French caterer Elior beat sales expectations on Wednesday 23 November and forecast a quick return to profitable growth after a third straight annual loss, sending its shares up 10%.
Details
Alphavalue analyst Yi Zhong said the update should be enough to ease investor concerns after a discouraging forecast from the world's largest catering group, Compass, on Monday 21 November.
Elior, like peers Compass and Sodexo, is renegotiating rates and supplier pacts, reining in costs and cutting menu options to cope with rising energy and food prices.
Europe's third-biggest contract caterer said it had renegotiated 67% of its contracts by Sept. 30, but in France only 20% of the total price increases were reflected in annual results, mainly due to more complex negotiations with public sector customers.
"There's no way we're going to sit back and wait for things to happen," the firm's communications director, Anne-Laure Descleves, told reporters, saying the group was asking for an average price increase of 9%, and sometimes as high as 15%.
Elior posted revenue of €4.45 billion for the year to the end of September, beating analysts' forecast of 4.38 billion, while its adjusted core loss (EBITA) narrowed to 48 million, in line with estimates.
Bernstein analysts underscored a "much needed stable quarter", saying revenue was "largely in line with the beats shown by other caterers and reflects inflation is being passed".
Elior forecast organic revenue growth of at least 8% for fiscal 2022/23, with a positive adjusted EBITA margin of between 1.5% and 2% next year and above pre-pandemic levels in 2024.
Gaining Customers
Chairman and chief executive Bernard Gault said the group was gaining customers and pointed to a record high retention rate of 93.2%.
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