Elis: Q1 2023 revenue
Q1 2023 revenue up
+21.7%,
of which
+18.3%
on an organic basis
Growth driven by
good commercial
momentum, pricing adjustments
and activity in
Hospitality
Increased confidence in achieving
2023 targets
Q1 2023
revenue up
+21.7%
at
€1,013.4m:
good activity in all our markets,
numerous commercial
wins and good pricing
dynamics
- Activity in
Hospitality continued to be dynamic in every geography; Southern
Europe and the UK & Ireland benefited from a favorable
comparable base (Q1 2022 was still impacted by the end of the
pandemic)
- Elis reached a
record level of new contracts signed in Q1, driven by numerous
initiatives to address the evolving need for hygiene, traceability,
and responsible products & services, especially in Trade &
Services
- Price dynamics are
very favorable in all our markets on the back of pricing
adjustments implemented throughout 2022 (in a context of inflation
of our cost base) and since January 1st, 2023: price effect was c.
+11% in Q1
- The Group’s six
geographies delivered double-digit organic revenue growth in Q1;
organic growth was especially strong in Southern Europe (+24.7%),
the UK & Ireland (+23.9%) and Central Europe (+21.4%)
- We see no sign of
significant slowdown in our markets or of churn rate
deterioration
Increased
confidence in the
2023 outlook communicated on
March 8, 2023
- 2023 full-year
organic revenue growth expected between +11% and +13%
- 2023 adjusted
EBITDA margin expected up c. +50bps yoy
- 2023 adjusted EBIT
expected above €650m (up at least +20% yoy)
- 2023 headline net
income expected above €405m (up at least +15% yoy)
- 2023 headline net
income per share expected above €1.65 on a fully diluted basis (up
at least +13% yoy)
- 2023 free cash flow
(after lease payments) expected above €260m (up at least +16%
yoy)
- Financial leverage
ratio at December 31, 2023 expected at c. 2.1x
Saint-Cloud, May 10,
2023 – Elis, an international
multi-service provider, offering textile, hygiene and facility
services solutions, which is present in Europe and Latin America,
today announces its revenue for the 3 months ended March 31, 2023.
The figures set forth in this press release have not been
audited.
Commenting on the announcement, Xavier
Martiré, Chairman of the Management Board
of Elis, said:
“In Q1 2023, Elis recorded revenue growth of
+21.7%, to €1,013.4m. Organic growth remained very strong at
+18.3%, and all geographies posted double-digit growth.
Commercial momentum was particularly solid in
all our markets and geographies: we reached a record level of new
contracts signed in Q1. Our offers in Workwear and Hygiene and
well-being are very successful; they address the increasing needs
of our clients for hygiene, traceability and for a more secure
supply chain.
In Hospitality, Q1 2022 was still somewhat
impacted by the pandemic and activity was well-oriented in the
first quarter of 2023.
Finally, the price effect was +11% in Q1; it
reflects the adjustments negotiated throughout 2022, as well as
those that have been implemented since the beginning of the year to
offset cost inflation.
This good quarterly performance increases our
confidence in the 2023 outlook we communicated last March, when we
released our 2022 annual results: we anticipate another year of
strong organic growth, along with marked improvement of all our
financial KPIs and further Group deleveraging, with a financial
leverage ratio expected at 2.1x at the end of 2023, which should
quickly make Elis eligible for investment grade rating
consideration.
The great resilience shown by Elis through the
various recent crises, its operational know-how, its strengthened
organic growth profile and its circular economy model are major
assets that will enable the company to assert its leadership in all
the countries in which it is present.”
