The LSG Group has embarked on a programme of dramatic cost reduction and a product range revamp to combat a fall in sales revenues – down by 50% – due to the COVID-19 crisis.
The ongoing pandemic and resulting reduction in global air traffic have had a drastic impact on the LSG Group’s worldwide catering business and financial results of the first half of 2020. Sales revenues fell by 50% year-on-year to EUR 814 million. Adjusted EBIT (earnings before interest and taxes) fell accordingly to EUR -195 million (previous year: EUR 33 million).
Chief financial officer Dr. Kristin Neumann says: “The corona crisis has presented us with extreme major challenges that have never been faced before in our company’s history. Thanks to our solid liquidity position and the measures we implemented on short notice to safeguard that liquidity, we were able to cushion the initial slump in sales and earnings. However, none of us knows how long this crisis will last, and it is obvious that only long-term solutions will help us reduce our costs sustainably and at the same time give the company more flexibility and a future.”
As short-term measures to limit the financial impact, the company implemented project and hiring freezes, short-time work and temporary closures at the beginning of the crisis, and is aiming to cut worldwide costs by at least 30% worldwide through a new COVID business strategy entitled: the “Levante” project
Chief executive officer Erdmann Rauer says: “The aim of the project is to optimise our company in the medium term in terms of the size of its organisation and network, and to adapt it to changing market conditions with fewer flights and lower passenger and service volumes.
“In the long term, we are also changing our product range according to the ‘new normality’ and want to actively bring about change in the airline catering industry. We see that our customers are ready for change, and we are ready to support them with our employees.”
The LSG Group’s portfolio of independent expert brands continues to include: LSG Sky Chefs (airline and train catering and lounges), Retail inMotion (in-flight sales programme development and management), SPIRIANT (in-flight service equipment design and procurement) and Evertaste (convenience food).
Headquartered in Neu-Isenburg near Frankfurt, the company’s 35,500 employees last year generated group sales of 3.4 billion euros and produced 684 million meals.