DO & CO Aktiengesellschaft (DOC) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to DO & CO Investor Call for 2024-25 Fiscal Year. I'm Sergen, the Chorus Call operator. [Operator Instructions]. The conference must not be recorded for publication or podcast. At this time, it's my pleasure to hand over to Attila Dogudan, CEO. Please go ahead.

Thank you very much. Good afternoon, ladies and gentlemen, in Europe. Good morning to U.S. We appreciate very much that you all have joined us today for an update of the last business year as today is a good day for us, and hopefully, for you, too. DO & CO has achieved the best ever business year in its history, and together with all our colleagues and teams around the world, we are very proud to be able to present these good results to you guys. At this stage, I have to say a big thank you to all my Board colleagues and all employees of the group worldwide and obviously, to you too, you stayed with us in challenging times, and hopefully, you will get another fruit of the good times and can enjoy DO & CO year-by-year as a sustainable long business case. The growth and margin improvement we have achieved in all divisions show clearly that the DO & CO business case is unique and makes really sense. After a few difficult years, we have finally reached a level of financial stability, which I guess is one of the best in our industry and is a strong base for further growth and margin improvements. The company is almost debt free in terms of bank loans, as you know, and super ready for the next steps of growth in all areas. You know DO & CO is all about people, innovation and best quality. We have passed first time. Let's go through the presentation, we have passed first time the threshold of EUR 2 billion of revenues exactly EUR 2.2981 billion, which is a step change in our market position. We are now definitely one of the key players in the league of the biggest companies in the airline hospitality industry worldwide and guest commercially, one of the healthiest. In terms of product quality and brand portfolio, I guess, we're the leader of the industry. And please keep in mind that every single penny we produce is a kind of handmade effort. We have no machineries like other industries, therefore, a growth of 26% in sales, EBITDA of EUR 262 million, EBIT of EUR 183 million and a net result of EUR 92.4 million which is even a growth of 40% is very special for us and makes us really proud that we have reached all targets, which we communicated and we had for the last business year. If we go to the next page, you see the breakdown of the division basically, EUR 1.8 billion in Airline Catering, Event Catering EUR 305 million and Restaurant, Lounges EUR 172 million. All the growth numbers you see there, I think, which is really good is that the profitability is in line and sometimes even over the growth, which shows that we can utilize the economies of scale in a good way. On the next page, you see highlight, so to say, at the glance, free cash flow of EUR 125.2 million, net debt-to-EBITDA ratio of 0.6% and equity ratio of 37.6% is a strong improvement in comparison to the last year. All divisions have done well. The focus in Airline Catering on the premium side, looks like it's the right strategy, by covering the front with something others can hardly deliver and doing something in economy, which is still better than, than the rest of the industry, so to say, we won numerous tenders. We're going to come back in a minute to this. Event Catering, and you know that we are doing big events, all sports events majorly around the world and the Restaurants, Lounges & Hotel with an improvement in margin is very nice too. We have already mentioned innovation quality people are the three pillars of our group. Coming to Airline Catering, you see an EBITDA of EUR 200 million and EBIT of EUR 137 million shows exactly what I've mentioned before. Turkish Airlines going down to the big markets, Turkish Airline Turkiye is still best quality experience, many SKYTRAX awards, 500 flights plus a day, which is an incredible number. The new airport is working very well. We're doing between 200,000 and 300,000 meals a day, which is, I guess, one of the biggest kitchens in the world. I think it's very important to know that we produce almost everything in-house, so we don't buy-in a lot like our competitors. So this maybe is even the 300,000 -- 200,000 or 300,000 meals in this perspective has more value, so to say, as every single dish is produced in-house. We have increased our third-party customer share. I think we have an incredible market share over there, and have almost all of the third-party clients, the most important ones. We invest on innovation and the new gourmet kitchen as reported last time, the construction is now going to start and opening is expected latest in 2028. IG Group, which means London, Heathrow and Madrid, two major hubs, DO & CO is running very good operational performance in both locations, fresh menus, Iberia won international awards with outstanding food service by carrier in Europe in last year 2024, is a kind of ambassador of Spanish gastronomy. So you see more and more airlines are focusing on hospitality where I think DO & CO is a really great partner to achieve this. Delta. The other big client -- one of the other big clients we have, and we're proud of serving them in many locations. New York, as you know, was a challenge to start with, with more than 300, 350 flights a day starting from 220, but going up to this in peak season is one of Delta's biggest hubs and international hubs, not only for domestic, as you know. We have consolidated the location. We were doing far better than at the beginning now. There's some homework to do, but I think we are at the right path. JetBlue, another big one in U.S., another client, we are proud of and some new clients, as you see in the presentation in almost all locations from various airlines coming to us. New contracts Rest of the World from Air Astana, All Nippon up to China, China Eastern, Ethiopian-Gulf, Hainan and Singapore. So you see it in different locations Swiss. A lot of Asian carriers, they do a little bit more or even more than a little bit in focusing