Elis: Q3 2023 revenue
Q3 2023 revenue up +9.0%
+9.5% organic growth, in line with our
full-year growth guidance
All 2023 targets confirmed
Q3 2023 organic revenue growth remains
very solid at +9.5%
- Pricing momentum
remains strong on the back of the adjustments implemented
throughout 2022 and those put in place since January 1, 2023, to
offset cost inflation
- Unfavorable
calendar effect: c. -0.5% on Q3 organic revenue growth
- Commercial momentum
remains well oriented, with many new signings in Q3, especially in
Workwear
- The Group’s pricing
discipline led to a moderate increase in churn
- Mixed picture in
Hospitality in July/August, slight improvement in September
The Group continues its deleveraging:
financial leverage ratio of 2.2x at September 30, 2023, compared to
2.6x at September 30, 2022
- On October 5, 2023,
Moody’s raised Elis’ outlook to “positive” from “stable”,
reflecting the Group’s steady profitability improvement and solid
free cash-flow generation
- Financial leverage
ratio expected at c. 2.1x in 2023 and below 2.0x in 2024
- The deleveraging
trajectory that we anticipate is in line with Investment grade
rating requirements; once obtained, the Group’s financial policy
will aim at maintaining this rating
2023 objectives confirmed
- 2023 full-year
organic revenue growth expected at c. +12%
- 2023 adjusted
EBITDA margin expected up c. +70bps yoy
- 2023 adjusted EBIT
expected above €660m
- 2023 headline net
income expected above €410m
- 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)
- We anticipate
further improvement of our main financial indicators in 2024
(especially EBITDA margin, free cash-flow and financial
leverage)
Elis unveiled its climate roadmap and
related 2030 targets approved by the Science Based Targets
initiative
- Reduce absolute
scope 1 and 2 GHG emissions by 47.5% by 2030 from a 2019 base
year
- Reduce absolute
scope 3 GHG emissions by 28% within the same timeframe
Saint-Cloud, October 26, 2023 –
Elis, the global leader in circular services at work, today
announces its revenue for the 9 months ended 30 September 2023.
These figures are unaudited.
Commenting on the announcement, Xavier
Martiré, Chairman of the Management Board of Elis,
said:
“ In Q3 2023, Elis recorded +9.5% organic
revenue growth, which reflects our capacity to adjust our prices
upwards to offset the inflation of our costs.
Sales momentum remained strong in all our
geographies. Our offers, which address the increasing needs of our
clients for hygiene, traceability and for a more secure supply
chain, continue to be a resounding success, and we achieved a high
level of new contract signings in Workwear in the quarter.
In Hospitality, the comparable base was
difficult and activity, as expected, showed a mixed picture in July
and August but more dynamism in September.
Our strong pricing discipline led us to be more
selective and sometimes led to the non-renewal of an existing
contract, or to a missed opportunity while tendering for a new
contract. This, coupled with further logistics and industrial
processes optimization in our all geographies, will contribute to
2023 EBITDA margin improvement, and will lead to further margin
developments in 2024.
We confirm all 2023 objectives. The deleveraging
of the Group continues, and we expect the financial leverage ratio
to be at c. 2.1x at December 31, 2023, which should quickly make
the Group eligible for investment grade rating consideration. In
this context, I welcome Moody’s decision to raise its outlook to
“positive” from “stable” at the beginning of October.
Finally, at the beginning of September, Elis
unveiled its climate roadmap and related 2030 targets approved by
the Science Based Targets initiative. This underscores Group’s
commitment to support its clients in the reduction of their GHG
emissions; it will be a factor of attractiveness and pride for all
our highly committed employees.
The great resilience that Elis has demonstrated
through the various recent crises, its operational know-how, its
strengthened organic growth profile and its model based on the
principles of the circular economy are major assets that will
enable the Group to continue to assert its leadership in all the
countries in which it operates.”
