French catering group Elior lowered its margin forecast due to likely lower sales growth and high inflation, sending its shares 18% lower.
Details
After being hit by COVID-19 restrictions, caterers are now working to reset rates and supplier deals, reining in costs and cutting menu options to cope with high food and energy prices.
"Volume growth will slow after the post-Omicron catch-up that took place in the first half," the group said in an earnings statement.
Europe's third-biggest contract caterer said it expects organic revenue growth of around 10% in the 2022-23 financial year, compared with a previous forecast of at least 8% growth. However, it said the margin for adjusted earnings before interest, taxes and amortisation (EBITA) would be at the lower end of its initial range of 1.5% to 2%.
The groupsaid inflationary pressures on food would ease a little later than it had initially anticipated.
"The main driver of inflation is food inflation, which is higher than 10% in all our countries", chief financial officer Didier Grandpre said in a call, while noting labour costs. He said that energy costs have a lower impact since they are shouldered by its customers.
Elior also said that the renegotiation of contracts in France remains difficult, particularly in the public sector, as local authorities are reluctant to accept price increases.
JP Morgan
JP Morgan deemed them a mixed set of H1 results, with revenue and EBITA broadly in line with its estimates, free cash flow still in negative territory and cautious guidance.
"The new guidance will likely trigger around 10% EBITA downgrades for FY 23 and new FY 24 targets will now only be presented at the FY 23 results in November," the broker added.
Read More: Caterer Elior's Shareholders Back Derichebourg Deal
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