Elior's annual core profit nearly triples thanks to portfolio rationalisation (updated)

Elior SA

20/11/2024 07:46

(Writes through to add context, details and CFO comments)
    By Mathias de Rozario
       Nov 20 (Reuters) - French food caterer Elior  ELIOR.PA 
said on Wednesday its adjusted core profit soared 183% in the
year through September, beating market expectations, as a
strategic shift helped it remove sources of losses from its
order book.
    Elior, which has taken longer to recover from the pandemic
than rivals Sodexo  EXHO.PA  and Compass  CPG.L , has been
rationalising its order portfolio since last year through
voluntary withdrawals from loss-making contracts and business
expansion elsewhere.
    Its adjusted earnings before interest, taxes, depreciation
and amortisation (EBITDA) were 167 million euros ($176.84
million) in the 2023/24 financial year, up from 59 million a
year earlier and above the 162 million expected by analysts in a
company-provided consensus.
    The core result was in the red just two years ago, finance
chief Didier Grandpré noted during a press call.
    The positive development was thanks to the transformation
and development strategy initiated by CEO Daniel de Richebourg,
who took the top job in April 2023, Elior said.
    For the current fiscal year, Elior forecast organic revenue
growth of between 3% and 5%, below the 5.1% it reported for
2023/24.
    In October, French rival Sodexo  EXHO.PA  also said it saw a
slowdown in sales growth in fiscal 2025, after its results beat
market expectations in the year through Aug. 31.
    Elior also forecast an adjusted EBITDA margin exceeding 3%
and a net debt 3.5 times its core profit for the fiscal 2024/25,
and confirmed its medium-term targets.
    Its annual operational free cash flow turned positive at 233
million euros, while investment expenses reached 1.6% of total
revenue, rising 21 million euros to a total of 98 million.
    "The increase is essentially due to the integration of DMS
(Derichebourg Multiservices), which we only had for five and a
half months last year," Grandpré said about the investment
costs.
    Elior expects those expenses to rise to between 1.8% and
2.2% of revenue in 2024/25, he added.
($1 = 0.9444 euros)

 (Reporting by Mathias de Rozario in Gdansk; editing by Milla
Nissi)
 ((mathias.derozario@thomsonreuters.com;))