+90.0% revenue growth in Q1 2018
Good organic growth momentum
Very satisfying progress made in the integration of Berendsen
Saint-Cloud, May 2, 2018 - Elis, the leading multi-services group in Europe and Latin America, specializing in the rental and maintenance of flat linen, professional clothing, hygiene and well-being appliances, today announces its revenues for the 3 months ended 31 March 2018.
Commenting on the first quarter revenues, Xavier Martiré, CEO of Elis, said:
"With organic revenue growth of +3.1% in Q1, Elis' growth is accelerating compared to Q4 2017.
This performance is driven by outstanding commercial momentum in Latin America where Elis continues to open the rental and maintenance market. Trends were also generally favourable in the Group's other geographies, which bolsters our confidence for the rest of the year.
Our recent acquisitions continue to drive growth, especially Lavebras in Brazil and of course Berendsen in UK, where the integration plan is showing good progress. In the UK, we continued to adjust the operational structure and the first industrial measures we implemented have already generated productivity gains. Moreover, the English market is showing reassuring signs, with satisfying price levels and a healthy competitive landscape. In Scandinavia, we rationalized some central costs and are currently rolling-out Elis' multi-services approach. In Germany, we initiated some logistics enhancements as well as some projects to improve industrial processes in lower-performing plants.
For the full-year 2018, we expect margin to be flat in France, despite the negative impact from CICE and the increase in several taxes on energy. The ongoing integration of Berendsen, along with the momentum we see in Elis' historical scope, lead us to target margin improvement in all other geographies.
We will continue our targeted acquisitions strategy in our existing geographies, like we did in Germany in March with BW Textilservice and with A&M in Belgium in April. These acquisitions have very limited impact on our leverage ratio because of their small size and the low multiples paid by the Group. Our solid cash-generation pattern will contribute to reduce our leverage in 2018."
Q1 2018 revenue
(EUR million) | 2018 | 2017 | Reported growth | Organic growth |
| France | 242.1 | 237.0 | +2.2% | +1.4% |
| Central Europe | 160.8 | 64.3 | +150.3% | -0.3% |
| Scandinavia & Eastern Europe | 121.3 | - | n/a | n/a |
| United Kingdom & Ireland | 110.9 | - | n/a | n/a |
| Latin America | 63.5 | 38.8 | +63.4% | +18.8% |
| Southern Europe | 57.8 | 55.5 | +4.0% | +4.0% |
| Others | 4.7 | 5.0 | -7.3% | -9.7% |
| Total | 760.9 | 400.6 | +90.0% | +3.1% |
"Other" includes Manufacturing Entities and Holdings.
Detail of the countries included in each geography is presented in the "Geographical breakdown" section of this press release.
Percentage change calculations are based on actual figures.
France
Q1 2018 revenue in France was up +2.2% of which +1.4% organic growth. The Hospitality and Trade & Services markets are well-oriented (c. +3.5% organic) with the ramp-up of some new contracts and the decrease in the level of non-renewed contracts. This confirms the commercial dynamism we already noted at the end of 2017. Industry is growing (c. +1.5% organic basis), but Healthcare is down due to the non-renewal of some contracts (c. -3% organic basis).
At this stage, no material impact in connection with the strikes in April has been identified and we expect organic growth between +1.5% and 2% for the full-year 2018.
Central Europe
Q1 2018 revenue for Central Europe is made up of:
Scandinavia & Eastern Europe
Q1 2018 revenue in Scandinavia & Eastern Europe corresponds entirely to the activity of Berendsen. This region corresponds to the historical scope of the Sophus Berendsen group (Sweden and Denmark). Commercial momentum is good and pro forma revenue was up +2.5% on an organic basis compared to Q1 2017.
UK & Ireland
Q1 2018 revenue in UK & Ireland corresponds entirely to the activity of Berendsen. In this region, the Group serves clients in Healthcare (c. 50% of revenue), Hospitality (c. 25%) and Industry (c. 25%). As we expected, the UK (excluding Ireland) was impacted by some controlled client losses in 2017. Q1 2018 pro forma organic revenue growth in the region was c. -2% compared to Q1 2017.
Nevertheless, the English market is solid, with satisfying average price levels and a healthy competitive landscape. At this stage, no decline due to Brexit has been identified. Furthermore, activity is dynamic in Ireland.
From an industrial standpoint, several measures have been implemented to improve productivity and we can already see some improvements in our main industrial KPI's.
Southern Europe
Q1 2018 revenue was up +4.0% in Southern Europe and this growth is entirely organic. This performance is again driven by Portugal and Spain. Commercial momentum remains well-oriented in Spain despite the confirmation of the slight slowdown we observed at the end of 2017, in connection with a more difficult comparable base.
Latin America
Q1 2018 revenue was up +63.4% in Latin America with +18.8% organic growth, a contribution from acquisitions of +61.8% (Lavebras contribution) and a -17.2% impact from foreign exchange. Commercial momentum remains very good in Brazil, although the decrease in inflation should lead to the normalization of price increases.
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.
Geographical breakdown
| Elis | Berendsen | |
| France | yes | |
| Central Europe | yes | yes |
| Germany | yes | yes |
| Netherlands | yes | |
| Switzerland | yes | |
| Poland | yes | |
| Belgium | yes | yes |
| Austria | yes | |
| Czech Republic | yes | yes |
| Hungary | yes | |
| Slovakia | yes | |
| Luxemburg | yes | |
| Scandinavia & Eastern Europe | yes | |
| Sweden | yes | |
| Denmark | yes | |
| Norway | yes | |
| Finland | yes | |
| Estonia | yes | |
| Latvia | yes | |
| Lithuania | yes | |
| Russia | yes | |
| UK & Ireland | yes | |
| UK | yes | |
| Ireland | yes | |
| Southern Europe | yes | |
| Spain & Andorra | yes | |
| Portugal | yes | |
| Italy | yes | |
| Latin America | yes | |
| Brazil | yes | |
| Chile | yes | |
| Colombia | yes |
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 the Prospectus. 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 document. Moreover, the materialization of certain risks described in chapter 2 "Risk factors and insurance policy" of the Registration Document may have an impact on the Group's activities, financial position, results or outlook and therefore threaten this outlook. The attainment of the outlook also assumes that the Group's strategy will be successful. As a result, the Group makes no representation and gives no warranty regarding the attainment of any outlook set out above.
Next information
Half Year results: July 25, 2018 (before market)
Contact
Nicolas Buron, Investor Relations Director - Phone: +33 1 75 49 98 30 - nicolas.buron@elis.com
Audrey Bourgeois, Investor Relations - Phone: +33 1 75 49 96 25 - audrey.bourgeois@elis.com
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