November 17, 2017 / 7:18 AM / a year ago

Elior issues profit warning citing Irma impact, start-up costs

(Reuters) - France’s Elior (ELIOR.PA) downgraded on Friday its profit guidance for the current fiscal year, citing the impact of Hurricane Irma among the reasons for the change.

FILE PHOTO - The logo of Europe's third-largest catering group Elior is seen on top of the company's headquarters June 1, 2017 in the financial and business district in La Defense at Courbevoie near Paris, France. REUTERS/Charles Platiau

Europe’s third-largest catering group said the impact of the hurricane in September, both on the contract catering and concession catering businesses, was one of the chief factors for the guidance revision.

It said start-up costs for new contracts, notably with the Italian Ministry of Defence and in the education segment in France, and the fact that action and cost-saving plans made less of a contribution than expected, were the other key reasons.

Elior said it expects adjusted EBITDA margin to come in at 8.3 pct, compared with 8.5 pct in 2015/2016, corresponding to a near 6 percent increase in adjusted EBITDA compared with the previous fiscal year.

In July, the group confirmed that its target for 2016/2017 was a 20-30 basis-point increase in adjusted EBITDA margin, compared with 2015/2016.

The company said the target of significant growth in adjusted earnings per share will not be met.

The group also expects its revenue to increase by 8.9 pct, with 3.6 pct organic growth, excluding the effect of voluntary contract exits.

In December 2016, the company expected organic growth of at least 3 percent, excluding the impact of voluntary contract exits.

Elior also said Philippe Guillemot will be appointed as the group’s Chief Executive Officer on Dec. 5.

(This story corrects to read adjusted EBITDA increase not decrease in fourth paragraph)

Reporting by Michal Aleksandrowicz; Editing by Biju Dwarakanath and Adrian Croft

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