in product quality. And I think this is one of the reasons why they choose us. International Event Catering EUR 305 million of revenues, plus 6%; EBITDA 39%, 15% plus and EBIT 31%, 8% plus is basically is a [ who and who ] in the world of sports. You see all the Formula 1s, UEFAs, FIFAs, Bayern Munich, Tennis, Golf altogether, we are very proud to be a partner of all these corporations, federations, clubs. This is something we really rely on as its long-term relationships. UEFA, for instance, started 2000 and 2004 with the First Championship. We just did recently the Champions League Final. Formula 1 is, as you know, 33 years, another 10 years contract signed. FIFA will have on Saturday the opening match in Miami for the Club World Cup, which is very tiny in Miami and New York, but we are in a tender process for next year, where we just submitted the tender. So there is no results so far. We're going in the next phase. So you see all these clients when we click quickly through our loyal, long-term clients, and I think they appreciate the efforts, the passion we have and the liability in terms of serving them what they expect. SAP Garden in Munich has developed very well capacity of 11,000 guests with a lot of VIPs, Ice Hockey and Basketball games. So going very well. Ski World Cup we have, I think, mentioned already works very well. The ATP tennis, the Masters in Madrid is not one of the grand slams, but I guess in hospitality, it's definitely the grand slam with having, I think, 37,000 guests or almost 40,000 guests in 2 weeks' time. So this is one of the biggest hospitalities ever in tennis. The same is with golf, but is obviously far smaller for Austria Hahnenkamm Races and other festivals are included in this division. The third one is Restaurant Lounges. This is the product where we come from, and we are very proud of. We believe this is the DNA of the DO & CO blood and delivery, so to say. We did great improvements in -- especially in the profitability and in the sales too with 15% plus and EBITDA and EBIT by [indiscernible] increase. And we believe that there is an incredible market for the future. Now as a stabilized -- financially super stabilized company, we can step by step then invest in these areas where we have a B2C business, which is on its own a good business and additionally, the R&D of the whole group, which really makes sense as this is the competitive advantage which we have in comparison to all other Airline Catering. Demel is doing super well. So we have increased the product portfolio of the chocolates and sweet in terms of gifts and kaiserschmarrn, which is the Austrian pancake is incredible, which started during Corona and is still incredible in sales numbers. So the Restaurants are doing well in both locations, Munich and Vienna. So is the Hotel. Munich Hotel has been awarded by Michelin with one of the Keys, Michelin Key Awards, which we are very proud of. The airport gastronomy, we have extended the partnership in Vienna for another 10 years. And we're going now in a new tender process for the extension of the terminal, which will be due in, I think, 2 or 3 years' time. So this process just started and will be decided until the end of the year. Our clients in all divisions expect from us extraordinary delivery of customer experience. Just to deliver something is not good enough in terms of comparison with other suppliers or caterers or hospitality companies. This is the reason why our top clients are willing to pay a little premium for all this effort and know-how advantage which we can deliver. To ensure a sustainable business case for the future, we need far more to invest now in people and work on further efficiencies to improve further our margins. That's the reason why our internal focus this year will be very much getting more people with the right hospitality fashion to our family. DO & CO is now one of the best and biggest in this industry, but definitely the premium one. And whoever is interested in this industry, I guess, will rather come hopefully to us. The limitation of our growth is always finding the right people. It's not the business. This is the good news, there's nothing to do with CapEx, so to say, primarily, we have far more demand than we can deliver, but we would do wrong if we deliver something which is not in the corridor of the expectation of our clients. So to invest in the Academy, DO & CO Academy will be one of the other objectives this year to train and educate all the current crew and the new ones joining us to become the best in the industry, and the third focus will be question and improve internal processes, get better efficiencies from procurement, to logistics, integrate first-time robots and intelligent solutions in our logistics side. So it will be never seen by a client. But these are the next step where we believe very much that it makes sense. Regarding the current business years, so far, all parameters look good, not to say very good. So we see growth in all divisions expect an organic growth obviously not with 26%, 29%. It will be below double digit, something between 8% and 10%, which we currently believe is the case for -- in terms of organic growth. So I'm not saying that it could not be more, but then only we do acquisitions, and further improvement of margins is our other goals. So we promised you the 8% EBIT, which we delivered. So we'll do our best to improve more and more. The growth will be driven through a mix of new clients and expansion of the business with current clients and bottom line growth, as already mentioned, with efficiency improvements, especially in the area of logistics, which is not visible for the client, far better procurement and bundling the volumes in a better way like we did in the past and better utilization of production capacities, although we have a good utilization, but any penny which comes additionally will have to improve our margins and additional business out of the same infrastructure, obviously, will bring better results. I hope this first update was satisfying and is in a nutshell, good enough for you. Johannes is going to continue on the numbers, and we will be then happy to answer your Q&A. Thank you very much for listening.

