Avolta AG ($AVOL)

[Audio Gap] Q1 2026 Trading Update Conference Call and Live Webcast. I am Mira, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Xavier Rossinyol, CEO of Avolta. Please go ahead, sir.

Thank you very much. Good morning, good afternoon, good evening, everybody. Thank you for attending this trading update for the first quarter 2026 of Avolta. My name is Xavier Rossinyol, and I'm here with our CFO, Yves Gerster. I'm going to go straight to the highlights in Page 4 of our presentation. We have presented today a strong and positive results for the first quarter of 2026. Our core turnover reached CHF 2.9 billion with an organic growth of 4.7%. Without the estimated effect of the Middle East crisis, our organic growth would have been 5.9% on the first quarter of the year. Core EBITDA has reached CHF 190 million, which implies a margin of 6.6%, which is 20 basis points better than last year for the same period. Equity free cash flow has been negative as it is always on the first quarter of the year because of the seasonality on CHF 164 million, affected by some net working capital effects due to new operations that Yves will explain in detail in a few minutes. Those are strong and positive results in a context that is, number one, the lowest quarter for us. Number two, with effects on seasonality like Easter, the Orthodox Easter, the beginning and the end of the holy month of Ramadan between March and April. And of course, the Middle East crisis. Despite all those conditions, we have reported a strong quarter #1. Because of that, we reconfirm once more our focus on our capital allocation policy. Leverage has reached 2.1x net debt to EBITDA, which is another decrease year-on-year. Yesterday, our general assembly approved the proposal of the Board to distribute CHF 1.15 per share as a dividend, which implies a growth of 15% versus the dividend of last year. And we are progressing in the announced share buyback for 2026 of CHF 225 million. And today, we are confirming again that what we are seeing, particularly in the Middle East, but also the expected consequences on a wider sense, we regard them as temporary, not affecting our core business, and therefore, we are confirming our midterm outlook today. Moving to the next slide. I think looking at the performance by region helps to explain the strength of our business. Organic growth has been in the first 3 months of the year, 2.5% in EMEA, the region most affected by the Middle East crisis, 3.9% in North America, 6.9% in Latin America and 17% in Asia Pacific. Yielding the 4.7% I already mentioned before, which will be close to 6% without the Middle East. I consider more interesting in this page to look at the last column. Over the years, that April and March needs to be seen together because it's when you have the effects I mentioned before that are purely seasonal. When you look at that, you see a very clear numbers. EMEA is slightly negative, 0.6% organic, the effect of the Middle East, an effect that is higher on the lowest season quarters than in the full year. Middle East is one of the regions less or least seasonal according to the year, and EMEA is one of the most seasonal regions. So the weight of the Middle East in quarter 1 is the highest and much less in quarter 2 and especially in quarter 3. North America, a very strong performance of 5.4% in combination of March and April. We see very good signs in North America. LATAM, 3.8%, but that was temporarily affected by some of the security concerns in Mexico that affects the number of tourists. We are seeing an improvement on the numbers after those events. And very strong APAC, both on like-for-like and on change of scope as we've been consistently saying we want to grow everywhere, but we are underrepresented in Asia Pacific. All in all, organic growth for March and April combined has been 3%, and we think the estimated effect of the Middle East during those 2 months have been another 3%. Therefore, without the Middle East would have been an organic growth of 6%. In North America, maybe just to mention that we regard the potential effects of the Spirit Airlines Chapter 11, extremely limited. They represent 1.5% of the overall domestic traffic in the U.S., significantly less for our portfolio. And based on previous experience and already recent announcements, we believe other airlines will take the potential passenger. So we consider that a very limited effect, if any. Moving to the next slide, a little bit more deep dive into the Middle East. We said when the start of the crisis that Middle East, direct and indirect represents around 3% of our turnover on a full year, a little bit more on quarter 1, quarter 4, less in quarter 2 and quarter 3. We have seen a limited effect. March and April is pretty good. You can see that the effect has been 3%. Already in May, early days, but already in May, the effect is more limited because today, some of the airports that were closed in the Middle East are open and the number of flights and passengers in the region are rapidly increasing. It's still not in a normalized situation, but better today than 2 weeks ago. We do have experience on some of the spillover effects this crisis has on oil price, potential ticket prices. Oil goes up and down over the months and over the years. We know that now it's in particularly high levels, but we think also those effects despite being negative, it will be on a limited measure for our whole portfolio. We do have limited visibility like everybody else. But we don't believe anything that is happening today is structurally affecting neither the industry nor our core business model. Together with our diversification geographically, and it's very interesting because the first few months of 2026 are showing some regions performing better, others worse, like the last year, but they were in a different trend. The geographical diversification do matter in this business. Also the channel diversification, we have retail and we have food and beverage. And I think it's of particular interest to point out that apart from the effect on sales, the effect in results and cash flow are always more limited because our cost base has flexible components. And as we have shown over the years, in every crisis, we can take decisions and we can focus on protecting the profitability, both on EBITDA, net earnings and also in working capital. Moving to the next slide. Today, it's a trading update. It's not the moment to make a full review of how we are running the business, but I thought it was important to put a slide to reassure that, yes, we are focusing on managing the temporary headwinds, but we are also continuing in our commercial, data and digital transformation. We keep focusing in all the key aspects of the growth engine from the hybrids to the entertainment, to the local stores, to the pricing, the assortment, et cetera, and we are progressively increasing our focus on data and digital. You know those figures, but I'd like to remind them from time to time, of the 10 billion people traveling a year, we have exposure to 2.5 billion. We had last year 682 million customers. And today, our Club Avolta has 18 million members, 2 million more than in our last reporting date. Club Avolta members represent 8% of the sales, and the growth on partner-linked accounts year-on-year stands now to 132%. This data organized in a proper way with the transactional data, airport data, passenger data, net promoter scores, data from our POS, et cetera, et cetera, and the partnership with Avolta NEXT that is our platform for start-ups, all that together keeps improving the way we manage the business and allows us to use more data to optimize that business. And in every aspect, I just mentioned, we are always trying to get the best monetization possible. Moving to the next slide, which is becoming a classic because we have been showing exactly the same slide for quite a few years now. But I think it's important in these troubled times to confirm a steady direction. Geopolitics is affecting us like it's affecting everybody else. And I want to be very clear, do we take the current events extremely serious, we monitored them on a daily basis at airport basis. And when necessary, we take decisive actions where and when it's needed. And if we need to do more because things go on one direction on the other, we will do. But said that, we regard what is happening as temporary and it's not affecting the way we address our strategy and our operating model. And thanks to our diversification, that's why today, we feel comfortable confirming our medium-term outlook of an organic growth of 5% to 7% on turnover and EBITDA margin expansion of 20 to 40 basis points per year and a further increase of at least 100 basis points on the equity free cash flow conversion. And as we feel comfortable on our midterm outlook, we are also comfortable in reconfirming once more our commitment to the capital policy allocation, the capital allocation policy. Number one, investment in the business, investment in the shops, investment in the restaurants, investment in the business development, investment on the digital transformation. Potential mid- to small-sized M&A, always focusing on the accretion that they will deliver, financed with our own resources and of course, with an extreme focus on ROIC that for us is fundamental. Second, continuing the deleveraging. Our target leverage is 1.5 to 2x net debt to EBITDA. We are in that level on a full year basis with a possibility to go 2.5 on a temporary basis if we will do an M&A. And the third priority is very clear. The excess cash goes to shareholders. A yearly dividend that we have committed to be at least 1/3 of the equity free cash flow. And yesterday, I said earlier, our General Assembly approved that for this year, we will distribute CHF 1.15 per share, which is an increase of 15%. It's the third year in a row that we distribute an increased dividend. And if there is more excess cash, we will be doing share buybacks. And we did one in '24, one in '25, and we are -- we announced we will do one in 2026. The combination of the dividends and the 3 share buybacks will give you more or less CHF 1 billion that we will have distributed directly to the shareholders. And with that, I hand over to Yves. Thank you.

