(Reuters) – Elior announced on Wednesday that it was profitable again after suffering the full brunt of the COVID-19 pandemic, causing its stock to climb on the stock market, despite forecasts below expectations for the 2023-2024 financial year.

The adjusted EBITA of the collective catering group stood at 59 million euros for the 2022-2023 financial year ended at the end of September, after a loss of 48 million the previous year.

This is higher than the estimates of analysts who were counting on 50 million euros.

“Despite unprecedented inflationary pressures, the 2022-23 financial year marks the return to operational profitability, the beginnings of a more marked recovery,” said CEO Daniel Derichebourg in a press release.

On the Paris Stock Exchange, Elior shares rose 9.63% to 2.34 euros at 9:58 a.m. while the SBF 120 gained 0.5% at the same time.

Analysts also highlight the increase in the cost synergies objective, which goes from 30 million to 56 million euros by 2026.

For 2023-2024, Elior expects organic revenue growth of between 4% and 5% and an adjusted EBITA margin of around 2.5%.

Analysts surveyed by the company expected organic revenue growth of 5.9% and a margin of 2.6% for 2024.

“The positive performance of the share should be explained mainly by the profile and the less worrying forecasts on the net debt and by the revised upward objective of cost synergies, while the reduction of the objectives was eagerly awaited by the market,” observes Yi Zhong, analyst at Alphavalue.

Elior has set a priority for the current financial year on debt reduction with a net debt to Ebitda ratio of around 4 at the end of September 2024, compared to 5.4 at the end of the 2022-2023 financial year. This ratio is expected to be 3 at the end of September 2026.

(Reporting Federica Mileo in Gdansk; Lina Golovnya and Blandine Hénault)

Copyright © 2023 Thomson Reuters