Thank you. Good afternoon and good morning from Vienna. Also from my side, thank you for joining us today for the full year '24-'25 results presentation. I would like to start with our income statement on Page 28. We are pleased to announce that we have once again improved our EBIT margin increasing it from 7.5% last year to 8.0% this year. Our net result also increased, rising from 3.6% to 4.0%. Please note that hyperinflation IAS 29 is not affecting our EBITDA and EBIT margin, as you can see in our financial report, but the net result margin without this effect would be 4.5%. So those numbers demonstrate our focus on sustainable growth and long-term profitability. This business here has seen a decrease in our tax ratio from 28.4% to 24%. The lower tax rate compared to last year is not the result of changes in tax planning, but rather reflects the ongoing evolution of the business. A reduction in the tax rate in Turkey from 41% in fiscal year '23-'24 to 22% in '24-'25, partly driven by a reversal of hyperinflationary tax effects as well as reduced deferred tax valuation allowances have contributed to this result. Our expected core tax ratio for '25-'26, including any one-off effects is between 25% and 26%, and all this was achieved by the continuous commitment and dedication of more than 15,000 employees worldwide. I will give you now a detailed overview of our last quarter on Slide #29. As you can see, our total revenue was $524 million, slightly below [ Q2, Q1 ]. But on the other side, higher than expected. In the previous call, I mentioned that we expect EUR 500 million, so we are above that target. Our EBITDA margin was 12.5% in Q4. Our EBIT margin, 8.4% down from 8.7% in Q3 but higher as in Q2 at 8.1%, also the revenue in Q4 is the lowest. In comparison to Q4 last year, you can see an increase of EBITDA of 1.3 percentage points and 1 percentage point on EBIT margin. So overall, we are very satisfied with the result in Q4. It's in line with our internal forecast, and it confirms that we are on the right track. Now let's review the results for division on Slide #30. Let me start with the Airline Catering. Although revenue in the division was slightly lower in Q4 than in Q2 and Q3, but higher than in Q1. We were able to increase our EBITDA margin to 11.7%, and we stabilized our EBIT margin at the same level like in the past 2 quarters, 8.0%. Our EBIT margin improved year-on-year growing from 7.0% to 7.5%. It's important to note that the first quarter was impacted by start-up costs as we have outlined in our communications. International Event Catering. The EBITDA margin is 20.8% and its EBIT margin is 13.3% in Q4. This is due to a onetime release of accruals for Q1 and Q3. So our total year margin is not affected by any onetime effect, as this is related to our business year '24, '25. EBIT margin of 10.3% in that division is once again slightly better than last year. In our last division, Restaurants, Lounges & Hotels, revenue was higher than in Q1 and Q2 despite having only 28 days in February. That development push our potential in that division. The higher revenue resulted in an EBIT margin of 9.6%, just 0.1 percentage point lower than in Q3, which was boosted by a very strong Christmas season. Our EBIT margin for '24-'25 is 8.7%, which is 2 percentage points higher than last year. Turning to the balance sheet on Slide 31. We see an overall increase year-on-year of just 2.1% reaching EUR 1.2 billion at the end of March '25. Property, Plant and Equipment rose by EUR 51.7 million, mainly driven by investments in Turkey, U.S. and Germany. Trade receivables increased by EUR 42.5 million a clear sign of our robust business demand. Cash stands at EUR 174.2 million, EUR 100 million lower than last year. But please note that we repaid a total of EUR 171.8 million in loans. And we will discuss this again on the next slide. Slide 32 clearly shows our impressive equity ratio of 37.6%, which has surged from 27.4%. Other financial liabilities within noncurrent and current liabilities decreased by EUR 150 million in total, driven by the repayment of loan. The total value of outstanding short-term and long-term loans is EUR 76 million by the end of March '25, EUR 10 million on the noncurrent liabilities and EUR 66 million under current labilities. The total amount of lease liabilities is EUR 255 million. Looking at the cash flow statement on Page 33. Please pay attention to our gross cash flow of EUR 249.9 million on this slide. You will see that this is an increase of 38.4% compared to last year. Our free cash flow was EUR 9 million higher than last year. We had tax payments, EUR 30.6 million higher than last year. The repayment of liabilities amounts to EUR 200.5 million, including the repayment of loan, with the remainder being lease liabilities. Our net debt-to-EBITDA ratio is 0.6% by the end of our last business year, as clearly stated on Page 34. And now we have prepared another slide for you, #35. This clearly demonstrates the very positive development of the KPIs over the last 3 years. I would like to highlight only a few numbers. Our EBIT margin has a significant growth moving from 6.0% to 7.5% before reaching 8.0% this year. This is a major accomplishment, and I'm confident that we will continue to enhance this in the coming years. Our free cash flow of EUR 125.2 million compared to EUR 116 million and EUR 82 million in the past. Our net debt-to-EBITDA ratio improved from 1.9% to 0.6%. And last but not least, our return of capital employed is an impressive 40.4%, showcasing capital efficiency, outperforming industry benchmarks and delivering substantial value creation for our shareholders. Finally, I would like to thank all my colleagues worldwide for the support. Thank you for your attention. And now I would like to hand over to [ Bettina ], who will provide you with an update on the ESG. Thank you.