Thank you very much, Xavi, and good morning and good afternoon to everybody on the line also from my side. Looking at the financial results, turnover -- core turnover came in at CHF 2.9 billion, which represents a growth -- an organic growth of 4.7% year-on-year. If you strip out the Middle East impact, which has affected us in the first quarter by minus 1.2%, the group would have grown at 5.9%. Core EBITDA came in at CHF 190 million, and EBITDA margin was 6.6%, an improvement of 0.2% versus the same period of the previous year. Equity free cash flow came in at CHF 164 million and leverage stood at 2.1x net debt to EBITDA, a further decrease of 0.1x versus March 2025. Let's look into the details of the financial results on the next slide with the EBITDA and the equity free cash flow. So what is important to note, firstly, on the EBITDA is that we have faced an FX headwind of around 8.8% on the turnover. This is also visible on the EBITDA. So EBITDA at constant currency would actually have increased versus last year of 8.5%. But due to the headwinds, the reported amount is lagging slightly behind the CHF 196 million of last year. But again, as a margin, the situation has improved by 20 basis points. And regarding the FX headwinds, it's also important to note that while the impact was severe in the first quarter, we do expect it to be reduced and eased as we go along during the year. We currently do expect the full year impact to be around minus 5%. Reason for that is the easing of the impact as we go along with the third and fourth quarter already had a quite significant impact last year and therefore, from a comparable basis, is becoming less pronounced this year. The second point is on the equity free cash flow. Equity free cash flow came in at minus CHF 164 million versus the CHF 104 million of last year. What is important to note here is that we had 2 impacts or specific impacts, one of them being a one-off. As you know, we have opened and started to operate in Pudong, and we are the first one in a generation to start to operate with a duty-free license in Mainland China. We have opened that operation in a rush. We got awarded in the second half of December last year and had to open the stores on the 2nd of January 2026. As a consequence, because of that speed, we took over some merchandise from the previous operator in the amount of roughly CHF 50 million equivalent. That merchandise came in without any payable. So from a net working capital perspective, we took the full hit of the inventory. And as you know, the Pudong operations are ramping up during the course of the year. So while we started with a small footprint already at the beginning of 2026, not all of the stores are fully up and running and operational. That is expected to happen within the next 2 quarters or 3 quarters during the course of 2026. And therefore, also the net working capital impact will fade out during the course of the year. Point #2 there is an CHF 8 million impact from the Middle East, some moderate impact in the first quarter due to the Middle East crisis. Moving on to the next slide with the typical treasury overview with financial net debt and also leverage. As I've mentioned previously, leverage decreased further from 2.2x net debt-to-EBITDA in March 2025 to 2.1x in March 2026. So a further reduction of 0.1 despite the fact that we did a CHF 200 million share buyback last year, a dividend payment last year and have started to buy back shares in the -- up to CHF 225 million share buyback program this year already. If you look at the bottom line, you see the typical maturity profile, no material facilities coming up for renewal in the next couple of years. The next big one is 2030. However, in 2027 and 2028, in each year, we have a bond. The one in 2027, we are currently looking and preparing for the refinancing. So you can expect to hear some news from our side in the coming weeks and months. Having said that, it's also important to note that the group has currently access to around CHF 2 billion of liquidity. So there is no refinancing risk at all. And we will execute, as always, this refinancing in an opportunistic way over the next couple of months. Moving on to the next slide with the conclusion. So look, what is the key takeaway -- sorry, what is the key takeaway from my side looking at the financial results of the first quarter. Overall, a strong result despite the Middle East crisis. And in regard to the outlook, while a lot of things are remaining fluid and liquid as we are talking, I'm convinced to achieve the medium-term outlook, as also confirmed before by Xavi. The key reason for that is, on one hand side, our resilient and global platform, which we have built up over the last years. It's the strong balance sheet with reduced leverage and it's the flexible cost structure, which allows us to react if and when required in a decisive manner. And having said that, I hand over back to Xavi for the conclusion.

