Economia
Elis: H1 2024 results
Very solid H1 2024 results
Further improvement in industrial and commercial performance
Upwards revision of full-year 2024 organic growth and EBITDA margin targets
Solid financial performance: strong revenue growth and improvement in profitability
Revenue up +6.9% in H1 2024, of which +5.5% on an organic basis: numerous commercial successes, improvement of customer retention rate and good pricing dynamic
EBITDA margin up de +120bps, reflecting the Group's industrial excellence
Further development in M&A strategy with the acquisitions of Moderna and Wonway
Elis continues its progress in terms of CSR commitment
Update of full-year 2024 profitability objectives
Saint-Cloud, 24 July 2024 – Elis, the global leader in circular services at work, today announces its half-year 2024 financial results. The accounts have been approved by the Management Board and examined by the Supervisory Board today. They have been subject to a limit review by the Company's auditors.
Commenting on the announcement, Xavier Martiré, CEO of Elis , said:
« Our H1 2024 results are very satisfactory. Elis recorded revenue growth of +6.9% at 2,247 million euros, with organic growth of +5.5%, combined with significant improvement in EBITDA margin and free cash-flow.
In H1, the commercial dynamic remained strong. 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; we recorded many new contract wins in all our markets, notably in workwear. In addition, revenue continues to benefit from pricing adjustments implemented to offset cost base inflation; in this context, we note with satisfaction the return to normal of the customer retention rate, which demonstrates improvements in the Group's quality of service and the good commercial relationships it enjoys with its clients.
In Hospitality, activity was disappointing in Q2: poor weather conditions and the general elections in France and in the UK seem to have limited travel and tourism. In addition, the Parisian hospitality market was penalized by the preparation of the Olympics, with many business events postponed to Q3.
EBITDA margin in the first half was strongly up by +120bps at 34.5%, reflecting new productivity gains, and better purchasing conditions for energy. This is particularly the case in Germany, where the implementation of various operational measures is bearing fruit.
In the first half of 2024, M&A activity has picked up after a subdued year in 2023. At end-February, we closed the acquisition of Moderna in the Netherlands, which enables the Group to strengthen its offer in workwear and to address the still very fragmented Dutch flat linen market. On July 1, 2024, Elis also announced the acquisition of Wonway in Malaysia, to serve our clients in the fast-growing cleanroom market.
These good first-half results enable us to revise upwards our full-year 2024 organic growth and EBITDA margin objectives and we confidently confirm all the other objectives communicated last March.
The great resilience that Elis demonstrated through the various recent crises, its operational know-how, its strengthened organic growth 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. 2024 half-year results
H1 2024 revenue
« Others » includes Manufacturing Entities and Holdings.
Percentage change calculations are based on actual figures.
H1 2024 revenue breakdown
« Others » includes Manufacturing Entities and Holdings.
Percentage change calculations are based on actual figures.
H1 2024 organic revenue growth
« Others » includes Manufacturing Entities and Holdings.
Percentage change calculations are based on actual figures.
Q2 2024 revenue
« Others » includes Manufacturing Entities and Holdings.
Percentage change calculations are based on actual figures.
H1 2024 adjusted EBITDA
: Please refer to the « Restated income statement for prior financial years » section of this release.
Margin rates and percentage change calculations are based on actual figures.
« Others » includes Manufacturing Entities and Holdings.
France
H1 2024 revenue was up +3.6% (entirely organic), driven by commercial momentum in workwear (Industry, Trade & services). Pricing dynamic was good and enabled us to offset cost inflation. In Hospitality, poor weather conditions in May and June, combined with the disturbances linked to the Olympics preparations and the general elections, penalized Q2 activity. However, our clients remain confident: September and October should benefit from the postponement of business events initially scheduled before summer.
Productivity gains in our plants, combined with improved purchasing conditions for energy, led to an adjusted EBITDA margin improvement of +190bps in the first half of 2024, to 40.9%.
Central Europe
The region's revenue was up +12.0% in H1 2024 (+7.7% on an organic basis). The acquisition of Moderna in the Netherlands, consolidated since 1 March 2024, contributed c. +3.6% to region's growth in the half-year. Germany delivered organic growth above +8%, driven by good commercial momentum in workwear and a good pricing dynamic. Poland and the Netherlands are well-oriented as well.