I. Q1 2023
revenue
In millions of
euros |
2023 |
2022 |
Organic growth |
External growth |
FX |
Reported growth |
France |
303.5 |
262.1 |
+15.8% |
- |
- |
+15.8% |
Central Europe |
245.6 |
196.6 |
+21.4% |
+3.0% |
+0.5% |
+24.9% |
Scandinavia &
East. Eur. |
153.3 |
135.3 |
+15.8% |
+0.8% |
-3.2% |
+13.3% |
UK &
Ireland |
121.9 |
102.7 |
+23.9% |
- |
-5.2% |
+18.7% |
Latin America |
102.4 |
64.2 |
+12.6% |
+42.8% |
+4.2% |
+59.6% |
Southern
Europe |
81.3 |
65.2 |
+24.7% |
- |
- |
+24.7% |
Others |
5.5 |
6.8 |
-15.4% |
- |
-3.7% |
-19.1% |
Total |
1,013.4 |
832.8 |
+18.3% |
+4.1% |
-0.7% |
+21.7% |
« Others » includes Manufacturing
Entities and Holdings.Percentage change calculations are based on
actual figures.
France
Q1 2023 revenue was up +15.8% (entirely
organic). Although March showed some slight deceleration, activity
in Hospitality was well-oriented and benefited from a favorable
comparable base, as the beginning of Q1 2022 was somewhat impacted
by the Omicron variant. Furthermore, we continued to record good
commercial momentum in Workwear and in Pest control.
Central Europe
Q1 2023 revenue was up +24.9% in the region
(+21.4% on an organic basis). In a context of strong inflation
(especially wage inflation), Germany posted organic revenue growth
of c. +25%, driven by strong pricing dynamics of c. +17%: the
majority of price adjustments negotiated in 2022 were implemented
at the beginning of 2023. The other main countries in the region
(the Netherlands, Switzerland, Poland and Belgium) delivered
organic revenue growth of nearly +20%, with similar pricing
dynamics as Germany and new contract wins in Industry and in Trade
& Services, especially in Poland and in the Netherlands.
Scandinavia &
Eastern Europe
Q1 2023 revenue was up +13.3% in the region
(+15.8% on an organic basis). Hospitality was sharply up in Sweden
and Denmark (with a favorable comparable base) and Workwear showed
good commercial momentum (including Ultra clean).
UK &
Ireland
Q1 2023 revenue was up +18.7% in the region
(+23.9% on an organic basis). The Group delivered very good
performance in Hospitality (with a favorable comparable base). In
Industry and Trade & Services, commercial momentum was good,
with new contracts signed, and the churn rate was stable. However,
we observed a slight deceleration of same-store activity growth in
Q1 due to the unfavorable macro environment in the region.
Latin America
Q1 2023 revenue was up +59.6% in the region
(+12.6% on an organic basis). Inflation is stabilizing at below
10%, while outsourcing momentum continued. The acquisition of the
leader in the Mexican market, consolidated since July 1st, 2022
largely contributed to the strong scope effect in the quarter
(+42.8%); activity was well-oriented in Q1, notably with good
commercial momentum.
Southern Europe
Q1 2023 revenue was up +24.7% in the region
(entirely organic). As expected, Hospitality showed marked
improvement on the back of an easy comparable base. In Workwear,
good commercial momentum and the development of outsourcing
continued
II. Increased confidence in the
2023 outlook communicated on
March 8, 2023
2023 organic revenue growth is expected between
+11% and +13%, driven by:
- a price effect of
at least +9% made up of the embedded price adjustments negotiated
throughout 2022 and the additional adjustments implemented since
January 1st, 2023, and
- a favorable
comparable base in Hospitality in the first semester.
The lower end of the organic growth range
factors in the potential impact from a slowdown in the economy, of
which we see no sign to date.
In a context of very strong energy price
inflation, the Group has progressively negotiated fixed rate
tariffs for 2023 and the following years. These hedging measures,
as well as the embedded effect of pricing adjustments and new
productivity gains expected in 2023, should contribute to an
improvement of adjusted 2023 EBITDA margin of c. +50bps compared to
2022.
2023 adjusted EBIT is expected above €650m,
driven by top line dynamism and a slight decrease in D&A as a
percentage of revenue.
2023 headline net income is expected above
€405m, corresponding to 2023 headline net income per share above
€1.65 (on a fully diluted basis, notably factoring in the potential
dilutive effect from the new OCEANE bonds issued in September
2022).
