S&P trims Elior

S&P said it lowered its ratings for Elior Group SA and its senior unsecured notes to B from B+.

“S&P Global Ratings expects Elior's operating margins to remain significantly below pre-pandemic levels in 2023. From October 2022 to March 2023, the group saw significant cost inflation as in most of the countries in which it operates. Contract renegotiations in France also proved difficult–the group secured price increases totaling €283 million a year from March 31, 2023, but this will not fully offset the impact of increased costs on its operating margins.

“Nevertheless, the group reported earnings before interest, taxes, and amortization (EBITA) to net revenue of 1.7% in the first half of fiscal 2023, which represents a significant year-on-year improvement,” the agency said in a press release.

Accounting for the acquisition of Derichebourg SA, S&P said it estimates Elior’s pro forma leverage will be about 6.7x in 2023, its funds from operations (FFO) to debt will remain below 10% and that free operating cash flow (FOCF) after lease payments will be negative by €60 million.

The outlook is negative.

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