Good afternoon here in the Zürich Airport. Good evening, good morning on the call. Very welcome to the full year uncertain of Avolta results presentation. I'm Xavier Rossinyol, the CEO, and I'm joined here with our CFO, Yves Gerster. Let me start straight on the highlights of uncertain. We have reported an organic growth of 5.5%. Very strong organic growth in three of our four regions. 8.2% in EMEA. 7.4% in Latin America, and 6.9% in Asia Pacific. The only region that has not been growing so strongly is the U.S., with a flattish growth. If you take the group without North America, the organic growth would have been 7.9%. We have once more increased the EBITDA margin from 9.4% last year to 9.7% in uncertain.
That's the fourth year in a row where we increased the EBITDA margin. In 2022 was 8.8%. Equity Free Cash Flow has reached CHF 487 million. This is a 15% increase between uncertain and 2024, with a massive improvement on the cash flow conversion from 33.5% to 36.8%. Clearly ahead of our own expectations. Equity Free Cash Flow per share has increased by 18%, also supported by the reduction of the number of shares through the share buyback. Earnings per share, a fantastic 33%. This is a combination of a strong EBITDA and good performance in all the other lines of the P&L, plus the consequences of the reduction of number of shares.
Leverage, very important for us, has again reduced from 2.1x net debt to EBITDA to 1.96x, crossing for the first time in many, many years the barrier of 2x. That is including all the payments we have done on dividend and all the money we have invested in the share buybacks. Return on invested capital increased again from 9.5 in 2024 to 11.4 in uncertain. We've been, for the last four years, on a ROIC ahead of the ROIC we had as a company before the pandemic. Yves will elaborate on how important it is for us to focus on the return on everything we do. Not only a good performance for uncertain, but a performance also with a very strict discipline on our capital allocation.
We have invested in the business, as we said, with an increased return on investment. We continue deleveraging, following the different layers of our capital allocation. First, invest in the business, then deleverage a strong balance sheet, and third, remuneration to the shareholders. We completed the share buyback of uncertain with a cancellation of 3.3% of our capital. The board approved in the last meeting to propose to the General Assembly an increase on the dividend from CHF 1 to CHF 1.15 per share, which is a 15% increase. As you know, our policy is that we will distribute as a dividend a third of our capital, of our cash flow generation. As this one increases year on year, also our dividend.
We are announcing a new share buyback of CHF 225 million for the year 2026. If you put together the share buybacks we did in 2024, in uncertain, and the one we are announcing today, for these three years, we'll be roughly canceling 10% of the shares of the company. Clearly focusing on delivering more value per share for our shareholders. What's going on at the beginning of this year? The year started pretty well. January is a bit of a strange month because we had a very strong uncertain January with almost 10% growth. Also, the Chinese New Year is moving between January and February. February, for me, a more a better proxy of what we are seeing in the company. It has grown 5.5% organically.
Like last quarter of uncertain, we see encouraging improvements in the U.S. Still slowly, but clearly a change on the trend of uncertain. Remember that the U.S., North America, is our largest country. Middle East situation. Well, first of all, I'm not sure it's of interest of the investors community, but it's very important for our employees. We have 1,200 team members working in the region. They are all safe. We check daily with all of them. Also, we have not been affected in our shops and restaurants. To put a little bit of context, Middle East region, directly and indirectly, it's accounting for around 3% of our total turnover. So even if this conflict will last for a few months, which I think most people don't anticipate, the effect we will have in uncertain, it will be of limited nature.
We have seen year after year that these type of shocks have an effect on where it's happening, but lesser of an effect in the global movement of passengers. If you have to go to Asia because you have a business trip, you will not go through the Middle East now, but you will find an alternative route. People are not canceling their holidays. Maybe they are moving from one location to the other. That's why, once more, our extensive geographical diversification, it proves as a very strong hedging against these type of risks we are seeing right now. This performance of uncertain is the direct consequence, a clear strategy with relentless focus on execution. I know it's a bit repetitive because we've been saying the same thing for the last four years, but I want to once more remember.
Number one pillar is focus on traveler and consumer. Everything we've been saying over the last four years, the combination of food and beverage and retail, more entertainment, more flexible stores, more local products, more advanced pricing, more advanced assortment, hybrids, et cetera, et cetera, et cetera. Investment on data, loyalty, et cetera, all that is to keep expanding spend per passenger and gross profit margin. The second pillar is the diversification, both geographically and also on business segment. That, once more, it's proven a key element of our resilience, both in growth and profitability. The last one is productivity, operational excellence. We focus constantly in how we can improve the things we do. That's why not only growing in a resilient manner, but we are also expanding margin and cash flow conversion.
To give some numbers on the resilience and the diversification, we are in 70 countries with 5,000 points of sales in 1,000 locations, but we are also very well diversified on business line. We almost have 1/3 in duty-free, 1/3 in duty paid and convenience, and 1/3 in food and beverage, which hedges us not only about potential geopolitical shocks, but also on consumer behavior. The list on the right is just a reminder that uncertain was not an easy year. We had a bunch of things happening. Now we are all focused on what is happening right now, and we might be forgetting that uncertain was a challenging year. We had the first Middle East conflict. We had exchange rates all over the place. We had the tariffs. We had the slowdown in the U.S. passengers.
We have still the ongoing lower Chinese passenger consumption. The Ukraine-Russia war that makes a bunch of flights between Europe and Asia more cumbersome. Despite all that, we've been reporting very strong numbers. Again, speaks about the resilience of the company. One of our key focus is the spend per passenger, because that's where we can add on top of the passenger growth. We do that with the growth engine we presented in the Capital Markets Day a few months back. The three businesses, duty-free, duty paid, and food and beverage, both physical spaces, shops and restaurants, but also the digital and data side.
With all that, we focus on improving pricing, assortment, having more flexible stores, more distinctive look and feel with more focus on local because it sells more, enhancing retail and food and beverage, not only with the hybrids, but also sharing information. Now we have enough time with hybrids to confirm that a food and beverage outlet inside a big duty-free store, for example, drives more footfall into the store. Not only you sell what you're selling on the new F&B outlet, but you're enhancing the sales on the overall store. Entertainment. On the digital side, I'll come back later a little bit more, but a smart use of data. With all that, we've been increasing for four years in a row, 2022, 2023, 2024, and uncertain, the expenditure per passenger.
If you discount the effect of the U.S., our like-for-like this year has been around like-for-like, without business development, between 5.5% and 6%. About 60% of that comes from passengers, and 40% comes from a spend per passenger. What is interesting on the graphic we are putting here is that you see very different behavior per region and per category. Some of the category analysis will resonate you if you follow some of the mega trends or what's happening with some of these categories. For me, what is very interesting is that despite all pluses and minuses, the overall is plus. Again, also our exposure to different categories, all the kind of brands from the most luxury ones to the most basic ones, it helps us to adapt to the consumers.
What we're trying to do year on year is to do that adaptation better and faster. For that, we need data. Data is becoming, year on year, one of the key elements of our long-term strategy. I wanna put three ideas here. First idea, we are unique on the size of our data pool. There are about 10 billion passengers, air passengers per year. We have exposure in the locations where we are to about 2.5 billion. Last year we had 682 million tickets or customers, and 16 million of those are Club Avolta. The first clear idea is that we have access to more data than anybody in the industry, and year on year, we might be becoming even a powerhouse on travel data alone.
The second idea, we are creating a data and digital ecosystem, putting together all these sources of information we have. One is transaction data, the tickets, what is in the ticket. Of course, if it's duty-free, we also have the boarding pass, so we have more data. We use data from the airports. We use our net promoter score to see not only what they buy, but how they feel on the shops and the restaurant service. We have, in those stores where we put smart cameras and smart analytics, we also see what happens on the stores, how people moves around. We have, of course, a very detailed data on those members of the Club Avolta, which are the frequent flyers. We are also using a platform of startups, calling it Avolta Next, which is providing additional ways of looking at data.
