Posted By Uma Rajagopal
Posted on November 20, 2024
By Mathias de Rozario
(Reuters) -French food caterer Elior 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 and Compass, 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 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)
