(AOF) – Elior Group announced, in a brief press release, that it had obtained from its banks a relaxation of the test of its leverage ratio (net debt to Ebitda) as of September 30, 2023. It goes to 6 instead of 4.5, specified the specialist in collective catering. On Friday, Exane BNP Paribas raised its opinion on the Buy value. The analyst recalled that the group’s indebtedness concentrated a good part of the concerns of investors. Elior Group had net financial debt of €1.217 billion as of September 30, 2022, compared to €1.108 billion as of September 30, 2021.
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Key points
– Collective catering group, number 1 in France, Spain and Italy, number 5 in the United Kingdom and the United States, diversified into healthcare hotels and created in 1991;
– Turnover of €2.7 billion, of which 36% comes from companies, 33% from education and 31% from health and social services;
– Business model based on 5 levers of value creation: reinforcement of the most profitable activities, autonomy of field teams, systematization of loyalty, cost optimization and cash management;
– Capital held at 24.36% by Derichebourg, 5.42% by Emesa and 5.25% by the Strategic Participations Fund, Bernard Gault, former Chief Executive Officer, chairing the 10-member Board of Directors since the beginning of July 2022 ;
– Tense financial situation with a net debt of €1.22 billion against €437 million in cash but “covenant holiday” whose next test will be carried out on the basis of the 2022-23 results.
Challenges
– New Elior 2024 plan with objectives confirmed in June 2022: annual revenue growth of at least 7% over the next two years, operating margin around 4% in 2023-2024 and return of the dividend for the 2023 financial year- 2024;
– Innovation strategy: internally: Life4 innovation platform pooling employee innovations and Food Academy in Italy and Nutrition Research LAB in France / for customers: fight against undernutrition, deployment of the nutri-score and flexibility of offers / support and acquisitions of start-ups;
– Environmental strategy aimed at 2025: 12% reduction in CO2 emissions per meal (vs. 2020) / 30% reduction in food waste per meal / 80% renewable electricity;
– Growth of the healthcare hotel business in the United States, with the integration of LeveWell with Traditions;
– Upcoming launch of a strategic review of activities.
Challenges
– 3 growth catalysts to watch: penetration rate in SMEs (+21% in 2021), professional mobility solutions, and customer retention rate (92% at the end of June 2022);
– Strong impact of inflation on operating margins and strong sensitivity to Covid recoveries combated by the recovery plan: global and systematic program of renegotiation of price lists, co-construction with customers of more sustainable offers, strengthening of control operating costs, systematic review of the contract portfolio (exit of Preferred Meals in the United States).