H1 2024 adjusted EBITDA margin was up +180bps compared to H1 last year, at 31.3%, driven by better purchasing conditions for energy and significant productivity gains, notably in Germany where the measures implemented, including a management reorganization, are bearing fruit.
Scandinavia & Eastern Europe
The region's revenue was up +3.1% in H1 2024 (+4.2% on an organic basis), with a negative FX impact of
-1.1%. Organic growth was driven by the performance of the Baltics, Sweden and Norway, where the outsourcing trend remains strong. In Denmark, the Group's strict pricing discipline led to limited volume losses.
H1 2024 adjusted EBITDA margin was down -50bps, at 34.9% compared to H1 2023. Despite a strong position on these markets, pricing negotiations are sometimes tough, notably with public sector clients.
UK & Ireland
The region's revenue was up +7.2% in H1 2024 (+5.1% on an organic basis), with a positive FX impact of +2.1%. The UK continued its growth in all markets, notably in Healthcare and workwear (standard and cleanroom). We also recorded an improvement in the majority of our client satisfaction KPIs and quality of service. In Hospitality, poor weather conditions and the general elections penalized Q2 activity.
H1 2024 adjusted EBITDA margin was up +130bps compared to H1 2023, at 31.1%, driven by further improvements in our industrial processes and logistics and by better purchasing conditions for energy.
Latin America
The region's revenue was up +8.7% in H1 2024 (+7.5% on an organic basis), with a positive FX impact of +1.2%. Inflation is below +5%; our pricing adjustments in the region are thus comparable to those implemented in Europe. Commercial momentum was good, notably in Healthcare. Mexico and Colombia both recorded organic growth of c. +10%.
H1 2024 adjusted EBITDA margin was up +20bps compared to H1 2023, at 34.7%, driven by productivity gains.
Southern Europe
The region's revenue was up +8.7% in H1 2024 (+6.6% on an organic basis), driven by dynamism in Hospitality. In Industry, Trade & Services, further outsourcing continued, and we recorded many new contract signings. All the countries in the region were well-oriented, notably Portugal where organic growth was close to +9%. Finally, the 2023 acquisitions in Italy and Spain in the Pest Control market contributed for +2.1% to half-year growth.
In H1 2024, better purchasing conditions for energy combined with further productivity gains led to an improvement of +250bps in adjusted EBITDA margin, to 31.9%.
Adjusted EBITDA to net income
: Please refer to the « Restated income statement for prior financial years » section of this release.
Margin rates and percentage change calculations are based on actual figures
Adjusted EBIT
H1 2024 adjusted EBIT was up +20bps as a percentage of revenue. Depreciations were back to a normative level at 19.2% vs. 18.2% in H1 2023 (amortization in 2023 was below normative level due to the lower linen investments during the pandemic).
Operating income
The main items between adjusted EBIT and Operating income are as follows:
Net financial result
Net financial expense was €66.5m in H1 2024. It is c. €9.6m higher compared to H1 2023, mainly due to the increase of interest charges of recent refinancings.
Income tax
In H1 2024, income tax was at €62.0m, up €15.4m compared to H1 2023. Indeed, the 2023 basis was reduced due to the use of tax loss carryforwards in Spain and in the UK.
Net income
Net income was down -14.1%, at €119.1m in H1 2024 compared to €138.6m in H1 2023. The strong increase in EBITDA (+€76m) was offset by the normalization of amortization (-€49m), the increase of financial expenses (-€10m), earn-out payments (-€19m) and tax base effect (-€16m). These effects should be erased over the year; we anticipate a strong increase in net income in 2024.
Net income to headline net income
: Please refer to the “Restated income statement for prior financial years” section of this release.
Headline net income was €208.7m in H1 2024, up +0.9% compared to H1 2023. Headline net income per share was up +1.6% at €0.83 (on a fully-diluted basis).
Cash flow statement
: A reconciliation is provided in the “Restated income statement for prior financial years” section of this release.
Net capex
In H1 2024, the Group's net capex was up c. +€16m compared to H1 2023. As a percentage of revenue, this ratio stood at 19.2% (vs. 19.7% as of 30 June 2023), in line with the expected ratio for the full-year.
Change in working capital requirements
In H1 2024, calendar effect (Saturday 29 June, Sunday 30 June) had a strong negative impact on the change in WCR, at c. -€77m. The Group's average payment time remained very good, even if it slightly deteriorated at 30 June 2024, at 55 days vs. 54 days at 30 June 2023.