Thank you very much, Yves. I think the conclusion is one word, consistency. I think we deliver consistent results, consistent outlook, consistent strategy, consistent operations and consistent capital allocation. We monitor everything carefully, and we take decisive actions when needed, but we continue to be as consistent as possible delivering on what we say. And with that, I think we can open the floor for Q&A. And once more, thank you for your attention so far.

[Operator Instructions] First question comes from the line of Natasha Bonnet from Morgan Stanley.

This is Natasha Bonnet from Morgan Stanley. I've got 2. The first is, could you talk to us a bit more about the underlying trends you're seeing by traffic and spend per passenger? And then the second is on the margin front. So you've confirmed the midterm guidance for an increase of the EBITDA margin of 20 to 40 basis points. What level of organic growth do you need to keep margins flat? And what levers do you have to manage your cost base?

Thank you Natasha, for your questions. Look, on the trends in passenger and spend per passenger, I think, first, it's a low month. So what I'm going to say, you need to put it as what it is, the low season. But we don't see major changes versus the last few quarters, maybe with a couple of exceptions. Exception number one, some of the Middle East traffic going to Europe has been reduced and some of them are high spenders on their duty free, for example. The effect is minor, but to mention one. And the second, we see more strength in the spending in North America than what we have seen in the last year or so. The rest remains pretty much in line with previous quarters, taking into consideration, of course, the effects of the low season. On your second question, maybe you take it?

