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French caterer Elior sets new targets driven by COVID-19 recovery

French caterer Elior sets new targets driven by COVID-19 recovery
By Reuters
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By Federica Mileo and Diana Mandia

-French catering company Elior Group set on Wednesday its first financial targets since coronavirus-linked closures of schools and restaurants hit the service sector, as a gradual reopening helped its businesses recover.

Its shares jumped nearly 10% before paring the gains to trade 2% as CEO Philippe Guillemot later cautioned that a return to remote working would hit future revenue and call into question Elior's objectives for the next financial year.

He added that some of Elior's clients were "seriously considering" having people work from home two or three times a week as Europe faces a new wave of the COVID-19 pandemic.

Caterers had been starting to benefit from a return to schools and offices but now face new potential restrictions in Europe which is facing a surge in COVID-19 infections.

The group, which supplies businesses, schools, prisons, hospitals and care homes, is targeting an EBITA (earnings before interest, taxes and amortisation) margin of 2-2.5% next year and around 4.6% by 2024.

Analysts cheered the better-than-expected results and high hopes for the mid-term though some noted that its guidance was less impressive than its rivals like Sodexo and Britain's Compass.

Sodexo said last month it expected organic growth between 15% and 18%, as well as an operating margin of close to 5% at constant rates for its 2022 fiscal year while Compass forecast underlying operating margin of more than 6%. [L4N2SE1D4]

"Though this (Elior's guidance) is weaker than peers', their targets for 2024 are ambitious, way ahead of consensus and pre-COVID levels," Bernstein analysts said in a note.

Elior expects its revenue to grow by at least 18% next year and at least 7% annually from 2022 to 2024. Fourth-quarter revenue recovered to 85% of pre-pandemic levels, it said.

The company improved its customer retention rate to 91.4% at the end of September from 91.3% during the summer, but this was still lower than 91.8% a year earlier.

Elior aims to improve this to 95% by 2024, but Guillemot warned this could be pushed back if the pandemic worsens.

($1 = 0.8894 euros)

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