French caterer Elior shares soar after 'robust' first half
Adds details on prices and work-from-home in paragraphs 5-8
By Diana Mandia
May 16 (Reuters) -Elior's ELIOR.PA shares surged by more than 28% on Thursday after price increases and more efficient operations helped the French caterer top first-half core profit estimates.
The group, which supplies businesses, schools, prisons, hospitals and care homes, has taken longer to recover from the impact of the COVID-19 pandemic than its competitors Sodexo EXHO.PA and Compass CPG.L, as it sought to adjust rates and supplier agreements to rein in costs amid high inflation.
Elior's shares rose more than 28% to 3.92 euros in early trading, hitting their highest intra-day price in a year.
The company expects price increases after the renegotiation of contracts to drive revenues for the rest of its fiscal year, while efforts by employers to lure staff back to the office with meal offers is also ensuring that prices remain high.
"We see increasing requirements in terms of quality of the food, still requests from the customers to help them further attract people to come back to the office ... I don't see any sign of price reduction at this stage", Elior's Chief Financial Officer Didier Grandpré said in a call with analysts.
Remote working has been a concern for caterers since the COVID-19 pandemic, which the sector has tried to compensate for by offering more flexible services.
Grandpré does not rule out more employees opting to work from home this summer in Paris because of the 2024 Olympic Games, as commuting will be limited, especially around the immediate surroundings of the River Seine.
French rival Sodexo also pointed in April to a likely increase in home working around Paris during the Olympics.
Elior said adjusted earnings before interest, tax and amortisation (EBITA) were 100 million euros in the period from October 2023 to March 2024, compared to 87 million expected by analysts and 41 million a year earlier. Adjusted EBITA margin was 3.2% versus an estimate of 2.8%.
Although Elior stood by its previously announced full-year guidance, its language changed slightly and it now expects its adjusted EBITA margin to be "at least 2.5%" in 2024 versus "around 2.5%" previously.
($1 = 0.9196 euros)
Reporting by Diana Mandiá; Editing by Milla Nissi and Alexander Smith
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