Avolta reports strong Q2 organic growth despite FX headwinds

Avolta reported strong Q2 2025 results, with organic growth of 6.0% and core EBITDA of CHF416 million, both surpassing consensus estimates, driven by increased passenger volumes and spend. Despite a significant 6.1% foreign exchange headwind and a slight organic decline in North America, the company's core EBITDA margin improved to 11.6% and equity free cash flow grew 9%. Avolta also confirmed its positive mid-term guidance for FY2027, indicating confidence in sustained growth and profitability.

Analysis

Avolta's Q2 2025 results demonstrated solid underlying operational performance, which was significantly obscured by adverse currency movements. The company achieved robust organic growth of 6.0%, surpassing consensus estimates of 5.1%, driven by healthy passenger volumes and increased spend per passenger. However, a substantial -6.1% foreign exchange headwind neutralized this growth, leading to a nearly flat reported core turnover of CHF 3,562 million. Profitability metrics were a key strength, with core EBITDA rising 4% to CHF 416 million and the corresponding margin expanding 40 basis points to 11.6%, beating analyst expectations. Furthermore, core equity free cash flow grew an impressive 9% to CHF 320 million, indicating strong cash generation. While performance in EMEA, APAC, and LATAM was strong with organic growth exceeding 7.7%, the North American market showed a slight organic decline of 0.2%, representing a key area of regional weakness. The confirmation of mid-term guidance through 2027, which targets annual organic growth of 5-7% and continued margin improvement, signals management's confidence in the long-term trajectory despite near-term caution.

Key Decisions for Investors

• Investors should weigh the strong underlying fundamentals, including beats on organic growth and cash flow, against the significant and ongoing risk posed by foreign exchange volatility.
• The underperformance in North America, with a 0.2% organic decline, warrants close monitoring as a potential drag on future consolidated results if weaker US passenger traffic persists.
• The reaffirmation of ambitious FY2027 guidance provides a solid anchor for long-term valuation, suggesting that management is confident in overcoming near-term headwinds to deliver sustained growth and margin expansion.