What we are doing progressively, and without any doubt advancing, putting all those closer and closer together. When you have more data than anybody else and a very clear data strategy putting them together, you are moving ahead in a different way. The third idea is we don't do that for the sake of having more data, and that's it. Our target is to monetize that additional and better data we are getting. For that advanced data management, AI is becoming increasingly faster and cheaper to generate value from that increased number of data points. There's a bunch of list, but a couple of examples.
If you understand better the consumer, if you have better data on the products, if you have better data on the way people moves, you can start applying, for example, dynamic pricing that we tested in uncertain and we're gonna extend progressively in 2026. We see that if you do it the right way, it's a clear system to increase sales. Advanced data can improve the operations. One very complex topic for us, particularly in the duty-free side, because we have global suppliers, is the logistics and the supply chain. If you improve your forecasting system, which is basically data, and better, for example, AI, you can improve your assortment, improving sales, gross profit margin, and potentially decreasing working capital. We see a tremendous potential, but it's not gonna happen overnight, has not happened overnight, and we don't want to happen overnight.
We want progressive, realistic improvements in the business for the incoming years. One element of this new data digital and AI strategy is Club Avolta. We've been talking so much about Club Avolta that we maybe forgot that Club Avolta was born only in October 2024, so it's a 15-month-old program and has already achieved 16 million users or members, represents 7% of the total sales. An average member of Club Avolta spends 3 times a non-member. This is for show. There is a transaction every two seconds. It has won a bunch of awards in the industry. For me, what is really important is the amount and quality of data we can extract from that and how we can keep fine-tuning our offering, our services to those Club Avolta members.
One way of doing that is with partnerships, and we have a bunch of them here from airport launches, airlines. You see, we are starting getting to that point where we can see that if you are a member of Club Avolta and a member of certain loyalty programs of airlines, you consume more than if you are not having both programs. Better understanding the passengers, better understanding the frequent flyers allows us to more and more do better job as a retailer and as an F&B operator. One data point that is not here, we had last year 1.5 million downloads of our app, and 25% of the new members were actually downloading the app. That's even more important because if you have your loyalty program in your wallet, we get a certain amount of face time with you.
If you have the app, it's additional. There is people gaming for free in our app. We learn so much, and we are only at the beginning of what we can do to progressively monetize this Club Avolta. Because it's one of those win-win-win. The passenger, the loyal member wins because they have special treatments, we win because we sell more, and the airport also wins because they get a percentage of that. One point I wanted to make here is what we call a smart CapEx. It's to emphasize the idea that everything we do, everything we invest on, is based on a very robust governance and a very strong focus on return on investment. That includes the business development, that includes the refurbishment of existing shops and restaurants, that includes the investment on data, digital, or the new spaces.
uncertain has been, on new spaces, a very interesting year. We have entered new countries, like Tunisia, Saudi Arabia, Japan. We opened the shops now. In existing countries, we have operated new segments. For example, we won the first duty-free store in mainland China, an historical move, and that was because we have a very clear strategy of focusing on geographical diversification and segment diversification, but we had the team in place to benefit from that. We also opened in uncertain the first food and beverage in Latin America, both in Mexico and Brazil. Another very interesting move. We have also won important contracts in North America, like several terminals, food, convenience, and duty-free in JFK in New York. We also have extended many of the existing contracts.
I cannot name all of them because it will take a couple of hours, but I wanna mention one because it's the contract here in Zürich, which we extended this week for 10 years with duty-free included, which we are very happy. All what we do is with a smart focus on the return on investment. I was just checking that now it comes. Before I have my final slide, a small video in case people is getting bored of my speaking. Now we have some more energy into the system. Can we put the video, please? I need to push.
Travel never stops, and neither do we. At Avolta, everything comes together in one seamless world, turning every journey into something more rewarding. uncertain was a year of momentum. New experiences for travelers everywhere. Today, Club Avolta counts more than 16 million members with one loyalty transaction every two seconds. Data connects it all, working as one, driving us forward towards Destination 2027. Recognized across the industry, we deliver strong financial performance and create value for our shareholders through disciplined execution. Because in an industry that never sleeps, you keep moving, you keep innovating, you keep delivering. Avolta. Journey on.
My last slide. Twenty-five, despite all the turbulence and all the headwinds, was a very good year in all the key metrics of our outlook. We were very disciplined in getting a strict capital allocation policy. We have proven over the last four years now, consistent delivery and consistently doing what we have said. Now, of course, people is gonna ask what happens going forward. Once more, we confirm our midterm outlook for the incoming years, which is organic growth of 5%-7% per annum, EBITDA margin of 20-40 basis point additional. Yes, additional to the 9.7% we reported for the full year uncertain. An increased cash flow conversion of 100-150 basis points.
We've been doing much better on this metric over the last four years, but we think we can keep improving another 150 basis points on the current base. With that, I hand over to Yves. Thank you very much.
Thank you very much, Xavier. Good morning, good afternoon to everybody who joined online, and good afternoon to everybody who joined here.
In the room in Zurich to this year's financial result presentation. Let me start directly with the highlight of this year's result, starting with the turnover on the left-hand side of the slide. Turnover came in at CHF 13.72 billion. That represents an improvement versus last year organically of 5.5% or, and that's actually the metric I prefer, at constant exchange rate, 5.9% versus the same year, 2024. Looking at EBITDA, the margin has improved by 0.3%, now reaching 9.7%. This is bang in line with the medium or the midpoint of our guidance, which Xavier just have explained of 20-40 basis points improvement year-on-year in the midterm.
Equity Free Cash Flow, once more, the start of the presentation came in at CHF 487 million. It's a significant improvement versus the number of the previous year. If we look into the growth first, into the detail of the growth, you will notice on the left-hand side that like for like came in at 3.9%. As Xavier has explained at the beginning, that's on one hand side driven or predominantly driven by the slower performance of North America. Net of the North American impact, the group would have grown by around 5.5%-6% on the like for like.
If you look at the different regions, as I've just mentioned, growth was significant in EMEA, coming in at more than 8%, at 8.2%, but also in LATAM with 7.4% and APAC with 5.69% improvement versus the previous year. If we go further into the P&L and looking at the detailed evolution here, there are two messages from my side on the P&L above the EBITDA margin. Number one is you will notice that the improvement year-on-year on the gross profit margin is probably not as high as expected. It's a slight decline. You will also notice that the concession expenses year-on-year as a percentage of turnover has increased, actually quite substantially. You will also see that personnel expenses and general expenses have decreased. Now, there are two reasons for that. Number one...
Actually three. Number one is a mix effect. Because of the slower performance of North America, we see an impact on the gross profit margin, on the concession expenses, and also on the personnel and general expenses. The reason for that is potentially an obvious one, and we have presented it in both Capital Markets Day today. North America has a very strong food and beverage business and also a very strong convenience business driven by the big footprint we have in North America, specifically in the U.S. As we have explained many, many times, the food and beverage business, while it has a very similar EBITDA margin than the duty-free business, comes in at a completely different cost structure when you look at the gross profit margin, the personnel expenses and the concession fee, but then also the general expense line.
Food and beverage has, relatively speaking, a higher gross profit margin. Because it's the evolution and the turnover growth was lacking behind the other regions, the improvement in the gross profit margin is not as pronounced as it would have been if North America would have grown as well in line with the rest of the organization. Gross profit margin because of that lacking slightly behind or the improvement lacking also slightly behind. If you look at it on a region by region basis, or if you compare food and beverage with retail in both areas, the gross profit margin has increased, but then on the consolidated basis, it did not. Again, a mix effect. The same applies on the concession fees. Concession fees in food and beverage are significantly longer than in duty-free. The same thing applies here.
