Elis: The return of guests to hotels has boosted Elis’ revenues in 2022

(BFM Bourse) – The industrial laundry specialist recorded like-for-like growth of 21% last year. In the fourth quarter alone, business grew by almost 16%.

Elis did not experience any bad surprises in 2022. While the health crisis had damaged its activity in 2020 and to a lesser extent in 2021, the industrial laundry group found a much better shape last year.

The company published total revenue of 3.82 billion euros on Monday evening, higher than its 2019 record of 3.28 billion euros. In published data, growth was 25.3% over one year. Adjusting for scope and exchange rate effects, it stood at 21%.

Volumes increased by 12.7% while price increases contributed to the growth with a positive impact of around 7% (and 257 million euros in value), reflecting the transmission of inflation to customers in the band.

A better than expected fourth quarter

Elis benefited at full speed from the recovery of the hotel and catering industry, the segment which had logically suffered the most from the health crisis and which was driven in 2022 by the strong recovery in tourism. This segment accounted for a quarter of Elis’ revenues last year.

“The very good organic performance of +21% reflects the numerous contract wins in industry and in trade and services, the rebound in the hotel and catering industry and the price adjustments made to offset, in particular, the surge in the cost of ‘energy”, explained Xavier Martiré, the chairman of the management board of Elis in a press release.

In the fourth quarter, organic growth was 15.7% while revenues amounted to 1.006 billion euros. The slowdown in growth is explained by a more demanding basis of comparison, the hotel industry having suffered less at the end of 2021 than at the beginning of the same year.

“Fourth quarter revenue performance was strong, slightly above consensus expectations [les analystes tablaient sur une croissance organique de 14,3%, NDLR]thanks to the continued positive momentum in the hospitality sector, a solid commercial performance and pricing initiatives,” said Stifel.

“Elis delivered a solid publication, in line with the rest of the year”, appreciates for its part TP ICAP Midcap which anticipated revenues of 971 million euros for the first quarter.

Cautious forecasts for 2023

With regard to its outlook, Elis has confirmed all of its objectives for 2022, namely a gross operating margin (Ebitda) of around 33%, adjusted operating income of more than 530 million euros, net current income by share of more than 1.45 euro, a free cash flow of around 200 million euros and a debt ratio (debt to Ebitda) of around 2.5 at the end of December, down from 0.5. The annual results will be published on March 8.

“To date, we still do not note any slowdown, in any geography or any business line,” said Xavier Martiré.

Elis also delivered a first indication of its performance for the current year, expecting organic growth of more than 10%. In a presentation, the company specifies the different variables allowing it to build its forecast: the rebound of the hotel industry in the first quarter of 2023 due to a weak basis of comparison should bring 1.5% to 2% of organic growth, the growth ” normative” (excluding inflation) of Elis is estimated between 2.5% and 3.5% and the price effects are estimated between 8% and 9%. The group has also integrated a negative impact linked to a potential economic slowdown from 2% to 0%, recalling that in 2009 during the great financial crisis its revenues had stabilized. In other words, its current forecasts anticipate organic growth of between 10% and 14.5%.

Stifel judges for his part “cautious” the forecast of an organic progression for the moment given by the group to “more than 10%”.

Elis also intends to improve all its results indicators in 2023 (EBITDA margin, operating profit, earnings per share, cash generation).

Last but not least, the industrial laundry group believes that its debt reduction trajectory should make it “quickly” compatible with an “investment grade” rating profile (in the non-speculative category) with rating agencies. For the time being, the group is rated BB+ by S&P Global ratings and “Ba1” by Moody’s, i.e., for each one notch of the “investment grade” rating (“BBB-” for S&P and “Baa3-” for Moody’s) .

On the Paris Stock Exchange, the market appreciates all the announcements delivered by the company, the Elis share signing one of the strongest increases in the SBF 120, with an increase of 2.7% around 2:30 p.m.

Julien Marion – ©2023 BFM Bourse

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