Yes. Absolutely. So look, on the second question in regard to how much turnover or growth we need positive or negative to basically be flat on the EBITDA margin year-on-year. Look, a big part of the expected improvement of the EBITDA margin is coming from the initiatives we have from Club Avolta to all the digital initiatives to the data analytics, to the store upgrades, the refurbishments we do, et cetera, et cetera. All of that is expected to lead to the improvement. Now obviously -- and that's the lion's share of the improvement. Now to a smaller part, obviously, there is some economies of scale. I mean you have one CEO, you have one CFO and the more growth you have, obviously, that has an impact. But the impact is relatively moderate. So to answer your question, even in a scenario where you see a slowdown of the growth or even a stop or halt of that, we do expect to be in a position to improve our margins in line with expectations and in line with our outlook.

The next question comes from the line of Manjari Dhar from RBC.

I also have 2, if I may. My first question was on Asia. I was just wondering if you could give some color on sort of the consumer behavior and the trends you're seeing there given the strong improvement and maybe some color on the early signs from the Pudong units that have opened. My second question, I think on the Middle East slide, you mentioned that you can take some targeted actions if required to protect profitability. I just wondered what -- if you could give some color on what those actions would be and under what scenario you would need to take those?

In Asia is a very interesting area for us because, as you know, we are growing in line with what we said a few years ago on our strategic plan. So we have a wider and wider portfolio. That in itself is also helpful because we want a global diversification, but we also want a regional diversification, risk management, but also the possibility to capture the passengers that are growing. There are always some expenditure going up. The question if you get or not exposure to those. So now we have better exposure in Asia Pacific that we used to have. We have a wider portfolio, a healthier portfolio, and we benefit better. Pudong, it's very early to say. because we are ramping up the operation from -- if I don't recall -- if I recall properly, we started with 3 shops, and we will keep ramping up to 20-plus shops over the next few months. I don't think we will have a full Pudong until the second half of the year and probably the last part of the year. 2027, we should have a full Pudong and see the full benefit of this material operation. What actions we can take on the cost, do you want to take that also?

Yes, sure. So look, I mean, the actions we take and the area where we can take them depends very much on how severe the situation potentially becomes. I mean you can basically look into the Middle East crisis as something which you assume will continue to happen for the next 2, 3 weeks, 2, 3 months or a couple of quarters. And depending on that, I can already tell you today, and we didn't disclose that in details, but that we have the corresponding plans already on the shelf and ready to execute if and when required. And that goes from little light planning of shifts, rehiring of people taking holidays and incentivizing holidays to more severe and stronger actions, including management of personnel expenses, general expenses or also potentially the management of some of the cash flows, including CapEx in case this becomes required. But look, having said that, and just to be very clear, all of that has no impact on the strategy. It's done in a way that whenever the situation is normalizing or growth is accelerating again, we are ready to do so. It has no impact on the strategy of the organization, specifically when it comes to business development and is done in a very careful, but also decisive and timely manner if and when required. And we are pretty far away from any of those actions at the moment.

And maybe just to add, you could see the way we act. If you look at the revenues of the turnover and the profitability of North America last year, full year, it tells you that when it's necessary, we can adapt the cost base to the turnover. I always give the same simple example. You don't want to cut, for example, high season personnel if you're going to have a very good season because you want people serving them. But if you know the passengers and the number of potential customers will decrease, you can also decrease the sales force. And we did that. And I think it's not -- I think it's pretty clear that we did that or our North American team did that very decisively last year. And if it's needed to do the same in EMEA this year or in parts of EMEA, we will do it. It's never perfect because, of course, you need to have certain visibility on when things are going to happen, but do -- we do have ways to minimize any effect -- negative effect on sales, minimize them in the effect in the results.

The next question comes from the line of Harry Gowers from JPMorgan.

I've got 2 questions, if I could. The first one, just on the 3% Middle East negative impact. I was wondering if you could break that down into any kind of more detailed high-level bucket and maybe how much was stores based in the Middle East and store closures and how much of that was maybe weakness in the rest of EMEA or other regions with a high degree of outbound travel going into the Middle East? And then the second one, I guess, a little bit more of a technical one, but you said the Middle East is 3% of group sales. Was that an annual figure? Or is that very much a March and April figure? Because obviously, you mentioned the seasonality point, correct, is the Middle East exposure much lower than that 3% as we go into the summer months.

