Elior Lowers Annual Targets After First Half with 1.3% Organic Growth
Elior releases its results for the first half of fiscal year 2025-2026 on Wednesday, marked by an organic growth of 1.3% and an adjusted EBITA margin of 3%, but must significantly adjust its annual guidance. The group reduces its growth forecast from 3-4% to 1-2% and targets an EBITA margin of 3% instead of 3.5-3.7%, impacted by delays in the deployment of new contracts and a provision of 25 million euros due to a tariff dispute with an Italian railway operator.
Growth Hindered by Delays in Implementing New Contracts
The group's revenue amounted to 3,179 million euros in the first half, down 1.1% in reported figures but up 1.3% on a constant scope and exchange rate basis. This organic growth, driven particularly by Multiservices (2.6%), masks a contrasting operational reality. The group's new commercial signings, higher than the previous year, include large-scale contracts whose implementation takes longer, notably in collective catering and cleaning of 113 colleges in Yvelines and the headquarters of a major bank in La Défense. This gap between contract signing and revenue recognition explains why, in the first half, the commercial balance contribution stands at -0.7%, including the full-year effect of last year's contract closures.
Profitability Squeezed by Inflation and Provision for Italian Dispute
The adjusted EBITA stands at 95 million euros, down 37 million euros from 132 million euros in the first half of 2024-2025, bringing the margin to 3%. Excluding the exceptional impact of the 25 million euros provision for the tariff dispute in Italy, the adjusted EBITA margin reaches 3.9%, down 20 basis points from 4.1% recorded the previous year. In Collective Catering, adjusted EBITA plummets to 87 million euros (from 124 million euros), with the margin falling by 140 basis points to 3.8%. Multiservices show an opposite trajectory with an EBITA of 21 million euros (from 17 million euros) and a margin expanding by 50 basis points to 2.5%. The net income attributable to the group stands at 21 million euros, down 51% from 43 million euros a year earlier.
Reduced Annual Guidance, Depressed Operational Cash Flow
For the fiscal year 2025-2026, Elior adjusts its guidance framework due to the delayed conversion of commercial gains and the persistence of inflationary pressures. The group now targets an organic growth between 1% and 2% (compared to previously 3% to 4%) and an adjusted EBITA margin excluding exceptional items around 3% (compared to initially expected 3.5% to 3.7%). The leverage ratio is revised upwards to 3.5x (from about 3x initially), remaining comfortably below the covenant set at 4.5x. The semester's free cash flow stands at 9 million euros, compared to 205 million euros the previous year, mainly due to an unfavorable change in working capital requirements of 52 million euros, affected by the seasonality of collective catering and a delay in billing in cleaning services. Investment expenditures increased to 83 million euros (2.6% of revenue) from 61 million euros last year, reflecting the continued investment policy in central kitchens and tactical acquisitions.
