November 17, 2017 / 10:48 AM / a year ago

UPDATE 1-Caterer Elior warns on profit, shares tumble 14 pct

* EBITDA margin forecast cut to 8.3 pct from 8.7-8.8 pct

* Says target of significant growth in adjusted EPS won’t be met

* Appoints Philippe Guillemot as CEO

* 2020 margin goal at risk -analyst

* Shares down 14 pct (Recasts with shares, analysts, details)

By Michal Aleksandrowicz and Dominique Vidalon

Nov 17 (Reuters) - Elior issued a profit warning on its annual earnings on Friday, sending shares in the French catering company down 14 percent, and named a new chief executive.

Philippe Guillemot, 58, a former Alcatel Lucent COO will also be tasked with setting medium and long-term financial goals, Elior said in a statement, fuelling fears the company’s 2020 targets could be at risk.

Europe’s third-largest catering group cut its forecast for annual adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) margin to 8.3 percent from 8.7-8.8 percent. Elior, which competes with larger rivals Sodexo <EXHO.PA and Compass, also said a target of significant growth in adjusted earnings per share will not be met.

It cited start-up costs for new contracts, the impact of Hurricane Irma in September and a lower-than-expected contribution from a savings plan this year as the main reasons for its worsened outlook.

Elior shares were down almost 14 percent at 21.23 euros at 1041 GMT, setting the stock on track for its worst day in more than eight years.

“While we do not expect any major changes in the group’s current strategy, and that Elior should continue to benefit from a positive organic growth trend, as well as M&A contributions, we believe its 2020 EBITDA margin target could be at risk, and potentially be revised downward once the new CEO has taken office,” Raymond James analysts said.

Elior, however, said it remained confident in its development prospects both for contract catering and its concession catering business.

Elior’s contract arm, which provides catering to businesses, schools and hospitals, accounts for 76 percent of its overall business. It also has a concessions business, which serves airports, railways and motorways.

Kepler Cheuvreux analysts expect Elior’s EBITDA for the year to fall 4 percent short of consensus and its adjusted earnings per share (EPS) to fall 12 percent short. “Details about 2018 guidance will be discussed during FY results on Dec. 6, but we expect pressure on costs to continue despite a better-than-expected top-line trend...We think the 2020 EBITDA margin guidance will have to be revised down (from an initial target of 9-10 percent),” they said.

In July, Elior announced that chairman and CEO Philippe Salle would step down and that the functions of the two roles would be separated.

Last month it named Gilles Cojan as chairman of the board and Pedro Fontana as interim CEO.

Reporting by Michal Aleksandrowicz; editing by Adrian Croft and Jason Neely

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