2023 free cash flow (after lease payments) is
expected above €260m, driven by EBITDA increase and despite an
expected negative calendar effect on receivables (30 and 31
December 2023 will not be working days).
Financial leverage ratio as of December 31, 2023
is expected at c. 2.1x, down -0.4x yoy.
III. Other information
The circular economy at the heart of Elis’ business
model
Elis offers its clients products that are
maintained, repaired, reused, and reemployed to optimize their
usage and lifespan. The Group therefore selects its textile
products based on sustainability criteria, to ensure frequent
washing, and also operates repair workshops. Elis’ conviction is
that the circular economy model, which notably aims at reducing
consumption of natural resources by optimizing the lifespan of
products, is a sustainable solution to address today’s
environmental challenges.
The services offered by Elis are a sustainable
alternative to:
- simple purchase or
use of products: by sharing them between several users or clients,
and by constantly looking at improving the industrial processes
linked to their washing. As an example, the use of workwear
operated by Elis leads to a 37% decrease of CO2 emissions compared
to workwear that is washed at home or in a standard laundry, and to
a 48% decrease of water consumption (source: EY); and
- single use /
disposable products: by offering reusable products, which are
mostly maintained locally, hence supporting local employment and
local economic development. As an example, the use of reusable
surgical garments in care facilities leads to a decrease ranging
from 31% to 62% of CO2 emissions compared to disposable clothes
(source: Cleaner Environmental Systems).
These alternatives to a linear consumption
approach enable our clients to avoid CO2 emissions and contribute
to a reduction of their own emissions.
The Ellen MacArthur Foundation states that
“circular economy is necessary to reach Net Zero” and that “nearly
10 billion tons of CO2 (i.e., 20% of world emissions) could be
reduced thanks to the transition of our current model towards a
circular economy”
(https://climate.ellenmacarthurfoundation.org).
Non-financial rating
In 2022, Sustainalytics improved Elis’s ESG
rating by 10pts to 14.8 (“low risk”). Furthermore, the Group was
rated A- by the CDP (Carbon Disclosure Project), a non-profit
organization which performs independent assessments on the basis of
information made available by companies on their strategy, risk
& opportunity management, climate goals, annual climate
performance, etc. This rating puts Elis in the “Leadership”
category and underscores its commitment and actions with regards to
climate change. Furthermore, the Group got an “A” grade in the
Supplier Engagement Leaderboard, which rewards the top 8% companies
for their actions on their value chain to support climate
change.
After winning a Gold medal related to the
EcoVadis questionnaire for five consecutive years, Elis obtained a
Platinum medal, the highest possible reward. This medal places Elis
within the top 1% of the c. 90,000 companies assessed by
EcoVadis.
Finally, Elis maintained its high performance
with rating agency Gaïa (72/100), which ranks the Group at the
“Gold” level.
Our climate commitment
Conscious of the environmental challenges with
regards to climate change, Elis is committed to an approach to
reduce its emissions that is in line with the Paris Agreement to
contribute to keeping the increase in temperature below 1.5C°
compared to preindustrial levels1. At the General Shareholders
Meeting held on 19 May 2022, the Group already proposed that
shareholders support this strategic step, via an advisory
resolution. This resolution was approved. The setup of Elis’
Climate plan that started in 2022 will continue in 2023 in order to
be as accurate and fair as possible.
The Group aims at presenting its climate
objectives, aligned with the methodology of the Science Based
Targets initiative, in the second half of 2023. The Group currently
plans to submit its climate objectives to the advisory vote of its
shareholders at the 2024 General Shareholders Meeting.
Financial definitions
- Organic growth in
the Group’s revenue is calculated excluding (i) the impacts of
changes in the scope of consolidation of “major acquisitions” and
“major disposals” (as defined in the Document de Base) in each of
the periods under comparison, as well as (ii) the impact of
exchange rate fluctuations.
- Adjusted EBITDA is
defined as adjusted EBIT before depreciation and amortization net
of the portion of grants transferred to income.
- Adjusted EBITDA
margin is defined as adjusted EBITDA divided by revenue.