Good afternoon, ladies and gentlemen. It's a pleasure to share the successes of our ESG initiatives during the past business year. Our commitment to innovation growth, always mindful of future generations has led to significant progress in our ESG strategy last year. Please allow me to highlight two key achievements from the past year. We significantly expanded the scope of our business activities covered by Certified Environmental Management Systems. As a result, 51% of our activities are now certified, well above our target of 40% for this year. And the second one, which I would like to mention is that our science-based targets has officially been validated. So we are on a good way on our journey to Net Zero by 2040. Data clarity is something very important in order to have a solid basis to sustainably drive the business. We have implanted two new software systems. First in preparation for the upcoming CSRD but also to set a new global level of visibility of relevant KPIs leading to business optimization. As mentioned earlier, the ISO certification of our London unit helped us reach 51% EMS certification across our business. And in the Events division, our local Austrian event department have been awarded with the Austrian Ecolabel which not only proves our high level of quality and dedication to offer sustainable events, but also provides a blueprint to expand the product range to green events globally. Where do we go in our ESG initiatives? After successfully expanding our EMS systems last year, we are continuing to pursue ISO certifications for additional units. And with better data now available, ESG creates further opportunities for driving the business. Finally, our supply chain remains one of our strategic assets, building on highly valued partnerships. In preparation on the new regulations, but also the changing environmental conditions, we will set the focus on maintaining a strong and secure supply chain. Thank you very much. I hand back to my colleagues.

Thank you very much. I think we're done with the first part. Now we can move on to the Q&A.

[Operator Instructions] And we have our first question coming from the line of Julien Richer from Kepler.

Three questions for me, if I may. The first one on recent trading, you mentioned the fact that trading so far is good or very good. Some airlines have been talking about weaknesses on transatlantic routes. What are you seeing on those routes and especially with BA or the U.S. airlines you work with? And how do you explain the softer Q4 performance during the year? And you mentioned Attila an 8% to 10% organic revenue growth for 2025, 2026, implicitly, it confirms your EUR 2.5 billion revenue ambition you mentioned during the year. But does that also include some FX impact because it seems that the FX will be a headwind in the next 12 months? The second question in terms of new contracts, you signed several contracts during the year. Can we have the contribution? I mean out of the close to EUR 500 million revenue you had in 2024, 2025. What share of revenue increase was coming from those new contracts? And what has been the impact on margin overall during the year? And last question on capital allocation, 0.6x net debt EBITDA is fair and low level, let's say, if we assume a 2x, it's EUR 400 million of cash available. What do you think you can do with that cash?

