Contract caterer Elior sees sales slowdown as inflation weighs (updated)

Elior SA

17/05/2023 07:25

(Adds details, CFO quote)
    By Federica Mileo
       May 17 (Reuters) - French catering group Elior
 ELIOR.PA  lowered it margin forecast on Wednesday due to likely
lower sales growth and high inflation.
    Europe's third-biggest contract caterer said it expects
organic revenue growth of around 10% in the 2022-23 financial
year, compared with a previous forecast of at least 8% growth.
However, it said the margin for adjusted earnings before
interest, taxes and amortisation (EBITA) would be at the lower
end of its initial range of 1.5% to 2%.
    After being hit by COVID-19 restrictions, caterers are now
working to reset rates and supplier deals, reining in costs and
cutting menu options to cope with high food and energy prices.
    "Volume growth will slow after the post-Omicron catch-up
that took place in the first half," the group said in an
earnings statement.
    It added the inflationary pressures on food would ease a
little later than it had initially anticipated.
    "The main driver of inflation is food inflation, which is
higher than 10% in all our countries", Chief Financial Officer
Didier Grandpre said in a call, while noting labour costs. He
said that energy costs have a lower impact since they are
shouldered by its customers.
    The group also said that the renegotiation of contracts in
France remains difficult, particularly in the public sector, as
local authorities are reluctant to accept price increases.
    

 (Reporting by Federica Mileo in Gdansk; Editing by Milla Nissi,
and Louise Heavens)
 ((federica.mileo@thomsonreuters.com))