Elior collapses in Paris after disappointing half-year and guidance cut
The group announced numbers also penalised by a dispute with a railway operator in Italia and revised its annual estimates downwards due to the slow implementation of some contracts
(Il Sole 24 Ore Radiocor) - Elior fell headlong on the Paris Stock Exchange, under the weight of disappointing half-year results and a profit warning. The stock of the French catering and collective service giant lost 26.76% of its value to EUR2.06, dragging Derichebourg, which holds a 48% stake, down as well.
Elior Group announced after the close of trading on Wednesday half-year accounts penalised by a contractual dispute in Italia and revised its annual forecasts downwards due to slow implementation of some contracts and persistent cost inflation. The group posted first-half revenues of €3.17 billion (-1.1% on a reported basis and +1.3% on an organic basis), adjusted EBITDA of €95 million (up from €132 million last year) with a margin of 3% from 4.1%, and net profit for the period more than halved to €21 million from €43 million. Net debt was 1.18 billion from 1.12 billion, with an adjusted EBITDA ratio of 3.6 from 3.3.
Elior points out that it has provisioned EUR 25 million 'in relation to a contract with an Italia railway operator, in the context of a price dispute'. Excluding this item, net profit was EUR 46 million, 'slightly up' on last year. Free cash flow was EUR 9 million in the first half of the year, compared to EUR 205 million a year earlier, due to 'seasonal outflows' of working capital and a delay in invoicing in the cleaning sector. The group also explains that newly acquired large-scale orders are taking longer to be completed, such as the collective contract for the catering and cleaning of 113 schools in the Yvelines region of France and the contract for the head office of a major bank at La Défense in Paris, resulting in a 'delayed impact of economic development on revenue growth'.
Against this background and "taking inflationary pressures into account", Elior revised its estimates for the financial year downwards. The organic revenue growth target for the 2026 financial year has been revised to between 1% and 2%, down from the previous 3%-4%, and the adjusted EBITDA margin is now forecast at 3%, below the previous forecast of 3.5%-3.7%. The leverage ratio target has been revised to around 3.5x at the end of September 2026, compared to an initial target of around 3x, while remaining below the covenant threshold of 4.5x. "Elior Group's consolidated results for the first half of 2025-2026 reflect a solid operating performance, achieved despite inflationary pressures, the timing effects of new contracts and an extraordinary item arising from a pricing dispute related to a major contract in Italia. The group has solid fundamentals, as demonstrated by the net profit of EUR 21 million. However, the delay in converting new contracts into revenue has led us to revise our forecasts for the full year 2025-2026, without this calling into question the validity of the strategy we have been implementing since April 2023,' Elior's president and CEO Daniel Derichebourg was quoted as saying in a statement.
"The first-half performance is not very good: excluding a non-recurring provision, the group posted an Adjusted EBIT of EUR120m, compared to the consensus target of EUR137m," commented analysts at TP Icap Midcap, also highlighting the collapse in free cash flow. TP Icap also noted that while contractual delays and low working capital appear temporary and limited to 2026, 'the return of inflation appears a far more problematic threat'.
