Business
Elior forecasts slower revenue growth for 2025, shares slump
Global Banking & Finance Review®
Company
By Mathias de Rozario
(Reuters) -French food caterer Elior said on Wednesday it expected revenue growth to slow down in the year from Oct. 1, echoing comments from rival Sodexo and sending its shares tumbling more than 17% by 0918 GMT.
Elior, which has taken longer to recover from the pandemic than Sodexo and or UK-based Compass, forecast organic revenue growth of between 3% and 5% for the fiscal 2024/25, below the 5.1% it reported for the year through September.
In October, French rival Sodexo also forecast a slower sales growth after its annual results beat market expectations.
“We understand the management’s desire to remain cautious, but we believe that the solid achievement of 2024 does not compensate the disappointing guidance,” Midcap Partners analyst Julien Thomas said.
The shares were at the bottom of France’s SBF 120 index and could see their biggest daily drop since May 2023 if the losses persist.
Elior’s adjusted core profit (EBITDA) nearly tripled to 167 million euros ($177 million) in the fiscal 2023/24, beating analysts’ consensus of 162 million, as a strategic shift helped it remove sources of losses from its order book.
Elior has been rationalising its portfolio since last year through voluntary withdrawals from loss-making contracts and business expansion elsewhere.
Annual operational free cash flow turned positive at 233 million euros, while investment expenses grew by 21 million to a total of 98 million euros, or 1.6% of revenue.
“The increase is essentially due to the integration of DMS (Derichebourg Multiservices), which we only had for five and a half months last year,” CFO Didier Grandpré said during a press call.
Elior expects investment costs to rise to between 1.8% and 2.2% of revenue in 2024/25, he added.
The group also forecast an adjusted EBITDA margin of above 3% and a net debt 3.5 times its core profit for the current financial year, and confirmed its medium-term targets.
($1 = 0.9444 euros)
(Reporting by Mathias de Rozario in Gdansk; editing by Milla Nissi)
Organic revenue growth refers to the increase in a company's sales generated from its existing operations, excluding any revenue from acquisitions or mergers.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's overall financial performance.
Free cash flow is the cash generated by a company after accounting for capital expenditures, which can be used for expansion, dividends, or debt repayment.
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