Because North America was not growing as much as the rest of the organization, the concession fee, relatively speaking, was increasing. The same on personnel expenses and general expenses. Food and beverage has typically a higher general expense, but because of the lower growth, you see a decline there. Now there's another element I want to quickly mention on personnel expenses and general expenses. One element there is the improvement of productivity, simplification of processes, automation, and the further use of artificial intelligence throughout the organization from front office to back office. That also supported the reduction of general expenses and also the reduction of personnel expenses. This is point number one.
Point number 2, that's probably a little bit more complex, but we have started to internalize some of the costs which before were covered by external advisors and support we got from outside the organization into the organization. That led to a slight negative effect on personnel expense, but a disproportionate positive effect on general expenses. Some of the things we did there, for example, is in IT. We are focusing more on having the function there in our shared service center rather than buying external advice. Something similar happens in HR, also in the finance organization. We depend less on external advice, for example, also in the area of tax support. That ultimately led to the improvement of the EBITDA margin by 30 basis points.
If we go to the lower part of the P&L, you see a number of effects there. Depreciation and amortization came in in line with expectations. If I look at the financial result, this was significantly better than the year before. On one hand side, it's structural improvements, it's well management of the interest expenses, some additional interest income on some cash deposits we had. On top of that, also by a good positive FX result. Look, we have a natural hedge in place, as you know. The FX differences we report are not very material. But nevertheless, for the last two, three years, it was slightly negative. This year, slightly positive, and this slightly negative to slightly positive helped us to improve the financial result there as well. Income tax has been reduced further as a percentage of EBT.
For me, this result here is a good proxy to what we should see going forward. Somewhere between what we have seen last year and this year, 21.8%-22.8%, I believe is a good area of approximation if you want to model our tax rate going forward. Then when it comes to the net profit, we have generated CHF 645 million. Also, minority interest has slightly decreased as a percentage, now standing at 22.8%. There are two effects I want to quickly mention there. On the one hand, as you know, some of the minorities we have in North America, it's part of the business model there. It's unavoidable. As a consequence of the slower performance in North America, we are lagging a little bit behind there. This is one element.
The other element is a more structural one. Because we are optimizing the organization, because we are more efficient on processes, specifically also on global functions and on global elements which are owned 100% by us, we can expect to see a decrease of that percentage over the medium term. That's more a structural improvement. The last point quickly here is on the right-hand side. If you look at that table with the performance over the last couple of years, quarter by quarter, there's something which is very interesting to observe. If you go vertically, Q1, 2022, 2023, 2024, uncertain, you do the same for half year, you do the same for the nine months and the full year, you see that quarter by quarter, year by year, we have improved in line with what we have mentioned from an outlook perspective.
Year on year, for every single quarter, we have improved the EBITDA margin by at least 20 basis points, in some case, closer to the 40 basis points. In line with our outlook we have provided. Moving on to the bridge of the income statement. We have shown that several times in the past. We then didn't show it for a while. It's always reflected in the annual report. Sometimes we have shown it in the annex of the results presentation. It's one of those things, we got asked during the road shows by investors and external stakeholders to show because it helps to understand the bridge from IFRS to CORE. You see it here in a very transparent way. I will not go into the details, but we do actually 3 adjustments to IFRS.
One is the acquisition-related amortization, because we believe that especially now in a situation where the big transactions and the big acquisitions lie in the past of the organization, it's important to correct for that because the concession rights are only activated when it comes to acquisitions. When we grow organically, we don't activate those concessions, and as a consequence, over time, this amount is fading and being reduced. It would be wrong not to adjust for that also because CORE, on the one hand, it should be transparent, but also management compensation depends on that. It would be wrong to have an improvement over time, purely mechanically because of the acquisition-related amortization. The second one, which is much more important in this lease adjustment, it's related to IFRS 16, and it's purely related to that.
We, as you know, believe that IFRS 16 does not represent us properly, and therefore we adjust to that. Something similar applies for the fuel. What is important here, you may like or don't like CORE. We believe it's the right way to represent our business, but maybe you prefer IFRS. What is important to note here is the bottom line. The IFRS profit to equity holders of CHF 199 million is by far the best result the group has ever generated in this regard before or after IFRS 16. If you believe that the IFRS 16 adjustment of CHF 177 million is justified and you add that to the IFRS 16 result, the bottom line result is about three times the best one the group had in the past before IFRS 16.
A significant step up in the bottom line result in that regard. Moving on to the cash flow. It's a record equity free cash flow, but then if you look at the details, it's quite uneventful. CORE EBITDA was one of the biggest contributor to ultimately lead to the strong equity free cash flow. On top of that, we had some improvement in the net working capital of CHF 60 million. The improvement in the net working capital is predominantly generated by improvements in inventory. We are more efficient of managing our inventory, and as a consequence, we're able to take out some of the net working capital there. Otherwise, CapEx is in line with expectations, so is dividend to minorities, income tax, and also the interest result. Nothing surprising there. Below the equity free cash flow, we have the three typical lines.
You will see the CHF 175 million of share buyback. As you know, the share buyback of last year in total was CHF 200 million, so we have canceled shares in the value of CHF 200 million. The amount we purchased is slightly less because we still had some treasury shares on stock, and we used CHF 25 million of treasury shares to be canceled to complete the CHF 200 million program. On top of that, you see the reflected dividend increase there from CHF 100 million the year before, CHF 140 million last year, so an improvement of 42% year on year. Still disregarding the share buyback, disregarding the increase in dividend, we were able to reduce the net debt by around CHF 130 million, standing now at CHF 2.5 billion.
That leaves us or leads us to the leverage. Leverage is standing at 1.96 times by the end of uncertain, which is exactly in line with the medium-term guidance of 1.5-2 times. Just scratching at the upper end of our medium-term target when it comes to leverage. The maturity profile is still very well balanced regarding different currencies, different products, different maturities, and also from a fixed and floating mix with having 80% or around 80% of our debt being under fixed rate arrangements. Now, there are two maturities coming up. One is actually in about two weeks time on the twenty-third of March this year, which is a CHF 500 million convertible. We are not going to refinance that.
We are repaying that convertible on one hand side with cash, which we had from a refinancing of last year. Last year, we financed or refinanced a CHF 300 million bond with a new CHF 500 million bond. There's some cash left. On top of that, with cash from the balance sheet. No refinancing there. The next maturity is at the beginning in the first quarter of 2027, so around 12 months from now. There we plan to refinance that in the next couple of months. It's not finally decided yet with which product or mix of product, but you can expect to hear from us, quite soon there in that regard. Look, having said that, it's also important to note that there is no refinancing risk.
The group has sufficient cash on the balance sheet and also sufficient available facilities under the RCF, which matures in 2030, to refinance the maturity of next year, even if we would not go into a new arrangement on the market. ROIC, Xavier has quickly announced it. ROIC is something which is extremely important for us when managing the business. It drives any decision when it comes to CapEx. It drives the decision when it comes to business development, be it organically or inorganically via M&A. Whenever we enter into a new project, we look at the ROIC. We look at, obviously, when you look at single projects at IRRs and at present value and some other performance indicators. Now, we haven't communicated that to the market in the past.
We didn't want to distract from our KPIs, turnover growth, EBITDA margin improvement, and equity-free cash flow. We will continue to report those, but nevertheless, we came to the conclusion based on feedback also we got from the market that it's important to show you also the ROIC. The ROIC for us follows a very strict definition. We believe that it's a very clean definition. We take into account everything, taxes, minorities. So everything which is related to the business and for our business model is included there. It's a very clean number from that perspective. And what is also important, and Xavier has mentioned it at the beginning, is the progression over time. So we see a strong improvement year-on-year, reaching 11.4%, in uncertain. You see clearly the trajectory here. It's reflected in the arrow.