So thank you for your question. So regarding the revenue now in that business here, we do not see any big decrease reduction even it's higher than last year again. You might note that according to IATA, we're expecting approximately 4% passenger increase. So we do not see any big impact right now. Of course, we are tracking our passenger numbers, our flight numbers on a daily base. So if a reduction would happen, we would be able to react immediately. But so far, we do not see any big decrease here in passenger numbers or meal numbers. Regarding your second question, the Airline Catering revenue in Q4, maybe you asked for the -- for comparison between Q4 and Q3. And yes, you can see a slight reduction in some of our units if you compare the revenue, the airline catering revenue per country. But please consider that especially Q3 is a very strong quarter. According to the Christmas season, we were missing 2 days in Q4. And on the other side, please note that the lira devaluated also in Q4. So that was also an impact if you look to our Turkey revenue. But the softer revenue that you mentioned is not related to any volume reduction or passenger reduction.

Julien, may be from my side, the growth. So we're always conservative in these kind of things and do not want to overpromise. So the 8% to 10% is something we believe is doable. And you're right. This is exactly what we said in terms of we're going to heading EUR 2.5 billion, and we said in 3 years' time, where we have another 2 years is something like EUR 3 billion, which we had. And if you look on a sales increase of 12% and 15% within the next 2 years, and you end up with EUR 3 billion. So this is basically the simple math we do. And in this case, we are not talking about acquisitions or something like that. So we believe that the current business we have can be expanded with maybe some openings in some areas, but within the own package, so to say, without significant acquisitions on the market. And maybe one more thing I want to add on the U.S. airlines and what they said. It might be the -- not it might be sometimes -- it was the case that in some areas, the occupancy level or the load factors, airlines call it, has been dropped down. But what happens is they use then the aircraft on the other destinations. So they take one out of the fleet instead of flying on the Atlantic and flying somewhere else for us. Honestly, we don't care at the end where the destination is as long as it's another long haul. And this is what we have seen so far. So, so far, we do not see any significant change in total numbers we have delivered in terms of meals. So that's what we have.

And Julien, sorry, one more answer of your question regarding the '25 revenue increase. So in the Airline Catering, we saw an increase in revenue of approximately EUR 440 million. So there around 45% is related to new customers that started operation in '24-'25 and also the remaining effect of new customers that started partly in '23-'24. As we mentioned in one of our calls, we faced start-up costs in JFK. Nevertheless, the new revenue in all other stations contributed also to our results and the profit margin for those contracts are in line with our group margin was slightly above due to operational leverage. This was the remaining question regarding Airline Catering revenue in '25.

And just before going to the last question, does it mean that in terms of margin for next year? I mean, if I annualize what you had in '24-'25, you should be at a margin of around 8.4%, 8.5%. So Q4 is at 8.4%. But if I annualize the 100 bps improvement that you had in H2 for the entire year should get around 8.4%, 8.5%, but your ambition initially was 8% to 8.5% for '25. So what's your view on margin for the next 12 months?

Julien, you are always right. This is exactly the target. This is what we have to go to, and we'll go to. So honestly, this is a realistic increase and see where we are. So initially, we said 8% to 8.5% and now we are heading at 8.4% and 8.5%.

Okay. And so for the capital allocation, sorry, I interrupted you.

Yes. And regarding net-debt-to-EBITDA, you're right. We are at the moment at 0.6. This was one of our main goals now to reduce this ratio from 1.9 to 0.6. It's just giving us financial power as well now in stability. So I think we are ready to go if we get to an opportunity, you're right. So I think -- we are in a very good position now. We do not plan any big investments right now or maybe M&As, but I think we have the power, we are ready to go if we get the right opportunity.

Correct. I mean it was always shared with you that, that step one is stabilization of the financials in being healthy and strong for the next step. Now we are investing and I have started invested in -- investing in people, in education. As I mentioned before, this is the only driver of the business. So we do not suffer in terms of market demand. We need to be careful that we deliver what the market expects in terms of experience. And then I think a balance sheet like we have, you can always take any loan you wanted to say, if you get opportunities, and we will take these opportunities. So the clear message is this company will grow but this company will not go in a stupid, stupid way by diluting margins. So this is definitely not what we have in mind. But as I said, the clear goal is the EUR 3 billion in 2 years' time with a margin in terms of double digit. This is what we always stated, which we believe is super realistic even from -- I mean, far more now than 1 year ago.