As we always talk about Middle East exposure, direct and indirect, the numbers are not 100% precise, but I will tell you the average of the year is about 3%. It's more around 3.5%, 4% on the low seasons and going down to 2% on the high season, roughly. Of the effect of the 3% is probably today about 2/3 direct effect and 1/3 indirect effect, meaning demand in other places of the world that is linked to the Middle East. I answered your 2 questions the other way around, but I hope it's okay.

The next question comes from the line of Jorn Iffert from UBS.

I would have 2 to 3. The first one is good to see the trend change in North America with healthy organic sales growth in the last couple of weeks. What would you say is the reason for this? Why is this improving? And in which categories you are seeing this? Is it more food? Is it physical retail? This would be the first question, please. Second question, just as a reminder, when you have big sports events or big events like the World Cup now coming up in the U.S., what is your current expectations? Is this a material positive one-off for the region? Or is this balancing in other regions of the world? Maybe your latest thoughts on this one would be helpful. And the third one, I know it's a very generic question. But given all your market intelligence you have, all the pre-bookings you are seeing at airlines, your conversations with landlords, what is currently your best guess what is happening with global passenger growth over the next couple of quarters? If you can answer that one.

So first, just -- so the change of trend of the U.S. is not the last few weeks, it's the last few months, at least for 2 a little bit more than 2 months, we have seen a positive trend, both in retail and F&B, maybe a little bit more in F&B. But again, I answered the question because you asked me, not necessarily because I believe that is so relevant in just the beginning of the year. We need to see the full year, et cetera. And again, it's very interesting. We typically don't cover that because we focus more on the segment reporting by region. But this diversification that balances our portfolio that we see in the regions, we also see in the segment by business line. So not always the 3 business lines, duty-free, duty paid and food and beverage behave the same way. But the beauty of the merger we did 3 years ago is that today, that might be interesting for a conversation. It's definitely interesting for pricing policy, assortment, et cetera. But also at the end of the day, it helps us to perform on a more regular basis even if the trends on categories or type of business changes. Your second question. The World Cup, the big events. Look, we regard these big events as, number one, positive in general with limited effect. So it will have some effects a few days in a few airports, but that doesn't mean it will probably group-wise be something you will see very materially. But they typically are neutral to slightly positive. On the last one, I'm going to answer in a certain way. But if I could answer perfectly, probably I should be selling the answer, not answering. But look, it's a very interesting question, and we talked to all our landlords at all the airports where we operate, airlines, we read everything. And it depends a little bit on the markets. So for example, bookings to or from the Middle East are more limited than one would expect in a normal circumstances -- sorry, they are less than what you normally would see, but it's not something you wouldn't -- that you would be surprised because sometimes the schedules are variable, et cetera. But the airlines there feel pretty comfortable and pretty reassuring that when the security circumstances change, the demand will be back very fast. In Europe, in general, the outbound markets on tourism for the summer do not see major differences from other years at this point in time. So in general, people are still booking holidays to the southern part of Europe. Maybe Western Europe or Western Mediterranean, a little bit more than Eastern Mediterranean, which is also normal to what we have seen in the past. And in the Western Mediterranean, I include South of Europe, but also North of Africa. As you know, we have operations both in the East and the West of North Africa. The Middle East crisis have had limited effect so far in North America. Limited effects in Latin America. Even if our numbers don't show that at all, a little bit more effects in Asia on number of flights, but not material in number of passengers. So what airlines are doing are reducing many times the number of flights, but increasing the load factors because, of course, to maximize or to optimize their P&L, they need to reduce the weight of the fuel. And that's something it's not -- there is no correlation, but it's not a 100% correlation, the number of flights and the number of passengers. So I still expect 2026 to be weaker in overall passengers than without the Middle East crisis. But with, as we said, temporary effects and more limited than maybe in the middle of a crisis, it looks like. That's the best way I can answer. I hope it's good enough.

The next question comes from the line of Jon Cox from Kepler Cheuvreux.