We do believe that it will improve over time going forward. We will do everything and all the decision we are continuing to do in 2026 and beyond with that in mind and with having in mind that it should be accretive for the ROIC going forward. We are not going to report that number on a quarterly basis. It will be reported on an annual basis. The next time you hear about that is in one-year time. We will continue to report all the other KPIs in the usual fashion. For that, I believe once a year is sufficient, and we will also report, obviously, last twelve months information in that regard. Moving on to the capital allocation policy. It's the same as we have shown for the last two years.
There is no change in that regard, and I believe that's also important, and that's the key thing about it. We are using it very strictly. We have the clear priorities to reinvest into the group. We have just discussed CapEx before when talking about the cash flow. We will continue to do that because we believe there are opportunities out there which are worth exploring and to enter into. On top of that, we are looking or continue to look into some small to medium-sized bolt-on acquisition, fully cash financed and with the requirement to be accretive in general, but also from a ROIC perspective. We are very much focused on maintaining the leverage and the leverage targets we have discussed before between 1.5 and 2 times net debt to EBITDA.
Last but not least, whatever is remaining as a free cash flow of the organization, we are using as a cash return to shareholders. We have discussed it before, but as a summary once more, the dividend, where we have started about two years ago to pay 70 cents per share as a dividend, improved significantly to CHF 1 last year and a further 15% improvement for this year proposed by the board to the General Assembly. We are following a very strict one-third of equity free cash flow, there, and that leads basically to that pattern. On top of that, we have continued with the share buyback. We did a cancellation of treasury shares two years ago.
We did the share buyback last year of CHF 200 million, and we have announced this morning today a further program to be launched shortly for CHF 225 million Swiss francs. If you take all of that together, that's a reduction of around 10% of the shares since we started with canceling shares and the share buybacks around 2 years ago. A significant reduction in the number of shares over the years. If you calculate all of that together, the dividend and the share buyback, that basically reflects a cash return to the shareholder over the last 2 years, including now 2026, of more than CHF 1 billion. It's a significant amount. That basically brings me to the end. As a quick statement before I hand over to Xavier, what is outstanding about the result from my perspective is threefold.
First, that we have achieved this growth disregarding some headwinds, and Xavier has mentioned them, we have faced during uncertain, while at the same time improving profitability. That's point number one. Point number two, we have continued to invest into the organization by investing CHF 500 million CapEx, while still significantly improving the equity free cash flow. Number three, we have achieved the target leverage of 2x, while at the same time generating cash returns to the shareholders of a significant higher dividend and a CHF 200 million equity free share buyback. Having said that, I hand over back to Xavier for the conclusion.
Thank you, Yves. Well, to avoid to be repetitive, good performance, all the KPIs in line or ahead of the outlook. Very strict capital allocation, growth, deleverage, return to shareholders, an obsession on profitable growth, and we confirm the outlook. The last thing I wanna say is first thank everybody here. Thank the shareholders for the continuous support, particularly in the last few years, also the strategic shareholders, the board, the suppliers, the landlords. A lot of the things we are trying to do are only possible in the combination with the suppliers and the landlords, the three together. The last and most important, thanks to all the team members.
Starting from my colleagues at the group executive committee, going through all the global function, all the regional functions, all the shops, all the restaurants, all the warehouses, everybody of the 75,000 employees of Avolta that thanks to you, we are delivering these results. A last word of solidarity with our employees in the Middle East. They are going to the shops, they are going to the restaurants despite being in the middle of war. We appreciate your support, we appreciate your commitment to the company. I also want to thank the magnificent collaboration we have with the airport authorities and the authorities in that part of the world have been tremendously supportive and also focusing a lot on the safety of our employees. Thank you very much. Now we are gonna open for question and answers.
Thank you.
Thank you, Xavier. Good afternoon, everybody. For the Q&A, we're gonna start with the floor, and then we'll go on to questions on the phone, and then we'll finish with questions on the webcast. We've got a mic on either side of the room, so put your hand up and we can kick off.
Good afternoon. Thank you for taking my questions. It's Laura Bucher with Octavian. I have three questions, if I may. The first one, in the CMD last year, you said that you expected a 30 basis points pressure from concession fees. If and when North America comes back, is that still the level that you expect, or has anything changed since July? I'll take one by one.
Look, of course, we monitor the activities segment by segment and region by region, and we see a limited inflation in the concession fees when you eliminate mixed effects. I think what is important for me is that the improvement on gross profit margin and productivity has to be larger to any potential pressure on the concession fees. As Yves explained, you cannot just look at the line of concession fees, you need to look. Because you could have an operation with huge margin in the gross profit margin, very low people, and a little bit higher concession fee. We expect that the combination of the different elements allows us to deliver on our outlook on the EBITDA margin. I think on the last four years, you have seen that the evolution of the concession fee has been quite kept at bay.
It has increased, but in a very limited manner. We expect something similar for the incoming years.
Okay. Thank you. The second question on lease payments in the cash flow statement, there's a 20% increase year-over-year, so almost CHF 400 million more than in 2024. You know, similar trends H1 versus H2. What happened there?
On the lease payments?
Yes.
You're looking at the IFRS results?
Yes.
Look, what happens there is, the lease payments on the cash flow statement, IFRS talking now, so it's not what you see in the presentation, but in the annual report, reflects the fixed component. Whenever you renew a concession or whenever you have a concession which has a relevant minimum annual guarantee, the minimum annual guarantee or the fixed component is reflected in lease payments, while the variable part in the IFRS P&L is reflected under lease expenses. Together, they reflect the full charge of the year for the leases under IFRS 16.
Yes. I'm aware of that. My question is, why has it increased or why has your MAG increased CHF 400 million? I mean, that's a massive increase if I compare with the other years.
I was under the impression that post-COVID, we were going more or that MAG-intensive concessions were not so much of a topic anymore.
Yes, absolutely. Look, overall, especially after COVID, the MAG intensity has decreased. Nevertheless, there are contracts which have a minimum annual guarantee, and whenever you renew them, or when you enter into new one which have a minimum annual guarantee, you would see it reflected there. What I can tell you is that this is not a one specific concession. The last big one we have done, which has a significant MAG, is Spain, but that was before uncertain. In uncertain, the number of concessions we have renewed and which have a relevant MAG are minimal, but the sum together will have led to that specific amount.
Okay. Thank you. The third and final one. I appreciate that it looks like you guys can do it all and at the same time. Again, why another share buyback? Why not deleverage faster? I mean, you're at 2x, which is the high end of your guidance. Why not wait until you're 1.5, and then you do, you know, truly recurring share buybacks at even higher amounts, and then you can, you know, return even more cash to shareholders?
Look, I think the right way to answer that is consistency. We have announced something that is the capital allocation policy that Yves explained earlier on, and we are strictly following it, so you have no surprises. We said that after the investment in the business, and with a leverage of 1.5-2 times as a target, the excess cash will go to shareholders, and that's what we're doing. If you ask 10 people, there are 10 opinions, but we announced something 3 years ago, and we are delivering on that year on year. I think the good thing is that the business still brings a lot of opportunities organically and potentially as small M&As, always accretive, always financed with a balance sheet. If you don't have an M&A, there is enough cash for a share buyback, and that's consistency.
That's the main reason why we do the things.
Okay, thank you.
Thank you. Okay.
Gian Marco Werro, Zürcher Kantonalbank. Two questions from my side. The first one is on the historic win of your duty-free contract in China. One of the first in a decade, as you mentioned. I was just wondering if you could elaborate a little bit more about what might have changed there in relation to the protectionism of the local airports and authorities down there. Do you now also see more opportunities to expand your duty-free business in China? The second one also on Asia. Just two years ago, you mentioned you entering more and more duty paid, especially in Wuhan, experimenting with this new category in Asia. What are your learnings so far and your experiences? Do you also plan to expand duty paid more in China? Thank you.