The next question comes from the line of Vladimira Urbankova from Erste Group Bank.

Congratulations to excellent results. Yes, a little bit more on the ForEx impact. Do you have by chance any figure for the '24-'25 fiscal year? What it would be the revenues in constant currency then, of course, looking towards the current fiscal '25-'26. I think we faced rather headwinds. Any kind of estimate if you said 8% to 10%, 8% with bigger headwinds, 10% with less significant or how to interpret this range? Or what are the major factors apart from currency? And then next question would be related to your CapEx, if you maybe have any update of what do you plan to spend in this fiscal year and maybe but where the start-up costs at JFK? Do you have any quantification or is it simply like that without the start-up cost at JFK, we would be 8% already in first Q, which in fact, recorded 6%? So this would be my questions.

Thank you, Vladimira. Let me start with FX. So you know that we are very transparent to you and our forecast at the moment, we estimate a little of a devaluation of approximately 15%. It's well at the same level that we faced in '24-'25. If you compare the FX effect '24-'25 with '23-'24, it's approximately EUR 100 million. But on the other side, the hyperinflation effect was EUR 91 million. So this is a compensation more or less if you look to the '24-'25 numbers. And regarding the U.S. dollar at the moment in our forecast, we expect [ 1.16 ] to the current level. And for hyperinflation, we expect 33% within that business year. Okay. So I think that's a very important thing for you, for your model, and I think also very transparent. Regarding the estimate, 8% to 10%. Yes, of course, depending as well on the currencies. It's a mixture. The increase is a mixture of, of course, CPI increases, new customers, which is around 3%, 4%, tender wins that we have already in the books. And according to IATA study, a 4% increase in passenger volume. So that's leading us or bringing us to 8% to 10% in that range, depending on the lira. And if we see some changes in the lira in our next calls, of course, we will give you another update, and we will reflect our guidance again. Your third question regarding CapEx. Our CapEx guidance for this year was 3%. It's exactly 3%. If you look to our financial report, it's EUR 68 million for next year, to be honest, we expect 3% to 4%. As Mr Dogudan mentioned, we have to invest into our units into people, innovation, but also automization to further increase our margin. So that's why our CapEx guidance is a bit higher for this business here between 3% and 4%.

Next question comes from the line of Christoph Greulich from Berenberg.

Yes, it's three questions from my side, please. Firstly, I wanted to just quickly follow up on the EBIT margin target that you have given for this year. And am I right to assume that if we simply do not have the start-up costs at JFK again, that would already bring you then to around 8.5% margin. Then I wanted to also follow up on your statements regarding M&A and general willingness to engage if an attractive opportunity emerges. I would just -- yes, I would like to get a bit of a feeling for how advanced let's say, that, that process is -- would you say is more of a wait and see approach if, if anything comes up or have you already identified targets that you might be interested in actively preparing for discussions with potential targets? If you could provide any color on how advanced those M&A plans are? And then just lastly, on the momentum in terms of winning new contracts. If you could give us an idea of the latest trends there? Have you seen any changes in the frequency that you're receiving tender invitations, any changes in the success rate? Yes, that would be very helpful.

Let me start with your margin. Yes, of course, you are right. If we reduce the start-up costs in those numbers, it would be at 8.5% approximately. On the other side, like we mentioned before, we invest into people, innovation, quality. That's not always related only to CapEx, but also maybe affecting the P&L, but it's not a big effect. So that's why our guidance is, yes, between 8.5%. But of course, our target is 8.5% in regards to the margin.

On the M&A side, you're right, it's a wait and see. I mean, basically, the strategy is what is the interesting part of the market. So you either get a home base, which makes sense where you have enough volume with one client or you go on high-frequency locations. In terms of high-frequency locations, we can go on our own. So we are working, as mentioned last times on the last call on the system where we have far less CapEx to go on a location because we go with kind of temporary kitchen store inside of this where the technical requirement is less in terms of CapEx than if you would do it the old way around. So we can go and open our own stuff. So to buy someone just having locations doesn't make sense. So getting another 5 locations in U.S. or 10, Honestly, if you buy in the wrong culture, then it doesn't make sense. So I think we can do our business on our own, but where we are definitely looking very, let's say, very interested is always a home base. So whoever comes up with the home base, where we have basically the biggest impact to an airline because you do all the [ outbound ] flight. In this case, if there is a chance to buy from an airline or if you buy something on the market, that would make sense. The other part is we mentioned already, we're working on the central production unit, that means that we sell components, food components which we do only internally now in our group to third party and especially to other airlines, too. In this case, you can utilize your existing facilities, in a better way, and this is something which we're going to try in U.S. too. So the combination of these elements give us the confidence of, let's say, the base growth of 8% to 10%. And we believe very much additionally to getting new clients that we open new doors for let's say, distribution channels, which we so far did not touch. So this is where we are. I hope this is helpful.