I. Q3 2023 revenue
Reported revenue
In millions of
euros |
H1 |
2023Q3 |
9M |
H1 |
2022Q3 |
9M |
H1 |
Var.Q3 |
9M |
France |
640.3 |
347.2 |
987.5 |
564.0 |
319.1 |
883.1 |
+13.5% |
+8.8% |
+11.8% |
Central Europe |
497.3 |
257.3 |
754.6 |
410.7 |
227.9 |
638.6 |
+21.1% |
+12.9% |
+18.2% |
Scandinavia &
East. Eur. |
300.1 |
143.8 |
444.0 |
280.2 |
147.1 |
427.4 |
+7.1% |
-2.2% |
+3.9% |
UK &
Ireland |
257.3 |
143.4 |
400.7 |
224.2 |
129.0 |
353.2 |
+14.8% |
+11.1% |
+13.4% |
Latin America |
213.7 |
117.0 |
330.7 |
141.0 |
102.7 |
243.6 |
+51.6% |
+14.0% |
+35.7% |
Southern
Europe |
179.9 |
108.1 |
288.0 |
150.3 |
96.8 |
247.1 |
+19.8% |
+11.7% |
+16.6% |
Others |
12.6 |
6.6 |
19.1 |
13.5 |
8.2 |
21.7 |
-6.9% |
-20.4% |
-12.0% |
Total |
2,101.3 |
1,123.3 |
3,224.7 |
1,783.8 |
1,031.0 |
2,814.8 |
+17.8% |
+9.0% |
+14.6% |
« Others » includes Manufacturing
Entities and Holdings.Percentage change calculations are based on
actual figures.
Q3 2023 reported growth breakdown
In millions of
euros |
Q3 2023 |
Q3 2022 |
Organic growth |
External growth |
FX |
Reported growth |
France |
347.2 |
319.1 |
+8.8% |
- |
- |
+8.8% |
Central Europe |
257.3 |
227.9 |
+12.3% |
- |
+0.6% |
+12.9% |
Scandinavia &
East. Eur. |
143.8 |
147.1 |
+5.0% |
- |
-7.3% |
-2.2% |
UK &
Ireland |
143.4 |
129.0 |
+11.6% |
- |
-0.5% |
+11.1% |
Latin America |
117.0 |
102.7 |
+10.9% |
- |
+3.1% |
+14.0% |
Southern
Europe |
108.1 |
96.8 |
+10.3% |
+1.4% |
- |
+11.7% |
Others |
6.6 |
8.2 |
-20.3% |
- |
-0.1% |
-20.4% |
Total |
1,123.3 |
1,031.0 |
+9.5% |
+0.1% |
-0.7% |
+9.0% |
« Others » includes Manufacturing
Entities and Holdings.Percentage change calculations are based on
actual figures.
9-month 2023 organic revenue growth
|
Q1 2023 |
Q2 2023 |
Q3 2023 |
9-month 2023 |
France |
+15.8% |
+11.6% |
+8.8% |
+11.8% |
Central Europe |
+21.4% |
+16.7% |
+12.3% |
+16.6% |
Scandinavia &
East. Eur. |
+15.8% |
+7.4% |
+5.0% |
+9.2% |
UK &
Ireland |
+23.9% |
+13.9% |
+11.6% |
+16.0% |
Latin America |
+12.6% |
+9.5% |
+10.9% |
+10.9% |
Southern
Europe |
+24.7% |
+15.4% |
+10.3% |
+15.8% |
Others |
-15.4% |
+6.6% |
-20.3% |
-10.4% |
Total |
+18.3% |
+12.5% |
+9.5% |
+13.1% |
« Others » includes Manufacturing
Entities and Holdings.Percentage change calculations are based on
actual figures.
France
Q3 revenue was up +8.8% (entirely organic).
Pricing dynamic was good, driven by the adjustments implemented
since 2022 to offset the inflation of our costs. We continue to
record many contract wins in Workwear and Pest Control but we also
saw a slight slowdown in activity with our small clients, notably
for non-essential services. In Hospitality, the comparable base was
difficult and summer activity was slightly below 2022. However,
September was slightly up yoy and our clients remain optimistic for
the future.
Central Europe
Q3 revenue was up +12.9% in the region (+12.3%
on an organic basis). Sales momentum remains satisfactory, in
particular in Germany and in the Netherlands, where further
outsourcing led to new contract signings in Workwear. In Germany,
most of our pricing adjustments negotiated in 2022 to offset strong
inflation (especially wages) were implemented in at the beginning
of 2023, especially for our Healthcare clients; organic growth was
at +15% in Q3. Nevertheless, the Group’s pricing discipline led to
some contract losses in some countries, notably Germany
(Healthcare).
