INTERNATIONAL
Third quarter 2020 global revenue figures to 30 September from Elis have just been released showing a marked improvement in all the company’s markets but with revenue down -10.6% on an organic basis and with 2020 objectives for EBITDA margin and free cash-flow raised, according to the report, which noted that although Q3 revenue was down -10.6% this is a notable improvement over the -26.7% recorded in Q2.
In brief, Elis reported:
• Around. 75% of its total business1 returned to virtually normal levels of activity in Q3: c. +3% in Healthcare, -2% in Industry and -2% in Trade & Services
- This improvement was driven by (i) a recovery in activity at our clients, (ii) churn rate improvement, with good quality of service maintained during the crisis and (iii) several contract wins linked to higher demand for workwear and hygiene services
- Hospitality (c. 25% of 2019 total revenue) was down nearly -40% in Q3: during the summer season, domestic tourism only partly offset the sharp decrease in international tourism
- Central Europe and Scandinavia were resilient owing to the weight of Workwear in their mix; France, Southern Europe and the UK & Ireland were impacted by their exposure to Hospitality; Latin America was up due to very good commercial activity in Healthcare
- Prices were stable in all our geographies.
2020 outlook
- The general economic environment remains very uncertain and the new sanitary measures recently implemented in some countries contribute to lower visibility on the Group’s activity in Q4, especially in Hospitality
- Full-year 2020 organic revenue growth should be in line with the 9-month number
- The significant efforts to decrease the cost base that have been implemented and the action plans that have been defined should allow the Group to deliver 2020 EBITDA margin and free cash-flow slightly above 2019 levels
United Kingdom & Ireland
Q3 2020 organic revenue was down -21.6%. After the nearly -50% decrease recorded in April and May, activity has slightly picked up during the summer. Hospitality, which normally represents around one-third of the region’s revenue, was down -55% in Q3. Industry and Trade & Services, which represent another third of total revenue posted a -16% decline, due to our high number of clients in the catering sector, which has been strongly impacted by the heath crisis. Government measures aiming at helping businesses, which were less favourable than in European countries such as France and Spain, did not prevent a high number of layoffs, which has led to a significant decrease in the number of people wearing our workwear at many of our clients. Finally, the Healthcare segment, accounting for the remaining third, was slightly down in Q3.
Kings Laundry, whose closing was announced on 7 July, has been consolidated in our accounts since 1 August.
Hospitality subdued
Commenting on the announcement, Xavier Martiré, CEO of Elis, said: “Q3 revenue was down -10.6% on an organic basis, marking a notable improvement over the -26.7% recorded in Q2. Our activities in Industry, Healthcare and Trade & Services, which represented c. 75% of 2019 total revenue, returned to virtually normal levels of business in Q3. Hospitality remained subdued even if domestic tourism partly offset the near-total interruption of international tourism during the summer season, especially in France.
“From a commercial standpoint, Elis has seized many opportunities arising from increasing demand for workwear and hygiene services. Additionally, our client satisfaction indicators have been improving across the board since the beginning of the crisis, which rewards the steady quality of service provided by Elis in these difficult times.
“As far as our outlook is concerned, the general economic environment remains very uncertain and the new sanitary measures recently implemented in some countries contribute to reduce the visibility on Group’s activity in Q4, especially in Hospitality. As of today, we estimate that the full-year 2020 organic revenue evolution should be in line with the 9-month number.
“The impressive efforts made since H1 in all countries, at plants and head offices, should lead to a slight improvement in EBITDA margin compared to 2019. Finally, the strong emphasis put on cash collection, as well as good control over investments, should allow the Group to slightly improve its free cash-flow generation relative to 2019.
“Although the current situation requires the utmost vigilance, we face the next months with confidence: The Group’s fundamentals are strong, our diversification is a major advantage and our business model will enable Elis to assert its leadership in all the countries in which it is present. The lasting savings made since the beginning of the crisis and the operational reorganization implemented during the summer contribute to further bolster this confidence in the future.”
1 Based on 2019 full-year revenue