Yes. Maybe just quickly to follow up. So just understanding correctly, would you just describe these are all organic initiatives, or does that involve any M&A?

No. It's all organic. Organic, but organic would be if you invest like EUR 10 million in a location and you have another small location where we do another EUR 50 million, something like this. Instead of investing like EUR 25 million to EUR 30 million in the past. So we -- I think we are dropping down significantly the CapEx to get a new location, which means you can go in locations. If we get a good enough clientele base, then you simply go there. We all would go to a location if we have a client. We don't do it the other way around. But this is not in line with any M&A. So this is us organically.

And if we then just also think about that the M&A opportunity, yes, if we could just get a bit of a feeling for how advanced those plans are? Have you identified any specific targets you might have an interest in? Or is that more of an opportunistic approach where you basically just see if any opportunities might come up in the future?

Yes. I think it's more the second one seeing for opportunities coming up. As you know, some businesses in this industry are coming on the market now, and we'll have a look at it. But in general, I can say we're not buying market share for the sake of revenue. So if it doesn't make sense in terms of strategy, giving add value to the client, or if it's only driven by logistics and you have very little food, which is another approach where others might have a better business case, then it doesn't make sense for us. So we are selling experience combined with hospitality and food and obviously, logistics too. But if it was only logistics or driven by logistics, like, I don't know, 80%, then I think it doesn't make sense in the portfolio we have.

Yes, that's very clear. And then just the last question was in terms of the contract win and the tendering momentum if you have seen any changes in the trends? Kind of how frequently received invitations for tenders and your success rate?

Honestly, it's an ongoing process. And the success rate is quite high as we are but we're just participating in tenders where we believe we can win because we give the clients and add value. So we are not going in every tender, which does not make sense. So the success rate is definitely quite high, I would say, 70%, 80%, something like this. I don't know the exact number, but high. So -- and if we lose, it's simply driven that someone else gives a price where you keep a client for the sake of keeping the client. So I think the combination of growth and margin improvement is very rare in this industry. So it's more on the sales side. This is always the driver. And regardless, there is a chance to get a margin or not. And I think this should not be our goal. And if you look on the targets we have we have explained and told you 2 years, 3 years ago, which we could meet. And what while we are telling you now in terms of heading in after 2 years, EUR 3 billion on an organic way, with improving margins to a double digit, hopefully. This is super realistic if we stay where we are. And I think this really makes sense and then expand in other areas of business, which is not only airline. So this company was on sale and you just want to get another EUR 500 million, honestly, this is easy, but you dilute your margin. So this -- if you're a long-term investor and you wanted to do it in a proper way, then you have to look on quality or what you stand for. And everyone is expecting, as I mentioned at the beginning, everyone is expecting from us a discerned NPS score, different quality, different customer feedback. And if you were not able to deliver this, then you simply would not get the premium anymore, which we get. So I think this is a clear strategy. DO & CO is a quality provider, combined with a ton of innovation and the right people. And then I think this is exactly where growth and margin will come for the future.

The next question comes from the line of [indiscernible] from HAIB.

Just a couple, mainly on the Event opportunity in the U.S. There's been mention of the FIFA World Cup and Soccer Championships. Can you remind us when these tenders come up and whether you think you'll get a share of this opportunity? And then just to follow on, on the tenders. You say you've been selective about them. But what geographies are you focusing on mainly at the moment? I mean I see that you won Aeromexico to Detroit recently, is the Latin American market a potential market to tap into? Or where do you see the biggest opportunity?