- Adjusted EBIT is
defined as net income (loss) before net financial income (loss),
income tax, share in net income of equity accounted companies,
amortization of intangible assets recognized in a business
combination, goodwill impairment losses, other operating income and
expense, miscellaneous financial items (bank fees recognized in
operating income) and IFRS 2 expense (share-based payments).
- Adjusted EBIT
margin is defined as adjusted EBIT divided by revenue.
In order to take into account the statement
published by the European Securities and Markets Authority (ESMA)
on 29 October 2021 regarding alternative performance indicators,
the Group added the term “adjusted” to the above definitions. The
content of these indicators remains unchanged compared to previous
financial years.
- Headline net
result corresponds to net income or loss excluding
extraordinary items which, due to their type and unusual nature,
cannot be considered as intrinsic to the Group’s current
performance.
- Free cash flow is
defined as adjusted EBITDA less non-cash-items and changes in
working capital, purchases of linen, capital expenditures (net of
disposals), tax paid, financial interest paid and lease liabilities
payments.
- The financial
leverage ratio is the leverage ratio calculated for the purpose of
the financial covenant included in the banking agreement signed in
2021: Leverage ratio is equal to Net financial debt / adjusted
EBITDA, pro forma of acquisitions finalized during the last 12
months, and after synergies.
Geographical breakdown
- France
- Central Europe:
Austria, Belgium, Czech Republic, Germany, Hungary, Luxembourg,
Netherlands, Poland, Slovakia, Switzerland
- Scandinavia &
Eastern Europe: Denmark, Estonia, Finland, Latvia, Lithuania,
Norway, Russia, Sweden
- UK &
Ireland
- Latin America:
Brazil, Chile, Colombia, Mexico
- Southern Europe:
Italy, Portugal, Spain & Andorra
Presentation of Q1 2023 revenue (in
English)
Date: Wednesday 10 May 2023 at 5:15pm GMT (6:15pm CET)
Speakers: Xavier Martiré (Chairman of the Management Board) and
Louis Guyot (CFO)
Webcast link: https://edge.media-server.com/mmc/p/5tqjd3ja
Conference call & Q&A session link:
https://register.vevent.com/register/BIbe9786f1397e4f5a98fd8b9d1a5c01e8
An investor presentation will be available at 5:00pm GMT (6:00pm
CET) at this
address:https://fr.elis.com/en/group/investor-relations/regulated-information
Forward looking statements
This document may contain information related to
the Group’s outlook. Such outlook is based on data, assumptions and
estimates that the Group regarded as reasonable at the date of this
press release. Those data and assumptions may change or be adjusted
as a result of uncertainties relating particularly to the economic,
financial, competitive, regulatory or tax environment or as a
result of other factors of which the Group was not aware on the
date of this press release. Moreover, the materialization of
certain risks, especially those described in chapter 4 “Risk
management and internal control” of the Universal Registration
Document for the financial year ended 31 December 2022, which is
available on Elis’s website (www.elis.com), may have an impact on
the Group’s activities, financial position, results or outlook and
therefore lead to a difference between the actual figures and those
given or implied by the outlook presented in this document. Elis
undertakes no obligation to publicly update or revise the Group’s
outlook or any of the abovementioned data, assumptions, or
estimates, except as required by applicable laws and regulations.
Reaching the outlook also implies success of the Group’s strategy.
As a result, the Group makes no representation and gives no
warranty regarding the achievement of any outlook set out
above.
Next information
2023 AGM: Thursday 25 May at 3pm CET - Maison
des Travaux Publics - 3, rue de Berri - 75008 Paris
H1 2023 results: Wednesday 26 July 2023 (after
market)
Contact
Nicolas BuronDirector of Investor Relations,
Financing & TreasuryPhone: +33 1 75 49 98 30 -
nicolas.buron@elis.com
1 Reduction in line with the 1.5°C target for direct (Scope 1)
and indirect (Scope 2) emissions, and the well below 2°C target for
other indirect emissions (Scope 3).
- 20230510 - Elis - Q1 2023 revenue - Press release
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