Dufry Conference Call Notes – Expected Recovery late 2022 and in to 2023 – US Labour Market Challenging

The following statements were made during the conf call of 10th August 2021.

Dufry CFO on Expected Turnover Recovery

CFO: Now, the question is, by when we expect [...] turnover to recover entirely to 2019 levels. In our case, we believe that this is around late 2022, and then in the first full year 2023, and in that regard, taking into account what I just said, because the cash flow should recover slightly faster than turnover: We can assume that between 2022 and 2023, we would see again a similar cash flow again as in 2019.
CFO: So the first thing is, let's assume that the year 2023 we see a full recovery in respect to turnover on the year 2019. So, if that happens, you should have all the long term cost savings reflected in the P and L. But what you also need to consider a number of additional points. The first one is, if we have significantly higher profitability that will also come at the cost of some higher tax expenses. On top of that, you will also need to consider that in some of our locations, we have minority interests. So assuming that to some of those minorities, we do pay a dividend the 400 million of permanent cost savings will translate into a cash flow, which is considerably lower than that. Let's assume for the sake of argument, a 25% tax rate, income tax rate, that's already 100 million. So minorities impact on top. So basically the 400 million translate on the equity free cash flow level on something, give or take, rough numbers, maybe 250 (million). And then what you also need to take into account or some potential inflation on personal expenses in some jurisdictions and some other impacts.

Dufry CEO on Personnel Expenses

CEO: The drop in personal expenses has different components and the most important one is obviously the number of people that we dismiss and the number of people that we move to furloughs. Depending on the reopening we are in the position to reopen [...] all the spaces that we need.
CEO: We have a special program, a special welcome back program, that has identified positions and names of specific employees that will be recovered and obviously reinitiated in the company as soon as the business is back. When we have a problem, obviously we try with the local services to provide support to the organization.
CEO: […] Probably the only place that so far we have been in a more difficult situation regarding new employees in the US, where as you probably heard, that is very difficult to re engage all the employees because there are employees that don't want to come back and there are employees that have found something else. But we have not been limited so far for reopening due to lack of personnel. We have a program for the next 12 months as I said, in order to engage with the employees as soon as they are needed.

The wage inflation and US labour market was also brought up by Adecco in their conf call:

Wage Inflation – Scarcity of Talent but also due to Government Support Schemes

First we see some wage inflation not everywhere, but in specific territories and especially for example in the US and we see this wage inflation in territories where you have two components, you have a strong economic recovery, strong economic rebound and you have still at work the governmental subsidy schemes which prevent some part of the labor force to go back into the workforce. And and my comment was to say yes, I think that there is today this wage inflation because you have tension, you have scarcity of talent but also induced by by the governmental support scheme. But we expect this support scheme to go down and and this will will put more and more people back into the workforce and will release this pressure on the wages.
I would say today we see a little bit of pressure everywhere. I think there will be some wage inflation but it will remain mid term limited and for sure that there is more pressure on the highly skilled people than on the blue color even if you have different dynamics, especially what we see in the permanent recruitment. The fact for example that in the new way of work people can work remote and especially skilled and highly skilled people can work remote. It is disrupting the market because then people can decide not to live anymore in high costly cities but remote and a cheaper way so that they can accept, let's say to be perhaps a little bit pay less but having a better quality of life and especially a lower cost structure so that at the end they think that it's a winning formula.

Using Python to transcribe Conf Calls, Webcasts

The above audio was uploaded to an S3 Amazon Bucket, then was fed via a Python script to Amazon Transcribe service which resulted in a raw transcript. That raw transcript was then used for the quotes above. By default Amazon Transcribe does not seperate speakers, has difficulty with abbreviations or names like “AuM”, which was transcribed incorrectly as “a uh em” or similar.

For more on transcription see this article: Link

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