Thank you for the question. So coming to the event in U.S., you're right. So the FIFA is -- will be one of the biggest events ever happened on this planet. So the tender process started. We submitted our first offer, and we'll get some feedback, I think, in a couple of weeks. And then in the next, I would say, 3 months there must be a decision then who's going to get which part. It's a very big one. It's 16 locations, more than 100 games. And I think stadium [ cater ] have a big call on this too as they have the infrastructure ready on site. So again, our chances like we do now the Miami and New York, which are kind of prestige locations. New York is going to have all the quarter semis and the final and Miami is starting on Saturday, I think they have 8 matches or something like that, and we're just doing the VVIP, which means we have a chance to demonstrate after Formula 1 and the activities we have in U.S. that we are a U.S. company. We have 4,000, 5,000 people already working there. We had a lot of experience in football, like no one else has. And I think hospitality in U.S. is completely on a different -- in sport hospitality is completely different. And we definitely see a good opportunity once people experience on their own that business will come. So it's for sure. And this business, you can only run from your existing kitchens if you have skilled people who are at this level, and not let say, on an airline commodity level, which were not, but this is the reason why we have to invest in people, in education, in academy and these kind of things to cover this kind of demand. So this business will definitely come. But coming back to the FIFA, I think in the next 2, 3 months, we will get an answer. In terms of markets, airline, I think when you talk about Mexico, obviously, we would go to Mexico. We have a great event in Mexico for Formula 1, and we will always look for local, let's say, partner in maybe not even the same industry, so tying up with someone, if it makes sense. So we are super open to go to new markets and see what it is. Mexico is next door to U.S., the same could be Canada is an interesting market at the same time. But U.S. itself has incredible opportunities. If you keep in mind that we have 6 locations currently and the majority of international carriers fly to 15 plus destinations, there is a lot of room for further improvement in terms of getting the same clients in other locations. So it's like -- it's not increasing the frequency in New York from 5 to 6 flights a day, is simply if they are happy in New York and in Miami, they will obviously come in Seattle and San Francisco. So if we open a kitchen there. Las Vegas could be one of the locations where they want to go, because Formula 1 is there and -- this is a location where you combine these kind of businesses. So this is what we believe is the next step what we're going to do. But I can't give you like we go to Mexico, this country or that country. But I think we can see in a proactive way is maybe the right answer for that.

It was more on the tenders for leveraging the current kitchens you have, what other airlines you think are good targets to tender?

If you say in the current locations, we definitely -- I mean, all the network carriers, we go for tender. What I meant in terms of if someone is only buying logistics, if an American carrier has a location in U.S. somewhere where they just have handling, so to say, and they get very little food and it doesn't make sense. But all locations where we are, by nature, everyone is asking -- every big airline is asking the 2, 3 players in the market. So you always go in this kind of competition. And the question is, is it only price driven? Or is it driven by experience combined with price, which I think is like 30%, 40% of the market is driven by quality or more quality. And we see especially now by American -- with American carriers, too, that if you look to the ticket prices, they're charging a lot of money for this kind of transatlantic or Pacific flights and even domestic flights in the first class. So there is some room for the market we have. So we go in every tender with every major airline definitely. I hope this was good enough.

[Operator Instructions] There are no more questions at this time. I would now like to turn the conference back over to Attila Dogudan for any closing remarks.

So as a summary, I would like to thank you for all your trust and staying with us. As I mentioned in bad times, and we hope that we are facing a good time. So this industry is always shaky. We know that. So we are well prepared for changes, so to say, or market changes. As you know, 70%, 80% of our costs are variable costs, so we can adapt quickly and we'll focus in all divisions to get this kind of healthy balance why our numbers are improving. So it's not only getting the one or other client in Airline Catering, so to say. It's a mix of the business, which makes the business case is a unique business case, and that's exactly why we are confident by improving the margins. So what we have to do now additionally to what I've mentioned is bringing our brands more visible, and I think if you are financially healthy, then you can have a different approach in all these things. And this will be our targets. So what we see as a summary, currently is good signs, good parameters for this year. We do not expect currently any significant changes. And if then we will tell you and we'll see what's going to happen. But you know that we have always reacted quickly if something happens. So we are always careful on the downside, so to say, and take every opportunity on the upside. So the only limitation is we do not want to harm the brand. So we believe we have to deliver these ad values. And as long as the NPS scores and customer satisfaction are fine. We are always entitled to get the premium. So this is where we are. I hope this is a strategy you can share and I hope it makes sense for everyone. And we believe very much that we are heading kind of good times and I hope that we can deliver all your expectations. So thank you very much for listening. Thank you very much for all your support, and have a good day. Good evening, wherever you. Thank you.

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