Just a couple of more technical questions from my side. You mentioned Middle East passengers -- sorry, Middle East, 3% of group, but you talked about indirect effects. How many -- how much is that sort of Middle East population when they travel into Europe? Is that another couple of points? So if you can just give us some granularity on that. Back to North America, I'm just wondering in terms of is the growth really part of this whole K-shaped economy because you obviously see who these people are buying this stuff? Or is it just general U.S. consumers coming through because this pick up does seem a bit strange given everything that's happening. And I'm just wondering if it's like another indication of the K-shaped economy, where well-off people are still traveling and buying luxury goods, for example? And then just to come to this whole point about any slowdown, what the impact will be on EBITDA or cash flow. And I think I mentioned to Yves this morning, you guys did a fantastic job during the financial crisis, sales were down almost 10% during periods, and you still maintained more or less your margin and cash flow dynamics. So is it fair to say then, Yves, that even with flat sales this year, you would still be able to maintain EBITDA margin and your cash flow conversion?

So look, the Middle East, when we say 3%, we include the direct effects or the potential effects in the Middle East region as such, but also in direct flights. So flights from big capitals or big cities in Europe to the Middle East. As I said, in low season, this effect could be maybe 4% in high season for the group, it could be 2%. On average, it's around 3%. The Middle East passengers flying to the rest of the world, of course, you have all kind of profiles on that traffic. To name 3, you have a local population, which travel in particular months of the year to other locations, mostly in Europe, which are high spenders, but the number is extremely limited. And you know that because the local population in the Middle East is very limited. Then you have the other line, you have overseas workers that constitute the majority of the number of passengers, but they typically go back home once, twice a year, and that could be India, Bangladesh, Pakistan, Philippines, et cetera. Their consumer profile is completely different. They buy another type of products, not on the luxury side, but maybe on the food and other aspects. And then you have the, let's say, the population in between that also travels on a regular basis in Europe, mostly. The effect, of course, of the current crisis has been in the 3 because they couldn't fly as often as they used. I think on the first constituency, the effect will be limited because if they don't travel now will travel later and the consumption pattern will not change. In the last ones, they have to retain some of the flights. They will retain it because sometimes even for visa conditions, they need to take some mandatory flights a year, and they go back home to see their families that they sometimes are not together. And then on the middle one, we believe that's what the airlines in the region are saying that when the possibility to travel again on a regular basis will be there. What there will be probably a slightly more -- slightly additional effect are the tourists going to the region that in our experience, maybe not in the Middle East, but in other areas of the world, when there is a crisis, the tourism stops, but it reinitiates as soon as the security conditions fell correct. Domestic business, which means convenience stores and food and beverage. The duty-free is more limited. Duty-free is going quite well this year so far, but also because the perimeter has expanded. As you know, we won significant contracts in GFK last year, which included the duty-free, food and beverage and convenience. So that is supporting because they are material on the duty-free. So it's true, if you look at the categories, they are going a little bit better. But in general, the American consumption -- the American passenger is consuming more on the food and beverage and the convenience. And yes, it might look a slightly contradiction if you look at some of the macroeconomic data and our data. But if you look at last year, the macroeconomic data was slightly better than ourselves. And now our data is slightly better than the macroeconomic data. I can give you the data. The reasoning behind, I don't 100% can answer, but we are performing better in ourselves than the number of passengers according to TSA. The team in North America feels moderate, optimistic for the remaining of the year, but we need to see. The prediction of consumption patterns on group-wise are always much more reliable than when you go to region or you go to country or you go to airport. The more detail you go, the less precise is the forecast. And in your last question, I think Yves addressed it before, but I can add one very clear point. If we have the same sales on last year, we should have the same results of last year. Nothing should avoid that happening because even if you have some cost base increasing, in other places, you can cut the base. I was reluctant to answer that question because you are kind of putting the scenario of 0 sales growth on the mind of people, and that's not what we want. But I think there has been twice the question. So I think it's fair to answer.

The next question comes from the line of Gian-Marco Werro from Zur KB.

Two questions from my side. First one on the self-checkouts. As I understand correctly, the rollout is mostly completed in the U.S. Can you give us a bit more visibility on the rollout in Europe or EMEA region? How much more can you do there also in regards to your cost flexibility? That would be interesting. And then the second question is on your CapEx plans, now considering different scenarios for 2026. How much of your CapEx plans that you have budgeted for this year do you really need to spend and to also to consider as a cash out? And how much more visibility do you have there or flexibility do you have there to reduce it then also for the second half, depending on a more dark scenario?