Thank you for your questions. The duty-free in Pudong Airport in Shanghai, it's something we feel particularly happy about. It's something the industry has been waiting for 20 years, and everybody was thinking when it would happen, it will be announced years in advance and step by step, and actually it was announced days in advance. The tender came up on a Tuesday. We knew it on Sunday, and you had to present the offer in 3 weeks and open the first stores 2 weeks later. Really crazy. We had a very strong local team that we've been building over the last few years with very strong local leadership in the different parts of Asia, and they were ready for this tender.
It's a clear change in policy, and that means the government in China wants to explore international players operating duty-free. One reason behind is because they are betting for inbound tourism in China. You have seen that in a massive relaxation of the visa requirements to visit China, and this is part of a broader policy. They're gonna be looking at what we do and how well we do it, and there might be more opportunities. I think the consistency of what we said. I remember in 2022 when I said we're gonna go more to Asia, but it will take years, not months. It's what is happening. We've been increasing. China is a very big duty-free. China is a very big example. We also enter Japan, and we continue exploring that. We need more critical mass in Asia.
It's year-on-year. There might be a new tender in six months, but it could be a new tender in three years. We're gonna be ready, and we're gonna be learning. The duty paid and the F&B that we operate not only in China, but across Asia. In most of the locations in Asia, we are trying to do the three businesses. At least two of them. The strategy in China and in Asia is to grow on the three businesses as long as we can get the right contracts and the right return on investment. You learn from all of it. You learn different things. If you do duty paid and F&B, you learn the behavior of the domestic passenger. Let's remember, China is a huge market on domestic also. 80, almost 90% of our business in North America is domestic.
I'm not saying we can do that in China in 3 or 4 or 5 years, but the opportunity is very big. Also India domestic, it's a huge opportunity. Other countries like Indonesia and Vietnam that are huge, massive distance, there is also a big potential. Some of them could be developing in the next 3, 5 years, some of them in the next 5 to 10 years. We are selecting where to go. We are ready to go. Asia-Pacific has been growing significantly in the portfolio. Also, we are convinced that the bigger it becomes, the more critical mass, also the profitability, which is the lowest today, it will keep improving. Because in order to do all the things I'm saying, we need an infrastructure that requires certain critical mass.
Asia will keep growing in the next 3-5 years, both in sales and profitability.
Pascal Lang from Vontobel. I have here two questions, more on the top line, maybe to start with Q4 first. We saw there an acceleration in the US and also in APAC. I'm wondering if you could quantify maybe just in those two regions, what or was it driven by more spend per pax or more by number of passengers? Also into 2026, you also said there you saw some encouraging trends in the US or in North America, to be specific. What you didn't mention is what regions you've seen a deceleration, given the year-to-date growth you reported was lower than a year ago, which I think was at 6%.
It was both, to answer your first question on quarter four, it was both a bit of passengers and a bit of a spend per passenger. We want to be very mindful on any short-term guidance because it's always dangerous. It's much better in our business to have an outlook or a guidance for a year, two years, more than a month or a week. Because if I look at yesterday's sales, doesn't necessarily means this week's sales or next month's sales, and also because of seasonality. In general, starting the last quarter of uncertain, we have seen encouraging signs on the consumption trends in the US. Now is spring break, which is the first indication.
I always say that our first quarter actually is four months because there are the Easter, Ramadan, and New Year's, all these things moving across the different months of January, February, March, April. But leaving aside Middle East, we have seen a nice traction. We have not seen a deceleration that will be used, I think, as the wrong number. But yes, we see better performance in quarter one in North America versus last year. EMEA, which is also growing very nicely, but is not growing at 10% or 12% that we grew in the first quarter, that was an exceptional beginning. All the regions are growing nicely, all on a more normalized manner, with the exception, of course, of Middle East that I explained.
Look, the strength of Avolta is in the overall performance, and I'm happy to explain the individual ones. What it makes us strong is that a low performance in one place is compensated by a strong performance, and also across the year. I think I already said, quarter three, for example, is becoming in certain parts of the world, particularly in holiday places, more difficult to grow. Part of that movement of quarter three is moving for the last couple of years in quarter four. That is also helpful that the passengers are also somehow decreasing a little bit the seasonality.
Maybe if I can add a third one, probably to Yves more. You guide for a much higher FX impact this year and also probably a lower contribution from savings in other OpEx. Is it reasonable to assume that the EBITDA margin increase will likely be a bit on the lower end of your guidance, so a bit below 30 basis points compared to last year?
Now, look, first of all, the guidance we provide is a medium-term guidance. It's not for a specific year and also not for a specific quarter. Look, having said that, 2026, from our perspective, should not be in any regard different than any other year. From that perspective, we do expect to see a nice improvement in that regard. Having said that, look, the FX effect this year, from a translation perspective, should be similar to last year. I mean, we have provided the guidance or estimate, it's probably the better word, in our press release, and it's around 5% for this year. Look, that is similar to what we have seen last year.
If you take that and you extrapolate it, probably the effect we see in the first quarter this year is even more pronounced than the rest of the year. I believe that should answer the question, no?
If there aren't any more questions. Oh, we've got another question.
Thank you. Martin Guerra from UBS. I would ask two questions, please. The first one would be on interest costs. I mean, given the leveraging of the balance sheet now already below 2 times, how shall we think about interest costs for 2026? Is this something that should help that should support DPS growth for 2026? And my second question would be, if I look on the slide number 8, spend per passenger has increased over the last 3 years, but I see that APAC has been weakening in the last 2 years. Is there any specific reason for this? Thank you.
You take the interest.
Yes. Let me start with the first one, with the interest. Look, there are two effects I want to quickly mention. The first one is with the deleveraging, obviously that should lead to a reduction of the interest expenses. As we have discussed before, we are focusing very much also on cash returns to shareholders. We have the dividends, and we have also the share buyback. As a consequence, what is remaining for deleveraging is still relevant, but slightly less than the full amount of the equity-free cash flow as a consequence of those cash returns to shareholders. Yes, as a consequence, interest expense should decrease moderately over time. The second element I want to quickly mention is the refinancing. Look, there will be maturities coming up for refinancing in the next coming years, one which is in March next year.
We will need to look into the market conditions at that moment in time and if they are in line with the product we are refinancing or lower or higher. That also drives, to a certain extent, the interest expenses going forward. Again, I think what helps us is this maturity profile, which is spread significantly over the years, and also the fixed component of interest we have in place, which helps us to mitigate short-term volatility into interest rates, to the extent possible.
On the spend per passenger is a combination of two things, a bit of mix, because we don't have the same spend per passenger across the different sub-regions in Asia Pacific. Some weakness in the Australian activities and still a volatile consumption of the Chinese, which have been increasing as a percentage of our total exposure in Asia Pacific. I'm convinced that with some of the things we expect for 2026, the trend should go better in the coming couple of years.
Okay, no more questions from the floor. We'll go on to questions from the phone. I believe there's 6 at the moment.
For questions from the phone, please press star and one. The first question comes from the line of Manjari Dhar from RBC. Please go ahead.
Good afternoon. It's Manjari Dhar from RBC. I just had two questions if I might. The first question I had was on dynamic pricing. I think you mentioned you've been trialing this in uncertain. I just wondered if you could give some more color on the kind of uplifting benefit you see or you have seen where you have implemented this, and maybe some more color on how far it will be rolled out in 2026. My second question is just on working capital and true efficiency that I think you mentioned. I just wondered if you could let us know what's driven that inventory improvement, and should we expect further efficiencies to come in the coming year? Thank you.
Thank you for your questions. On dynamic pricing, it's a fascinating area of development. The principle is super easy. You have different profile of customers, different nationalities. They look at pricing as a reference to their local market or maybe their origin or their destination, and therefore, they have different perception of pricing. If you can adapt that to the different seasonal populations, to the different flights, even on different weekdays, of course, you are maximizing the possibilities to have a more attractive sale and your gross profit margin. The question has always been that you need a very advanced data management tools to do that on an efficient way. You cannot have somebody with an Excel file looking at all reference prices and changing the prices on a constant basis.
