Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue grew by 19%, with reported EBITDA increasing by almost 24% compared to H1 2023.
- Strong business momentum in core meal and food solutions, as well as energy cards.
- Successful acquisitions, such as IP in Italy and Spirit, bolstering market positions and expanding offerings.
- Double-digit growth in benefits and engagement, as well as mobility segments.
- Improved EBITDA margin, moving from 41% to 42.8%, with a like-for-like growth of 26.2%.
Negative Points
- Higher net financial expenses, moving from EUR58 million to EUR98 million, impacting net profit.
- Significant working capital outflow, with a decrease of EUR361 million compared to EUR120 million in the previous year.
- Ongoing regulatory discussions in key markets like France and Brazil, creating uncertainty.
- Complementary Solutions segment showing subdued organic growth.
- Potential headwinds from decreasing interest rates affecting other revenue projections for H2 2024 and 2025.
Q & A Highlights
Q: Can you provide an update on the regulation situation in France and the ongoing investigation?
A: The French government reached a consensus to promote more Ticket Restaurant usage, aiming for full digitalization to reduce costs. The current system is favorable for Edenred, and the reform, if implemented, would be beneficial. However, political uncertainties have delayed the announcement. (Bertrand Dumazy, CEO)
Q: What is the trajectory for European EBITDA margin improvement?
A: The European EBITDA margin improved by 60 basis points in H1 2024. We expect this trend to continue, driven by solid top-line growth and effective cost management. For 2025, we anticipate further margin improvements despite potential declines in other revenue. (Julien Tanguy, CFO)
Q: Can you elaborate on the impact of face value increases on like-for-like growth?
A: Face value increases continue to contribute to growth, although at a lower rate than in previous years due to reduced inflation. We still see opportunities to push face value increases in many countries, including France, where the average usage is below the legal maximum. (Julien Tanguy, CFO)
Q: Would you consider disposing of the Complementary Solutions business to benefit from higher valuations?
A: We actively manage our portfolio and have stopped certain programs that do not meet our growth and margin criteria. While we continuously review our portfolio, we are not planning to fully dispose of Complementary Solutions but will manage it strategically. (Bertrand Dumazy, CEO)
Q: What are the expectations for the use of compensation practices in Brazil?
A: We expect regulatory clarification on the use of non-cash incentives, which are currently allowed. The ban on cash discounts is likely to remain, which is positive for the industry. (Bertrand Dumazy, CEO)
Q: Can you explain the significant outflow in working capital in H1 2024?
A: The outflow is primarily due to the seasonality of our business and the impact of digital bank clients moving funds off our platform. This movement is offset by changes in restricted cash, resulting in no impact on free cash flow. (Julien Tanguy, CFO)
Q: How do you plan to achieve the 12% EBITDA like-for-like growth target?
A: Growth will come from scaling our core business, expanding our client base, and increasing the range of solutions offered. We also expect contributions from recent acquisitions and ongoing innovation in benefits and engagement, as well as mobility solutions. (Bertrand Dumazy, CEO)
Q: Can you discuss the revenue model for EV charging solutions?
A: Our EV charging solutions include installation, management of the charging point operating system, and consolidation of charging activities. The business model is a mix of fixed and variable fees, depending on the services chosen by clients. (Bertrand Dumazy, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
