Autogrill to raise prices at U.S. restaurants to protect margins
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An Autogrill point is seen along the Grande Raccordo Anulare (Great Ring Junction) motorway in Rome, Italy, March 8, 2016. REUTERS/Max Rossi
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By Francesca Landini
MILAN (Reuters) - Italian travel caterer Autogrill (NYSE: AGL) will raise prices at its restaurants in U.S. airports and motorways to offset rising labor costs and boost profitability, CEO Gianmario Tondato said on Thursday.
The Milan-based group has been reshaping its activities to expand its business in international airports with new contracts and small acquisitions, while it has put up for sale activities it considers non-core in Europe.
"We have seen an increase of hourly wages in the whole food-chain industry in North America," Tondato said on an analyst conference call about Autogrill's financial results.
"The higher cost of labor is going to be passed on to prices," he said, adding he did not see any long-term impact of higher wages on the group's profitability.
For the July-September period, the Milan-based group reported an increase of 3.7 percent in total sales while core profit (EBITDA) rose at a slower rate, gaining 1.4 percent to 166.5 million euros.
The EBITDA margin on sales, a closely watched indicator of profitability, fell to 13.4 percent from 13.7 percent for the same period last year.
Autogrill (NYSE: AGL) confirmed its 2016 guidance for full-year EBITDA to be in a range of between 411 million and 426 million euros, and revenues to be between 4.465 billion and 4.565 billion euros.
Earlier this year, the group sold its French railways' business and its Dutch motorway unit, while it purchased two small companies to enhance its airport business in North America.
In Italy, Autogrill continued its renewal of motorway sub-concessions and posted a retention rate of over 80 percent of sales.
(Editing by Steve Scherer; Editing by Elaine Hardcastle)
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