EUROPE/SOUTH AMERICA
Elis, the leading multi-services group, specialising in the rental and maintenance of flat linen, professional clothing, hygiene and well-being appliances in Europe and Latin America, held an investor day in London on Tuesday 31 January 2018. Elis gave an update on the main acquisitions carried out in the last 13 months – Berendsen in the UK, Indusal in Spain and Lavebras in Brazil – and provided its first estimates for its 2017 full-year profit margins as well as its financial outlook for 2018.
Xavier Martiré, chairman of the management board of Elis, said: “The integration of Indusal in Spain and Lavebras in Brazil – acquisitions that we finalized 13 months and 8 months ago respectively – are both proceeding as planned. We reiterate our 2019 synergy targets of 10 million euros for Indusal and 60 million Brazilian reals for Lavebras, as well as the 30% EBITDA margin target for the two countries by 2019.
“As far as Berendsen is concerned, the integration began in mid-September. A new organization, aiming at increasing the efficiency of the combined Group, was announced in November and was very well received. On the operational side, our first conclusions are generally in line with our expectations and we believe our integration know-how will make this acquisition a success. The company has a strong and very profitable footprint in several markets, including Scandinavia, the Netherlands and Poland. In Germany, the combination of the two networks and our higher market share should contribute to profitability gains. In the UK, some necessary operational, industrial and logistics adjustments are currently underway. We have appointed a solid team in charge of addressing with determination the operational and commercial issues that we had previously identified in order to turn around the flat linen business. At the same time, we will significantly reduce the capex plan announced by Berendsen prior to the transaction. All these measures should lead to profitability improvement in the country as soon as 2018.
“The structural measures that we implemented promptly now allow us to expect cost synergies of at least 80 million euros by 2020, double the amount we announced in June 2017. On top of this, potential revenue synergies will kick in from 2019.
“An important part of the 80 million euros synergies corresponds to overhead savings that have already been - or will soon be - achieved, and we estimate that synergies of 50 million euros will be generated in 2018. With these acquisitions, Elis is better positioned to continue its profitable growth, whilst pursuing its targeted M&A strategy in the countries in which the Group is present.”
The Group announced 2017 revenue of 2,215 million euros, up 46% year-on-year, with organic growth of 2.4%. The 2017 full-year results will be released on March 7. We expect the Group's EBITDA margin to be around 30.0%, with all regions of the former Elis scope showing some margin improvement, which is in line with expectations. The Group's EBIT margin should be around 13.5%. In 2018, taking into account the impact of the above mentioned synergies, the Group expects revenue to be above 3.2 billion euros.
