Moody's upgrades Dufry

Moody's Investors Service said it upgraded Dufry AG's corporate family rating to Ba3 from B1 and its probability of default rating to Ba3-PD from B1-PD. Concurrently, the agency boosted to Ba3 from B1 financing subsidiary Dufry One BV's backed senior unsecured ratings. Moody’s also changed the outlook to positive from stable.

The agency noted Dufry’s 2022 results beat Moody’s forecasts and global air passenger volumes. “Revenue of CHF 6.9 billion represented 78% of 2019 versus 68.5% for global air travel. The company's overperformance reflected the combination of (i) Dufry's overproportionate exposure to regions where the recovery was faster such as North America and Europe, (ii) consumers' higher propensity to spend in the wake of the pandemic, and (iii) Dufry's success in passing on rising inflation to consumers.

“The latter, as well as overhead savings during the pandemic and discipline in bringing costs back in as activity recovered, has led EBITDA to closely track the revenue recovery. As a result, the company's Moody's-adjusted EBITDA margin for 2022 was 23.2%, only modestly lower than the 24.5% in 2019,” the agency said in a press release.

The improved outlook reflects the continuing recovery in air passenger traffic and the possibility of Dufry improving its credit ratios, Moody’s noted.

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