When these exceptional items are factored out, ARI’s profit after tax contribution to DAA from continuing business outside Ireland increased by nearly +6% during 2012.
The profit figure also includes a €10.1 million dividend from Dusseldorf International Airport in Germany, where DAA, through ARI, holds a 20% shareholding.
The ARI net result helped parent Dublin Airport Authority (DAA) grow its profits (excluding exceptional items) to €43 million in 2012. This was a rise of +66%. DAA turnover increased by +3% to €575 million last year.
“Last year represented another very solid trading performance for ARI. Retail sales at our locations outside Ireland increased by +16% during 2012 despite continued challenging conditions in some core markets,” said ARI CEO Jack MacGowan.
“ARI’s global managed turnover, including its Irish operations, amounted to €1.1billion during the period under review, an increase of +11%. Our energies are very focused on enhancing profit margins as well as sales in all locations,” he noted.
ARI saw strong sales growth in the Middle East and in India, where annual sales at Delhi Duty Free passed US$100 million for the first time.
ARI opened its first Chinese stores during 2012 and was recently selected as the preferred bidder for the duty free business at Mumbai Airport’s new Terminal 2. “The addition of Mumbai means that ARI will be operating the key duty free outlets at India’s two main international gateways and gives us a very strong position in one of the most important growth markets in the world,” said DAA Chief Executive Kevin Toland.
Of the past year’s trading, DAA said in its annual report: “ARI’s joint venture interests across the Middle East performed strongly overall in 2012, despite the impact of ongoing political uncertainty in parts of the region on both passenger traffic and spending.
“The company’s joint venture at Delhi International Airport in India continued to exceed expectations. Delhi Duty Free Services generated sales in excess of $100 million last year and delivered operating profits and growth targets ahead of forecasts.”
At Mumbai Chhatrapati Shivaji International Airport’s new Terminal 2, the new terminal is scheduled to open in late 2013.
DAA said: “ARI and its Indian partner, Buddy Retail, are working closely with MIAL to deliver a retail proposition at Mumbai that will meet the expectations of all those who travel through this dynamic gateway to the Indian sub-continent.”
MacGowan noted: “India is one of the world’s fastest-growing markets for air travel and airport retail services and has been identified by ARI as a key target for focused regional growth. We are excited about the prospect of operating at the two principal international gateways to the sub-continent and about the benefits our scale will bring to suppliers and passengers, and to our airport partners in the region."
ARI commenced trading in China in 2012, when it opened duty paid shops at Kunming Changshui International Airport in southwest China.
MacGowan said: "We continue to work with Yunan Airport Group and our suppliers to ensure we service this new market successfully and, in time, build on our presence there."
ARI’s operations in Canada and Barbados had a solid trading year, said DAA, with sales in Canada modestly ahead of the record C$50 million figure achieved in 2011. ARI North America is planning significant investment during 2013 in its international stores in Montreal, while the company’s concession contract in Ottawa has been extended for three years.
Of the Irish airports business, DAA noted: “At home, ARI Ireland performed well given the context of a further deterioration in the general retail environment during 2012. The positive trend, which was more marked towards the latter part of the year, was underpinned by higher passenger numbers generally, and by particularly strong transatlantic traffic and the launch of new services to the Middle East.
“Sales at ARI’s own-operated shops rose by an average of +1% across Dublin, Shannon and Cork airports in 2012. The average spend per passenger also increased by almost +1%.”
Total retail sales at the Irish airports, including retail, and food & beverage sales by concessionaires, amounted to €221 million, a modest decline on the previous year.
[Note: The profit contribution from ARI’s operations in Ireland is not disclosed separately in the DAA accounts, as this contribution is treated for regulatory purposes as DAA commercial income by Ireland’s Commission for Aviation Regulation.]
The Irish performance was hit by trading at Shannon Airport, where reduced numbers of military transit passengers affected trading in particular, said DAA.
Shannon Airport separated from DAA on 31 December, by decision of the DAA’s sole shareholder, the government of Ireland. ARI will continue to supply the shops at Shannon on a contract basis.
“Our direct retail operations did very well to buck the continued downward retail sales trend in Ireland generally,” MacGowan said. “We also had other notable successes with the launches in Ireland of our own brand of bottled water, Plane Water, and of theloop.ie, which now offers the largest available for purchase selection of any airport retail website in Europe.”
Shop & Collect, which enables passengers to purchase their goods on their outbound journey for collection on their return, saw sales rise by + 26% during 2012. This service currently represents 6% of overall turnover.
The award-winning Irish Whiskey Collection, which was rolled out from Cork and Shannon airports during the year, supported a further +8% increase in Irish whiskey sales during 2012.
Passenger numbers climbed by about 1% to 22.8 million at Dublin, Cork and Shannon airports in 2012.
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