We have done a test in Europe. It worked very well. It shows that when you adapt the pricing to the potential customers you have around, you can do that in a very efficient manner. You of course need to have. It's not only the capacity to analyze and change the prices. You also have to have, for example, screens instead of fixed pricing. It's a bunch of things. That's why the deployment will be step by step. We have chosen, after the test, a few locations in Europe where we will implement that. If we prove that is successful, not the concept, because the concept we know it will be successful.
If it's successful, our capacity to implement that in a smart and fast way, we will keep deploying that in the next couple of years to all the group. I think your second question on working capital is for you.
Yes. Thank you very much for the question. I mean, look, the net working capital, there was a kind of a step-up this year, in uncertain because of system evolution, standardization, simplification of processes. From that sense, it's a step-up. Now from here, the way I look at it is more kind of like an evolution over time. Look, we are obviously trying, and that applies to all the lines of the P&L and the cash flow to optimize them, to continuously improve them. We seek some further improvements also on the net working capital, but maybe not necessarily, as pronounced as a step-up in one go. Look, having said that, maybe an additional piece of information for uncertain.
What for me is impressive about the result of an improvement of CHF 60 million, it's not only the amount, but that we have achieved that during a time where food and beverage was muted, which typically has a relatively low net working capital, and where travel retail, specifically also duty-free, was growing materially. Typically, when you grow in duty-free, you have to invest into net working capital. You would actually have expected a slightly negative amount for uncertain, and that did not happen. We have improved the net working capital in such an environment, so it's even more relevant, this step, which did happen in uncertain.
Great. Thank you.
The next question comes from the line of Harry Gowers from JPMorgan. Please go ahead.
Yeah. Afternoon, everyone. Thanks for taking the time. First question from me, maybe just some follow on what we should be modeling for kind of the direct Middle East impact. Maybe what percentage of sales is based in the Middle East directly? Then for Q2, should we be assuming that that component is down significantly and we need to shave a little bit off of our organic growth estimates? Then the second question, I just wanted to ask on the rationality of the global travel retail market at the moment. You know, we're a few years after the pandemic, so how do you see general competition for tenders in the bidding environment at the moment? Do you think operators are more rational when bidding and winning space compared to before COVID? Thanks a lot.
The line was not perfect, so I'm gonna answer what I understood. If it's not, please let us know. As we said, the Middle East represents around 3%. If the conflict, to give an example, will last for 4 months, you will have 1% effect. If that would be all the airports shut down, which is not even the case today. We have some operations fully shut down, others partially operating, and others even at 70, 80% of the normal. It's not in the Emirates, but it's nearby. We believe, as I said, even if it lasts for a few months, not weeks, months, it will be of a limited effect. On the second question, if I understood well, if operators are more rational on bidding. I see three things.
1, the answer is absolutely yes. You can see that people don't go everywhere. Even the number of bidders has decreased a little bit. 2, the rationality of the bidders is higher. We are also massively strict. We can make a mistake, but we are massively strict on return on investment, and we are sometimes not bidding ourselves, not renewing contracts or even exiting existing contracts. The return on investment is everything for us. Then the combination of more rational operators and a lot of industry talk, not everywhere, but we see more and more airports also having a more rational structure of fees.
I think the win-win that has been the mantra of this industry for many, many years, but it was a little bit distorted in the years before COVID because of the bonanza of the Chinese passengers. I think that time is a little bit gone and people is more rational, both in the airports and the operators. What I can guarantee you, because that we control, we are extremely systematic, and we have renewed contracts in the last couple of years where we have decreased the payments to the airports. Not everywhere, of course, otherwise it would be great news, but it's just an example. There are few limited examples, but when you put the right business plan on the table, the right improvement on the sales, you can have even better conditions. I don't wanna be misleading here.
Still, there are certain areas where the concession fees are maybe too low structurally and there will be some pressure. Overall, it will be a limited pressure and a pressure we expect to be lower than the gross profit margin and the cost improvements that Yves was mentioning before. Overall, we feel comfortable with the outlook on the midterm on the EBITDA margin.
Very clear. Thank you.
Thank you.
The next question comes from the line of Jaafar Mestari from BNP Paribas. Please go ahead.
Hi, good afternoon. I have three questions, if that's okay. Maybe the first one separately, just following up on Middle East situation. Can you give us a bit more? I'm sure trading is way too early, but on the reality of the business operations in the region, you said some shops are operating 70% of normal. Are you fully open, fully staffed? Are airports starting to talk about plans, opening times, staffing, or is the situation for the foreseeable future just operate as close to normal as possible? The other side of the equation, your landlord and your suppliers in global airports. It's very early days, but what's been the chatter so far? What are they telling you in terms of passenger flows?
What are they telling you in terms of, assortments in your operations, outside of strictly the region, please?
The situation depends very much on each territory. There are some locations where the aerospace is completely shut down, and therefore there is nobody of our employees at the airport. Some others are operating, if not normally, close to normality, and then we have the staff, and in other places is partially. Now is the moment to be supportive to the airports, to the employees. Even if it's limited passengers, those passengers might spend actually more time than usual at the airport. They need to be serviced, and we have a very strong commitment to our airport partners. There will be time to talk about the potential financial consequences of that. Now is operate when we need to operate on a safe manner, both for our employees and the passengers.
As I said, the situation changes completely airport by airport, and we follow the guidance or we agree with the airports what are the needs of that specific location. If you have food and beverage in some areas, we have more work than in other places, because you might have an airport with three terminals, two closed, only one open, and we have more people on that terminal than usual. It's a very different situation. It has been nine days. It's really very short, and we believe it will be normalized once the conflict itself is stopped, the normalization based on our experience happens very fast. Globally, of course, the effects are in destination Middle East, I mean, from other places on the world.
With the 3% we are kind of including also that rationale, destination Middle East, not transfer Middle East, because transfer Middle East is moving to other places. So far, we had no major impacts on assortment, suppliers, et cetera. We have alternative logistics routes to supply our shops without going through the Middle East. Shops and restaurants, sorry. I mean, the food is basically locally supplied and also the convenience, so it's only the duty-free. Compared to other industries, the channels in Middle East are not as important for our industry like in other places. Until now, the effect beyond the Middle East is extremely limited.
Thank you. Great. My other questions are on capture rates, 27% looks broadly flat. I know the numbers in terms of passengers and transactions can be a bit rounded. Maybe it's increased a decimal, but you know, it's 27. So it looks like you're doing very well to drive spend with the people who already stop and shop. I'm not sure you're satisfied with flat capture rates on the other hand, for people who do not stop. What are the plans specifically for that, if any? Question, net new contracts continue to tick up. It was net 2% in Q3. It's net 2.5% in Q4. Your medium-term guidance for net new space is 0%-1%.
At which point, do you start to articulate maybe that you can sustainably win new space and grow more in new contracts, please?
On your first question, of course, you need to correct one aspect, which is the US or the North America. I mean, if you correct that effect, you can see that conversion of penetration has been growing in the other three regions, but also the spend per ticket. Of course, there are thousands of mix effects. We look at this on a location by location and taking into consideration the profile of the customers. But we are doing to drive both. I think I gave an example. I mean, when you put entertainment, sports-related entertainment, when you put a combination of food, when you use the loyalty, when you use more digital promotions on the store, when you put a new branch and new categories, all of those things we do is not to have fancier shops or fancier restaurants.
