual sales in these outlets surpassed €100 million for the first time since the abolition of intra-EU duty free sales in 1999. Average passenger spends at ARI’s directly managed Irish stores increased by 12% last year.
“ARI had an excellent year both at home and abroad in 2015,” said ARI Chief Executive Jack MacGowan. “There was a strong uplift in ARI’s overseas profits and retail sales at the Irish airports increased ahead of passenger growth. ARI has also been working to lay the foundations for future growth, winning key contracts in Abu Dhabi and Muscat in recent months.”
The impact of the award-winning new walk-through stores in Terminal 1 in Dublin contributed strongly to the sales growth at ARI’s Irish stores. The first phase of the new T1 airside retail area, which comprised the core categories of liquor, P&C, confectionery and souvenirs, opened in mid-March and a new restaurant and bar area, Marqette, began trading in September.
“The innovations we have delivered with Terminal 1 have been very well received by passengers and have also been recognised within the industry globally,” Mr MacGowan said. “We were delighted to win the Best Airport Retailer category at the Frontier Awards for our Terminal 1 offering at Dublin, and our new Candy Cloud confectionery store was also named Speciality Concept of the Year.”
Managed turnover increased by 19% last year across all ARI’s locations. The daa annual report noted that ARI Middle East’s joint venture operations continue to perform very well, with Beirut Duty Free again demonstrating a resilient performance, despite the impact of the ongoing conflict in neighbouring Syria.
Turnover at ARI’s joint venture at Delhi International Airport increased for the fifth year in a row since this business began trading in 2010. Sales increased by 9% to $140 million last year, helped by increased traffic and innovative marketing and promotional activity. The Canadian business also saw strong growth during 2015.
Currency did have some impact on ARI’s trading during the year, according to daa’s annual report. Strong sterling and the US dollar boosted the performance of Euro-based operations, but ARI businesses which trade in US dollars – mainly in the Middle East – were less attractive to Euro passengers.
The weakening rouble and the ongoing economic issues in Russia also had an impact on trading in Cyprus, where ARI owns and operates the retail business at Larnaca and Paphos airports. Due to these issues, the volume and spend from Russian passengers declined at both airports.
ARI’s profits outside Ireland include the contribution from daa’s 20% shareholding in Düsseldorf Airport in Germany, which is not separately reported. Passenger traffic at Düsseldorf increased by 3% to 22.5 million last year and the investment in the German airport continued to make a positive profit and cash contribution to ARI.
ARI has also had a strong period of successful business development in the last 15 months winning three major contracts. In January 2015 it won a seven-year contract to operate 2,300 sq m of retail space at Auckland Airport and it began trading in Australasia last summer.
In December, the Abu Dhabi Airports Company appointed ARI to retail the perfume, cosmetics, sunglasses and fashion jewellery categories at its new Midfield Terminal Building. ARI’s contract is for 10 years from December 2017 when the new terminal opens.
ARI also recently won the duty free contract for the new Muscat International Airport in Oman. ARI, which has operated in Oman since 2003, will have more than 5,000 sq m of retail space at the new airport for core duty free products as well as watches, toys, gourmet foods and confectionery.
Jack MacGowan said “Successfully retaining the Muscat concession following on from our win in Abu Dhabi reinforces our position as the leading multi-location retailer in the Middle East. These are very significant contract wins for ARI due to their scale and growth potential, and the fact that most of our industry competitors were involved in both tenders.”