Look, the self-checkouts, we will go in -- and they are going everywhere, but it's slightly different depending on the type of business. So for example, self-checkouts for convenience store and the number of convenience stores we have in the U.S. is bigger than anywhere else, it's a no-brainer. For food and beverage, it depends on the type of food. You have the self-checkouts, but you also have the self-kiosk that is even more sophisticated. In duty-free, we have self-checkouts practically everywhere. But we -- in those cases, we combine it with typical cashiers and also with, in some cases, handles on the most -- on certain parts of the store, also depending on the size. So there is a progressive deployment of self-checkouts across the group. It's true in the U.S. or in North America, we are more advanced because of the type of business. Probably to reach the point that we would like to reach is another 12 to 18 months to go. And on CapEx, we always have some commitments, but part of the CapEx can be cut or postponed if needed. We have a reasonable amount of flexibility. But I also want to say something, if it's not needed, I'd rather do the CapEx because if the CapEx is done properly, it brings you higher sales and higher profitability. So I'd like to cut -- I don't like to cut positive ROIC CapEx unless it's strictly necessary. But if it's necessary, we have flexibility.

The next question comes from the line of Luka Trnovsek from Berenberg.

So I have 2, please. So the first one was on Club Avolta. You mentioned that it's growing both in membership and also as a share of group revenue. So I was wondering, do members skew towards any particular business? Are they buying more F&B or duty-free? And also, do you see a natural limit to how big the program can get? And then just number two, I was curious about margin. Do you see any particular kind of regional differences in margin this year? Do you think margin improvement can be broad-based across the group? Or do you see it being more concentrated in the Americas given the Shanghai ramp-up in APAC and then also, I guess, the Middle East impact in EMEA?

Thank you very much, Luca. I'll take the first one. It's super interesting, the data we take from Club Avolta. We learned so much about the Club Avolta members. We learned so much also from those Club Avolta members how to profile other type of non-Club Avolta members, and we can improve, thanks to that, the shops, the restaurants, the assortment, the pricing, et cetera. And the information or the examples I'm going to give are exactly 0 because this is a competitive advantage for us. Nobody is even close to what we have on Club Avolta. But be assured, we learn a lot, we profile a lot, and it's a key tool together with others on the digital side to keep improving our business and keep sustaining the continuous improvement on sales over the coming years. You might want to take the second one.

Absolutely. So look, on the second one on the margin, if I understood your question correctly, it was around if the margin, and I assume EBITDA margin is different or if we see the trends in the different regions. And the answer is no. We don't see a specific trend or a change in the trend in that regard. I mean, obviously, all our initiatives target to an improvement of the EBITDA margin globally in all our operations. I mean that's obviously not limited to certain regions. But otherwise, also with the current situation of the Middle East, we don't see a change or a different trend than what we typically would expect to see in regard to the margin. Maybe what I can add there is that in situations where you have on a regional limited basis, issue like the Middle East crisis at the moment, what we obviously always do -- and I think we're very clear on that is on making sure that the cash flow is optimized. And that typically, in most of the cases, also means maintaining the margin, obviously. But look, there might be also cases where on a situational basis, we may go for some additional promotions, et cetera, to drive sales in specific locations or regions to ultimately generate and maximize the cash flow. At the moment, it's not the case, but just to be clear and also complete there.

The next question comes from the line of Isacco Brambilla from Mediobanca.

I have 2. The first one is on the equity free cash flow. I appreciate your guidance and commitment is on equity free cash flow conversion, but focus for the market for investors is on absolute values. Based on your comments, it looks to me current consensus expectations touch about CHF 500 million seem at reach. Is this statement correct in your view based on the current scenario? Or am I missing something? Second question is on the March, April current trading, specifically on the trajectory across the 2 months. Looking at European data, looks like the worst point in [Audio Gap] perspective, do you see that indication as somehow reliable on the trajectory seen over the past weeks?

The first one. Yes. So look, on the equity free cash flow conversion for this year, I think what we try to do today is to provide you a clear and transparent picture of where we see the current situation, also taking into account the Middle East crisis. And from today's perspective, it's obviously extremely difficult to make a forecast for the full year, and that's why we confirm the medium-term outlook. Having said that, looking at current trading, and Xavi will answer that question in a minute and also considering what we see in the market, what we see in regard to Middle East and what we hear, there is nothing at this stage which prevents us from achieving the consensus or the targeted goal for this year in line with our expectation. But again, it's very intransparent what is currently going on. The situation remains fluid. And therefore, we also cannot and will not give any outlook or guidance for this year specifically.