Free cash-flow
In H1 2024, the Group delivered free cash flow (after lease payments) of €55.5m, up +€38.6m compared to H1 2023. This amount is in line with the full-year objectives, as the 2 half historically represents nearly all yearly free cash flow.
Net financial debt and financing
The Group's net financial debt at June 30, 2024 stood at €3,231.9m compared to €3,025.4m at December 31, 2023 and €3,275.4m at June 30, 2023. The financial leverage ratio was 2.06x at June 30, 2024 compared to 2.04x at December 31, 2023 and 2.36x at June 30, 2023.
On March 14, 2024, Elis issued a €400m aggregate principal amount of senior unsecured notes under its EMTN (Euro Medium Term Notes) Program. The maturity of the notes is 6 years and the notes carry a fixed annual coupon of 3.75%.
Payout for the 2023 financial year
The General Shareholders Meeting held on May 23, 2024 approved the distribution of a dividend of €0.43 per share in cash for the financial year 2023. The amount was paid on May 29, 2024 for a total amount of €101m.
II. Upwards revision of full-year 2024 organic growth and EBITDA margin targets
III. CSR
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 represent a sustainable alternative to the simple purchase or use of products or to single-use disposable, products.
Moreover, these alternatives to a linear approach to consumption allow our clients to avoid CO2 emissions and thus contribute to the reduction of their own emissions.
The Ellen MacArthur Foundation states that the circular economy can significantly contribute to reaching Net Zero and that nearly 9 billion tons of CO2eq (i.e. 20% of world emissions) could be reduced thanks to the transition of just some key industries from the current model towards a circular economy.
Non-financial rating
The Group's CSR performance has been recognized by non-financial rating agencies:
Our climate commitment: ambitious 2030 climate targets
On September 4, 2023, 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:
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 scopes 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 December 2023, these 2030 targets have been integrated to the calculation of the margin of the Group's 900-million-euro Sustainability-Linked Revolving Credit Facility.
Our CSR performance
In H1 2024, the Group recorded a noticeable improvement in its performance in terms of health and safety at work, with a c. -14% decrease of the accident frequency rate (in May 2024 yoy). This reduction results from heightened actions plans implemented by the Group and from the strengthening of the health and safety culture overall in its operations.
The deployment of the climate plan continues. The new collections of more-sustainable products (workwear or hygiene and well-being solutions) are being rolled out in all geographies of the Group. Many actions were also launched in countries to contribute to the reuse of linen or to the reduction of single-use plastics.
Close to 75 electric heavy trucks and close to 45 exclusive biofuel vehicles will be delivered in France before year-end. The energy performance of European laundries continues its improvement with an improvement of close to +1.5% to date compared to the same period in 2023.
IV. Other information
Restated income statement for prior financial years
The table below presents the adjustments made retrospectively linked to business combination (IFRS 3) on the previously-published income statement as of June 30, 2023.
Financial definitions
Consolidated financial statements
Condensed interim consolidated financial statements for H1 2024 will be available at this address: https://fr.elis.com/en/group/investor-relations/regulated-information
Geographical breakdown
Presentation of Elis' 2024 half-year results (in English)
Date: 24 July 2024 at 5:00pm GMT (6:00pm CET)
Speakers: Xavier Martiré, CEO and Louis Guyot, CFO
Webcast link:
https://edge.media-server.com/mmc/p/ibx7bux4
Conference call & Q&A session link:
https://register.vevent.com/register/BI8c54a52a81b441aaa6a4006a1b3ded12
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 estimates, 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 forward-looking information and statements have not been audited by the statutory auditors. They 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, 2023, 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, financial objectives or other objectives included in this press release. 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, adequacy, accuracy, reasonableness or completeness of such 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
Q3 2024 revenue: 30 October 2024 (after market)
V. Contacts
Nicolas Buron
Director of Investor Relations, Financing and Treasury
Phone: + 33 (0)1 75 49 98 30 -
nicolas.buron@elis.com
Charline Lefaucheux
Investor Relations
Phone: + 33 (0)1 75 49 98 15 –
charline.lefaucheux@elis.com
Excerpt from condensed consolidated financial statements
Consolidated income statement
Consolidated statement of financial position
Assets
*: A reconciliation is provided in the “Restated income statement for prior financial years” section of this release.
Equity and liabilities
*: A reconciliation is provided in the “Restated income statement for prior financial years” section of this release.
Consolidated statement of cash flows
Attachment
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