We do it to drive more people into the stores and to increase the spend per ticket. For me, when I have the follow-up meetings with all the regions and all the operations, so spend per passenger, spend per ticket, and penetration are the three things we discuss. If there is a mix effect, for example, a different mix of nationalities, different mix of long-haul, short-haul flights, whatever is the relevant point. We explain it, but that's our target. I think the last four years have been good. Maybe I didn't say it, but the performance of the last four years, including uncertain, I think has been good, but not by chance. It's not a miracle. It's not that just happens. It is happening. If you see some industry gurus, they didn't expect what is happening in Avolta to happen.
It's happening because of all the things we are doing to implement Destination 2027 and our consumer focus. More data, more digital, more entertainment, more hybrid. All those are the things that are driving more people into the stores, and they are driving them to spend more. What we have achieved today is not enough. We need to do more in 2026, more in 2027, more in 2028. That's why we keep investing in trying to improve the understanding of passengers. Data and the use of data with machine learning, AI, call it the way you want it is gonna be, in the next 3-5 years, a game changer for Avolta. We need to keep investing in data. We need to keep investing in a better understanding of the passengers.
I cannot disclose everything, first, because I don't want competition to know, and second, because in some cases, we don't know if it's gonna work or not. We are addressing every aspect of our business to see how we can optimize it from product to assortment to pricing to customer understanding to loyalty. Of course, we don't do everything at the same time. We test the different things, and then we focus. That's why when people say, "Why you keep reiterating the outlook with all what is happening in the world?" Well, of course, we don't know everything is gonna happen in the world, but we believe that we are touching the right things to keep performing. Answering your question, sorry, what we need to do is more and better what we are already doing. Sorry, I get passionate about that.
Take your answer just on net new.
Yeah.
100% in Q4.
Look, you need to look at net wins and losses, which are two types of losses, voluntary losses or exiting of unprofitable or below profitability contracts and wins. The net we want to be positive, and that's a 0%-1%. That could be some years more, some years less. Because it's impossible to have that as an outlook per year, because that's not the way the market works. Sometimes you have 1,000 contracts in a year, another year you might have 200. Sometimes you might be massively the incumbent on that year, and some other times you might be the big winner. It depends. That's why the outlook we provide is for organic growth. That is a combination of like-for-like plus new wins and losses.
We don't feel comfortable at this stage to change the way we've been guiding. Some years will be better, some years will be a little bit less. Overall, the organic growth should be this 5%-7%.
Thank you.
Thank you.
The next question comes from the line of Isacco Brambilla from Mediobanca. Please go ahead.
Hi, good afternoon, everybody. Thanks for taking my questions. I have two. The first one is on equity free cash flow conversion. uncertain, so again, more than 300 basis points improvement. Second year in a row of a sharp overperformance compared to the medium-term guidance. Beyond such extremely strong results, can you give us more color on the levers key to deliver further enhancement from this level? Second question is a follow-up on net new openings. If we look at the second half of uncertain, it contributed almost as much as like-for-like to your organic growth. Looking forward to 2026, should we think about this pattern to continue? Or maybe are you expecting to rely more on like-for-like growth?
Let me start maybe with the equity free cash flow first. Thank you very much for the question. Look, the levers are coming across the grid. We have discussed before net working capital. While I do not expect some similar step-ups as we have seen this year to happen, but still some improvements going forward. It's one potential source of improvements going forward. The second one is also what we have discussed is the deleveraging. Look, with the deleveraging and the tight management of interest expense and also interest income on the cash deposits, we do expect to see some improvements over time there. Then look to a maybe lesser extent, but the remaining lines, be it on the tax line or also dividend to minorities, and there should be some potential improvement possibility. CapEx, I don't want to touch.
I think we feel comfortable where it stands at the moment. What also happens on top of the different elements of the cash flow statements, it's a pure technical one. Because of the improvement of the profitability, because of the improvement of the EBITDA margin, if you then calculate the equity free cash flow as a percentage of turnover, you should improve over time also the conversion rate there. Those are basically the levers we have to optimize the equity free cash flow. Look, on the new concessions like-for-like, again, it depends a little bit how you consider North America. The like-for-like is this 3-4%. Or 5-6%. Like-for-like is clearly higher than new concessions.
Again, new concessions and like-for-like have to be combined and look at it not in a quarter, not in two quarters, but in a longer, period of time. We are very happy to have a strong like-for-like, and we are happy to have new concessions. You see, another idea on new concessions, which is fundamental for me, I don't wanna give guidance or a specific outlook there for two reasons. One, because it's more volatile than the like-for-like, but second, because it's a trap. If you push yourself to have new concessions because you guided the market to have new concessions, you might lose discipline. I wanna be absolutely free. Of course, I wanna win new concessions, but only if they come with the right return on investment and the right profitability.
If one year is zero, it's because that year, the opportunities were not fitting our strategy. I think keeping this freedom of being absolutely disciplined on the new bids, it's very important. When you have new concessions net positive, be assured that it's not only good news on the sales, but it should be also good news on the profitability. I think that is the key message we want to give.
Thanks. Perfect answer. Many thanks, for the answer.
Thank you for your interest.
The next question comes from the line of Luka Tronscek from Berenberg. Please go ahead.
Hi, guys. Thank you for taking my question. Just congratulations on the result. Just on the first one, I wanted to ask about the equity-free cash flow conversion. You've mentioned that, you've reiterated the guidance, so 100 to 150 basis points improvement per year between 2024 and 2027. Given the improvement you delivered this year, do you still think you can do 100 basis points this year? I'll ask one more after that.
Look, the question, the answer to the first question is yes. I mean, we have basically shown that we are in a position to do that over the last couple of years, significantly beyond that, but also for this year, we don't give guidance for one specific year. We know that it's a medium-term guidance, et cetera. Still, also for this year, there is no sign or no indication why we should not achieve that. We also believe that an improvement of 100 to 150 basis points on the equity-free cash flow is achievable due to the reasons I've mentioned before.
Perfect. Thank you so much for that answer. Then just on the size of the buyback. It looks like it's about 46%-47% of free cash flow in both 2024 and uncertain. Just thinking forward, like in the absence of, you know, any big M&A or anything like that, would you be comfortable staying at that level if we think out to maybe 2026, or is it just too early to say?
Look, thank you for the question, but we stick strictly to the capital allocation policy that is very clear, growth, deleverage, and excess cash to dividends, guaranteed a third of the cash flow and potential share buybacks when there is excess cash. No more, no less than that. This is a discussion management and board of directors have on a yearly basis, looking at the opportunities, the growth, and I think that's the best way I can answer your question.
Perfect. Thank you. Just one last one. I know you've spoken about this kind of net new space and the contribution, but specifically just for 2026, given that you have this win in China, do you think it'd be fair to say that you'd be over that 1%? Just if you assume that the China was kind of like maybe not expected when you were setting the guidance. Now that you've kind of won that, on a normalized basis, there should still be some more concession wins?
Look, we have to consider the wins that we already have. We have to consider some exits that we have executed in uncertain with effects in 2026. I think as Yves Gerster keeps saying, we don't give, because you see, you start giving guidance for five years, then three years, then a year, then a quarter, then a week. I think our guidance is clear. Our guidance is on a multi-year midterm. Things are going on the right direction on all the key indicators, of course, with the exception of the conflict in the Middle East, and we feel comfortable on keeping the same outlook we have been saying over the last few years. We will not go in more details on a specific year because that's too much information.
Perfect. All right. Thank you so much, guys.
Thank you.
The next question comes from the line of Carine Elias from Barclays. Please go ahead.
Hi. Thanks again for taking my questions, and thanks for the presentation. I just had a quick one on your maturity profile. Obviously, you've been very proactive at addressing your upcoming maturities and with the recent bonds issued in May, you used it to take out the rest of the 2026, this is the convertible coming up. How should we think about your 2027 maturity? Are you planning to come back to the market or, you know, any particular thoughts with regards to currency or convert or shape? Thank you.
