Q4 review: premium demand remains resilient

DO & CO closed FY 25/26 with a strong Q4. Sales grew 13% yoy to € 594m and EBIT improved 10% yoy to € 49m (margin: 8.3%), 4% ahead of consensus. This is despite the Middle East conflict weighing on March operations, which cost c. € 16m in sales and € 2-3m in EBIT.

Airline Catering grew Q4 sales by 11% yoy to € 497m on broad-based growth across the network (e.g. Spanish and UK locations) and the ramp-up of recently won contracts, delivering an EBIT of € 39m (margin: 7.9%). Demand at key partner Turkish Airlines remains intact, with volumes only slightly below plan in March and April despite the conflict. Moreover, premium and long-haul demand has proven robust through the crisis, in line with recent airline commentary. Several new contracts commence in Q1 26/27 (e.g. Emirates ex Boston), complemented by the newly awarded five-year contract with American Airlines in Chicago (start: Feb 2027; c. € 50m sales impact). Meanwhile, construction of the 150,000 sqm Istanbul gourmet kitchen is progressing (operations from 2028) with the € 20-25m of related equipment capex is only due in FY 27/28 (eNuW).

International Event Catering was the Q4 standout, with sales up 43% yoy to € 49m, supported by the earlier Japanese GP, FC Bayern's Champions League run and a busier SAP Garden. The segment's 11.0% EBIT margin faced a tough comparison against an accrual-flattered 13.3% margin in the prior year. With the FIFA World Cup now underway DO & CO is catering to more than 70,000 VIP guests across 20 matches, including the opening match and the final (eNuW: $ 30-40m of sales at margins close to the segment avg., eNuW). The cancelled Bahrain and Saudi Arabia F1 GPs (eNuW: € 10m of sales) should be partly offset by the new Madrid GP (Sep 2026) and an NFL game at the Allianz Arena (Nov 2026).

Restaurants, Lounges & Hotels grew sales 13% yoy to € 48m with the margin up 0.4pp to 10.0%. Current hotel cross-reads remain supportive, with April industry data pointing to improving occupancy across the upper end of the European hotel market (source: Hospitality ON). Moreover, a new DO & CO restaurant and DEMEL are set to open in London in Q1 2027.

Outlook: guided sales growth of 7-8% yoy looks achievable for FY 26/27 (eNuW: +7% yoy), of which 40-50% is to come from new contracts with the remainder stemming from price and volumes. The EBIT margin is seen at 8.6-9.0% (eNuW: 8.8%), with the upper end contingent on an easing of the Middle East conflict and the lower end reflecting a further escalation.

All in, the equity story remains intact: DO & CO combines exposure to structurally growing premium air travel with high revenue visibility (c. 70% of sales under multi-year contracts), a flexible cost base (c. 80% variable costs), room for further margin expansion and a strong balance sheet that is effectively net debt free (0.05x net debt/EBITDA).

BUY, new PT of € 255 (old: € 250), based on DCF.