On the second question, first, a caveat. Like I said, our numbers at group level are much more reliable than if you stop down to regions, countries, airports, et cetera. The same thing happens with the figures, they are on a temporary basis. They are more reliable on a year basis than on a quarter, on a month or a few days, that is what I'm going to answer. So with this caveat, what we are seeing at the end of April and beginning of May, it's a clear decrease of the effect of the Middle East. If in April and March, the effect was in the range -- sorry, in March, April was in the range of 3%. Now in the last few days, the effect is closer to 2% than to 3%. But again, very few days. So we still want to be vigilant. But as you ask, the trend in recent days is getting slightly better than in the middle of the Middle East crisis. But it's also reasonable. I mean some airports that were shut down are open. Some routes that were shut down, they are open. So the effects also in overall number of passengers is every day, every week, a little bit less than the previous week.

We have a follow-up question from Jorn Iffert from UBS.

It's 2, please. The first one is just a housekeeping one. What you have seen in Q1? Is this mainly volume driven? Or is it more price mix driven? Just have a feeling here, please? And the second question is with the next generation of scanners implemented at some airports, so you can't bring liquids of 5 liters plus. Do you see any changes there in consumption patterns of consumers behind the security line, buying less liquids, buying less sandwiches or anything else or not really meaningful?

I mean the effect we have seen in the first quarter is more related to passengers. I mean there were certain routes in the Middle East, obviously, and flights to and from the Middle East, there were less passengers that has been the major effect on the revenues. No meaningful effect of the new generation of scanners. We didn't see a big pick up of sales when there was the first time the liquid restrictions were added and no big changes now. Of course, you have people that maybe buy the perfume after -- a big perfume after the security for themselves, and that's why -- but that is very limited. I mean people buy perfumes in a store for a gifting, et cetera, you want it with a package, wrappers et cetera. So in general, the effects are very limited on the negative side. What might be helpful is that experience shows that less stressful pre-shopping experience is helpful. Less traffic to the airport, less queues in the check-in of the bags, on the security, on the passport controls, immigration, whatever of those all these stressful situations get better and the new scanners are improving that. That, in general, gives a peace of mind that helps potentially the consumption. Again, let's not go to an extreme that is negative to the extreme that is super positive. But in general, less stressful pre-shopping experience is helpful. So we like the massive investment our airports are doing in improving the customer journey and experience.

The next question comes from the line of Manuel Lang from Vontobel.

Actually, sorry if I missed that earlier, but it is one to better understand the sentiment or the spending patterns of the passengers a little bit better. So where do you see like the spending being most resilient in terms of products, so tobacco and food, like basic needs, if one can say that, or luxury goods and perfumes. And I'm talking about March, April only now, that would be helpful.

Very good question. Look -- and very complex to answer because it depends on the region, depends on the type of business, depends on touristic, non-touristic airports, depends on the weeks of Easter, people coming in or out of Easter or a normal week, a normal workday, et cetera. So I think the best way is it's not material change of trends on what we have seen in the last 12, 18, 24 months. It depends on the places, depends on the leisure, nonleisure, depends on the routes, the behavior stays consistent with what we expected. There are always changes, but it's not that we can say in the last 3 months, there has been a major change on the consumer sentiment across the group, and now this category is gone and this category is growing. It's more linked to origin, destination, profile of customer and seasonality. Let's see in 12 months at the end of the year, probably it's always more relevant to answer a question like yours because then you have 12 months, you have more distance with the prior year, you can see more of the trends. Now it's too early to announce any big headline on change on consumer sentiment. But thank you for the question.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Xavier Rossinyol for any closing remarks.

First, thank you very much for attending this call, and thank you for your thoughtful questions. Second, as I always like, I want to publicly thank all the Avolta team members. It's thanks to you on the shops, on the warehouse, on the offices, in the global and local and regional functions that we work. But I want to give a special thanks to our team members in the Middle East and their families. It's been a very difficult couple of months. You've been always supporting the company, supporting the shops, supporting the restaurants is highly appreciated. And the last point, as this is an advertising opportunity, please become a member of Club Avolta. It will be very good for you, and we will try to use whatever data we get for that to make a better offer for yourself. And once more, thank you, everybody. And I hope to see you soon in our shops and restaurants. Safe travels. Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.