API magazine
April 28, 2020

Corona Crisis & the challenges for Gebr. Heinemann

The corona crisis poses great financial challenges for Gebr. Heinemann. The dramatic collapse of the travel market means that our company is currently having to cope with high turnover losses every day. Our fixed costs are practically no longer offset by income. The entire travel and tourism industry has been directly and massively affected by the crisis and will have to struggle with the effects for longer than other industries. A large number of sectors have been severely affected, including airlines, airport operators, cruise lines, tour operators, hotel companies and also we as a travel retailer.

As a family business, we think in generations, not quarters. This long-term perspective determines our business activities. In the 140 years of its existence, Gebr. Heinemann has already experienced numerous crises: economic crises, epidemics, the consequences of the attacks of 11 September and a cloud of volcanic ash. For this reason, we implemented a comprehensive package of measures at an early stage in order to reduce our costs quickly and effectively and to ensure the company's liquidity. One lever is the reduction of personnel costs. Since the beginning of April, 2,700 employees in Germany alone have been on short-time working. We are pursuing the goal of avoiding lay-offs due to operational reasons. Other immediate measures include postponing capital expenditure and operating expenses, reducing current assets and negotiations with the airports. Our company generates a substantial part of the income of airport operators. In order to return to our former strength in the medium term, cooperation between airports, retailers, and brands is needed.

Thanks to our solid economic performance in the past, we are relatively well positioned. However, the current crisis cannot be compared with previous crises, as it occurs worldwide and it is not foreseeable how long it will take to overcome it. Any recourse to further government support depends on the duration of the crisis. We do not yet know what decisions governments will take in the near future and how global mobility will develop. It will certainly take some time before the global travel retail business will start up again, and we then assume that the ramp-up will take several months. Whether there
will be a return to normality, we cannot say today.

For Gebr. Heinemann, the year 2020 will be characterised by high financial losses. However, the duration of the crisis is decisive for assessing the long-term economic
effects. The unpredictability of its end also makes a reliable estimate for our company extremely difficult at present.

Press contact:
Nina Semprecht Julia Knors
Head of Corporate Communications

+49 40 30 10 21373

Julia Knors

Corporate Communications Manager
+49 40 3010 2186