Thank you very much for the question. Look, yes, absolutely. We do expect to come back to the market in the next couple of months and quarters. We typically refinance ahead of maturity, significant ahead of maturity. Given the high liquidity of the company in regard to cash and available credit lines, specifically the RCF, which matures in 2030, we do believe that we have no rush, so we'll wait for the right market window. In regard to the product, we have not taken a final decision there. We are debating that in management with the board and also with Treasury. There are a couple of different options, maybe also to slice and dice it, and we will take actions in due course once we are ready and once the market window is the right one.
That's very helpful. Thank you.
Thank you for the question.
The next question is on the line of Jörn Iffert from UBS. Please go ahead.
Yes, hello, and thanks for taking my questions. It's just 2, please. The first one is, I mean, what have you incrementally observed on consumer trends over the last 12-18 months, and what does it mean for you, going forward? The second question, please, inflation in your food and beverage business, I assume was quite material over the last 2-3 years. Can you give more data what you have observed on volumes on average over the last 2-3 years? Yeah. Thank you very much.
Thank you for your question. It's not an easy question to answer because there are so many data points that depends on categories, regions, et cetera. Maybe the best way I can answer that is to refer to page eight, I think it was, where you can see that there has been an overall slowdown on alcohol consumption over the last few years. We're still less affected than high street because we have a special format. It's many of the purchases in this category is because of gifting, and that is less sensitive than maybe the general trend. We have, in some cases, been affected, for example, also on the luxury performance. That is we are not immune to the general performance.
On the flip side, perfumes, cosmetics, in general, treatment, skin care, it's a very healthy category. Also, a lot of the consumption in travel retail is based on gifting and self-care. This category is very strong across the board. Those would be a few examples. Of course, if you go on a regional basis, I think we had a very strong performance across the board, with the exception of North America, which is linked mostly to the domestic traffic. We know the number of domestic passengers in U.S., in particular, North America in general, have been flat, accelerating a little bit at the end of the year.
On the food and beverage, and also in retail, in general, we try, and I think you have seen that both in high inflation, mid inflation and low inflation, that we've been able to pass through most of the inflation effects on the pricing, both in retail and food and beverage. That's why the gross profit margin has been stable and growing over the last few years. Of course, that depends on the different countries. It depends on if you go on the food and beverage to the supply of products, but something we do very actively. Sometimes people want a sandwich, let's put, and they don't necessarily want the sandwich to be salmon sandwich. So if you have a salmon, and now I don't wanna get into trouble with any of our salmon suppliers, it's just an example.
It increases, then you prepare a sandwich where you replace the salmon for another fish or turkey. You can play a lot with the recipes to adapt the assortment to reflect in a smaller amount the potential inflationary effects. In general, we are pretty hedged, and I think we've been improving that over the last few years on inflation.
Thank you for this. It was also about the elasticities. Since the prices increased materially for food and beverage in general, in your channels, what have you observed on volumes? Did your volumes grow in the last two years on average in food and beverage, or was it mainly price-driven, what you have seen there?
With few exceptions, volumes have been growing.
Thank you very much.
The next question comes from the line of Tim Barrett from Bank. Please go ahead.
Thank you. Hi, both of you. The first question just follows up from one of the last ones, actually, around category spend per pax. You didn't mention tobacco, but that's obviously been in compounding growth now. Do you expect that to continue, and does that have any implication for gross margin? Second question, Yves is very clear about ROCE and the trends there. Is that mainly gonna improve through margin in your view, or are you reducing capital base intensity? Thanks very much.
What we see in the tobacco category, which is more and more nicotine-related market, because what is really growing very fast are non-cigarette subcategories, and that's also a general trend in the market. Some of those categories are very convenient for smokers who fly. I mean, if you have nicotine chewing gum, kind of, is something very comfortable, and you don't disturb other passengers. On the gross profit margin, with the, of course, difference between food and retail. On retail, when you take gross profit margin minus concession fee, which is typically per category, all categories are very similar. That's why these changes in the categories have no major effects on the gross profit margin. They might have some in certain markets, but we are on net-net on EBITDA effect very limited.
The second question, I didn't understand.
The second one is on ROIC. The improvement of ROIC, is it coming from the improvement of the NOPAT or of the invested capital? Look, it's basically from the margin. A big part is coming from the margin, around 70%-75%. Year-on-year improvement 2024-uncertain is coming from the NOPAT improvement and, to a lesser extent, from the reduction in invested capital.
Understood. Okay. Thank you both.
The last question from the phone is from Natasha Bonnet from Morgan Stanley. Please go ahead.
Hi, good afternoon. Thank you for taking my questions. I've got two quick ones. Just coming back to the Middle East, you said it was 3% of your sales, but what is your exposure to Middle Eastern nationals globally? Because I tend to believe they have a higher average spend. Maybe if you could give us an update on the Chinese nationals now in your mix. The second just on U.S. You said you were seeing some encouraging signs year-to-date in North America. Are you seeing any differences by income cohorts? Can you share any color on trends of U.S. customers coming to Europe? Thank you.
The 3% is what we believe it's our exposure to the Middle East, not just on the presence on the Middle East. In the Middle East, you have two type, high-end expenditure, but also the lowest-end expenditure. The people that works in the Middle East that go back to China, to India, Bangladesh, Pakistan, et cetera, they have on average a much lower average. It's a very limited exposure. I'm more and more reluctant because we have more data than anybody else to start explaining nationality exposures, but this is still low single digit, our exposure to Chinese nationals. The last question was on North America.
North America and the increase and the trends when people are coming to Europe, for example, Americans.
International flight, it's always the consumption for international flights is always more resilient than potentially domestic. Because when people takes a long-haul flight, both on the cost of that flight and the duration of that trip, because somebody could be going, I don't know, New York, Boston three times in a week. If you're planning a long haul, it's a different type of mindset. Typically, the consumption at the airport is more resilient for international travelers. If you buy because you are going back home and you bring a gift, you're still bring a gift. If you are on holidays with your family, friends, your mindset is a different one. If you are traveling long haul for business, typically, you take something back home because you've been a week abroad.
What we typically see is that the spend per passenger in international travelers is less affected by macroeconomics than domestic. That's what we saw in uncertain in North America that was basically negatively affected the domestic, much less the international travel.
Okay. We've finished with the questions from the phone. We've got three questions from the webcast. I'll ask them individually. The first question is, under what circumstances would you increase the share buyback at the expense of the dividend?
That's an infinite question. I mean, we have the share buyback with the circumstances, so.
It's probably related to the future years or potential future programs. I mean, look, going back to what Xavier mentioned before, the dividend payment, the way it is described in the capital allocation policy is strict. It's one-third of equity free cash flow. Equity Free Cash Flow, ideally in line with our outlook, is increasing over time, and as a consequence, dividend is progressively increasing over time as an absolute amount. It's point number one. Point number two regarding the share buyback, also Xavier was explicit before, the share buyback is opportunistic in the sense that we first start with the investment into growth. We have our leverage targets and achievements in mind, and then once what is left subsequent to the dividend and the progressive dividend payment is going into share buybacks.
Depending on where the result lands, that is then the residual amount which defines the share buyback in a specific year.
Thank you. Second question: what is your medium-term ROIC target?
Look, in regard to the ROIC, we are not providing a target. We are not providing a progression over a year or a medium-term outlook. We believe what we want to show there is something else. We want to show our mindset, our strict approach to investments, how we think about that, and how that needs to be accretive for shareholders rather than a specific target.
Thank you. The final question is: what do you see as the ceiling for your medium-term EBITDA margin and Equity Free Cash Conversion ?
For now, we stick to the current outlook. In a longer term, in due time, we will provide an updated outlook if needed.
Thank you. That's the end of the Q&A.
Okay. Thank you very much for everybody attending this call. Remember, if you travel, buy in Avolta shops or restaurants and become a Club Avolta member, you're gonna get a bunch of benefits. Don't miss the opportunity. Thank you very much.
Thank you.