Scandinavia & Eastern Europe
Q3 revenue was down -2.2% in the region, with a
FX impact of -7.3% as a result of the evolution of the Swedish
krona and the Norwegian krone. Q3 organic growth was up +5.0%,
driven by pricing adjustments and strong commercial dynamism in
Workwear (including Cleanroom). Furthermore, activity in
Hospitality remained good during the summer. However, we noted some
slowdown in activity with our small clients, notably in Sweden and
Denmark.
UK & Ireland
Q3 revenue was up +11.1% in the region (+11.6%
on an organic basis). Pricing momentum remains very good in the
region. We also signed new contracts in Industry and Trade &
Services thanks to continuous commercial efforts. However, client
activity remains impacted by the sluggish macro environment in the
UK. Finally, our pricing discipline led to some volume losses in
Hospitality.
Latin America
Q3 revenue was up +14.0% in the region (+10.9%
on an organic basis) with a positive FX impact of +3.1%. The
outsourcing trend continues and we recorded new contracts signings
in Healthcare. Furthermore, contract losses remain very limited
despite a pricing effect that is now above inflation level.
Finally, out Mexican operations, consolidated since July 1, 2022,
contributed to boost the region’s topline momentum.
Southern Europe
Q3 revenue was up +11.7% in the region (+10.3%
on an organic basis), with good pricing momentum. In Workwear, the
outsourcing trend continued, and we recorded new contract signings
in the quarter. Hospitality activity was satisfactory, especially
in September. Finally, the acquisition of Gruppo Indaco in Italy (a
c. 5m€ annual revenue Pest Control company), consolidated since
June 1, 2023, contributed +1.4% to the growth of the region in
Q3.
II. CSR developments
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 mutualizing 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)
- 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 at 14.8 (“low risk”). 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
assessment places the Group in the “Leadership” category and
underlines its commitment and action in the area of climate
change.
Furthermore, the Group was also rated A by the
CDP Supplier Engagement Leaderboard which places Elis in the top 8%
of companies assessed for their climate-friendly actions across the
value chain.
Elis repeated its excellent performance in the
EcoVadis questionnaire, maintaining its score of 75/100 in an
increasingly demanding CSR context. Elis obtained a Gold medal,
placing it within the top 5% of the c. 100,000 companies assessed
by EcoVadis.
Finally, Elis improved its score with rating
agency Gaïa (75 vs 73 previously), maintaining its “Gold”
level.
Our climate commitment: ambitious 2030 climate
targets
On September 4, Elis unveiled its climate
roadmap and related 2030 targets, underscoring its commitment to
contributing to a low-carbon society.
Elis’ ambition is to achieve the following
targets by 2030:
- Reduce absolute
scope 1 and 2 GHG emissions by 47.5% by 2030 from a 2019 base
year1;
- Reduce absolute
scope 3 GHG emissions from purchased goods and services, fuel and
energy related activities, upstream transportation and
distribution, employee commuting, and end-of-life treatment of sold
products by 28% within the same timeframe.
These targets have been approved by the Science
Based Targets initiative (SBTi), an international reference and a
partnership between the United Nations Global Compact, the World
Resources Institute (WRI), the Carbon Disclosure Project (CDP) and
the World Wildlife Fund for Nature (WWF). They are fully in line
with the objectives of the 2015 Paris Climate Agreements to
contribute to restrict global warming to less than 1.5°C compared
to pre-industrial levels on Scope 1 and 2, and well below 2°C on
Scope 3.
These climate targets mark a new step in Elis’
sustainability strategy and climate actions. The Group has worked
for many years to reduce its energy consumption and CO2eq
emissions. In 2022, Elis reduced the intensity of its thermal
energy consumption by 26% vs. 2010 in its European laundries and
achieved and exceeded its goal of reducing CO2eq emissions (Scopes
1 and 2) per kilogram of linen delivered with a 25% reduction since
2010. The Group also reduced its CO2eq emissions in absolute terms
by 17.5% between 2019 and 2022 (Scopes 1 and 2).
III. Other information
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.
- 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 Q3 2023 revenue (in
English)
Date: October 26, 2023 at 5:00pm GMT (6:00pm CET)
Speakers: Xavier Martiré (Chairman of the Management Board) and
Louis Guyot (CFO)
Webcast link: https://edge.media-server.com/mmc/p/vb4oquyu
Conference call & Q&A session link:
https://register.vevent.com/register/BI18fe83fb28464c94857e64d63bdf3f83
An investor presentation will be available at 4:50pm GMT (5:50pm
CET) at this
address:https://fr.elis.com/en/group/investor-relations/regulated-information
Disclaimer
This press release may include data information
and statements relating to future events, trends, plans,
expectations, objectives, outlook and other forward-looking
statements relating to the Group’s future business, financial
condition, results of operations, performance and strategy as they
relate to climate objectives, financial targets and other goals set
forth therein. Forward-looking statements are not statements of
historical fact and may contain the terms “may”, “will”, “should”,
“continue”, “aims”, “estimates”, “projects”, “believes”, “intends”,
“expects”, “plans”, “seeks” or “anticipates” or words of similar
meaning. In addition, the term “ambition” expresses an outcome
desired by the Group, it being specified that the means to be
deployed do not depend solely on the Group. Such information and
statements are based on data, assumptions and estimates that the
Group considers as reasonable as of the date of this press release
and, by nature, involve known and unknown risks and uncertainties.
These data, assumptions and estimates may change or be adjusted as
a result of uncertainties, many of which are outside the control of
the Group, relating particularly to the economic, financial,
competitive, regulatory or tax environment or as a result of other
factors of which the Group is not aware on the date of this press
release. In addition, 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 December 31, 2022, which is available on
Elis’s website (www.elis.com), may have an impact on the Group’s
business, financial condition, results of operations, performance,
and strategy, notably with respect to these climate-related
objectives. Therefore, the actual achievement of climate-related
objectives, financial targets and other goals set forth in this
press release may prove to be inaccurate in the future, or may
differ materially from those expressed or implied in such
forward-looking statements. The Group makes no representation and
gives no warranty regarding the achievement of any climate
objectives, targets and other goals set forth in this press
release. Therefore, undue reliance should not be placed on such
information and statements.
This press release and the information included
therein were prepared on the basis of data made available to the
Group as of the date of this press release. Unless stated otherwise
in this press release, this press release and the information
included therein are accurate only as of such date. The Group
assumes no obligation to update or revise any of these
forward-looking statements, whether to reflect new information,
future events or circumstances or otherwise, except as required by
applicable laws and regulations.
This press release includes certain
non-financial metrics, as well as other non-financial data, all of
which are subject to measurement uncertainties resulting from
limitations inherent in the nature and the methods used to
determine them. These data generally have no standardized meaning
and may not be comparable to similarly labelled measures used by
other companies. The Group reserves the right to amend, adjust
and/or restate the data included in this press release, from time
to time, without notice and without explanation. The data included
in this press release may be further updated, amended, revised or
discontinued in subsequent publications, presentations and/or press
releases of Elis, depending on, among other things, the
availability, fairness, adequacy, accuracy, reasonableness or
completeness of the information, or changes in applicable
circumstances, including changes in applicable laws and
regulations.
This press release may include or refer to
information obtained from, or established on the basis of, various
third-party sources. Such information may not have been reviewed,
and/or independently verified, by the Group and the Group does not
approve or endorse such information by including them or referring
to them. Accordingly, the Group does not guarantee the fairness,
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information, and no representation, warranty or undertaking,
express or implied, is made or responsibility or liability is
accepted by the Group as to the fairness, adequacy, accuracy,
reasonableness or completeness of such information, and the Group
shall not be obliged to update or revise such information.
The climate-related data and the climate-related
objectives included in this press release were neither audited nor
subject to a limited review by the statutory auditors of the
Group.
Next information
- 2023 annual
revenue: January 30, 2024 (after market)
- Full-year 2023
results: March 7, 2024 (before market)
IV. Contact
Nicolas BuronDirector of Investor Relations,
Financing & TreasuryPhone: +33 1 75 49 98 30 -
nicolas.buron@elis.com
1 The target boundary includes land-related emissions and
removals from bioenergy. Scope 2 emissions targets are
market-based.Scope 1 (direct emissions) is mainly associated with
consumption of gas, fuel, etc. Scope 2 (indirect emissions) is
associated with consumption of electrical energy or steam; Scope 3
(other indirect emissions) is associated with emission from other
areas: purchases, upstream transport, employee travel, etc.
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