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Edenred SE

Earnings Release Apr 14, 2016

1268_10-q_2016-04-14_678aab2f-5659-4294-93c3-b36c70e3db40.pdf

Earnings Release

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PRESS RELEASE

April 14, 2016

FIRST-QUARTER 2016 REVENUE

Good like-for-like performance in issue volume (up 7.4%) and revenue (up 5.2%)

  • Solid like-for-like first-quarter growth in line with expectations, with:
  • o Issue volume up 7.4% like-for-like to €4,284 million, reflecting accelerating momentum in Europe (up 6.9%), sustained growth in Latin America (up 7.5%) and dynamic growth in the Rest of the World (up 12.1%).
  • o Total revenue up 5.2% like-for-like to €249 million, notably reflecting a 5.8% rise in operating revenue with issue volume and a 3.1% decline in financial revenue.
  • Significant negative currency effects over the period, mainly coming from Latin America
  • Confirmation for 2016 of annual like-for-like issue volume growth at the lower end of the Group's historical medium-term target range of 8%-14%
First-quarter First-quarter % change
In € millions 2016 2015 Reported Like-for-like1
Issue volume (IV) 4,284 4,553 -5.9% +7.4%
Operating revenue with IV 197 213 -7.7% +5.8%
Operating revenue without IV 36 31 +20.0% +6.6%
Financial revenue 16 19 -17.0% -3.1%
Total revenue 249 263 -5.2% +5.2%

1 At constant scope of consolidation and exchange rates (corresponding to organic growth).

Issue volume up 7.4% like-for-like at €4.3 billion

Issue volume for the first quarter of 2016 was up 7.4% like-for-like at €4,284 million. This performance reflects the acceleration of growth in Europe and sustained growth in Latin America despite a difficult economic environment in Brazil and a high basis of comparison in Mexico in the first quarter of 2015.

Issue volume fell 5.9% on a reported basis. This takes into account the 0.6% negative impact of changes in the scope of consolidation2 and the 12.7% unfavorable currency effect, relating mainly to the depreciation of certain currencies against the euro, particularly the Brazilian real (down 25.1%) and the Mexican peso (down 15.3%).

First-quarter 2016
In € millions Issue volume Like-for-like
growth
Europe 2,219 +6.9%
Latin America 1,872 +7.5%
Rest of the World 193 +12.1%
TOTAL 4,284 +7.4%

Issue volume by region

In Europe, issue volume amounted to €2,219 million for the first quarter, up 6.9% like-for-like.

The positive trend continued in France, where 4.2% like-for-like growth reflected solid gains in the Ticket Restaurant® solution (up 3.6%) on the back of a good sales performance, despite a sluggish economic environment. Edenred is the leader in the shift to digital, with a share of 65% of the digital meal voucher market. Around 30% of Ticket Restaurant® card users relate to new client wins. Incentive & Rewards solutions, especially Ticket Kadéos, also performed well over the period.

As a whole, the rest of Europe posted strong growth of 8.4% like-for-like. Issue volume growth was 4.9% like-for-like in Italy and continued to accelerate in Central Europe (6.8% like-for-like over the period), thanks to a positive commercial performance in a more favorable economic environment. The Ticket Plus Card solution contributed to Germany's strong first-quarter growth, and in the United Kingdom, the Childcare Vouchers business expanded by 4.6% like-for-like. The other countries in the region posted double-digit growth on average for the period.

In Latin America, issue volume for the period was up 7.5% like-for-like at €1,872 million.

2 Including the acquisition of ProwebCE in France, disposals in China and South Korea, and a cut-off effect.

In Brazil, first-quarter issue volume rose 5.3% like-for-like despite a difficult economic environment. Reflecting this market's significant growth potential, Expense Management solutions continued to enjoy strong 19.2% like-for-like growth, driven by new client wins. Issue volume for Employee Benefits solutions resisted and increased by 1.2% like-for-like, despite the rise in the country's unemployment rate.

In Hispanic Latin America, issue volume grew 11.1% like-for-like. The Employee Benefits business posted a 15.2% like-for-like increase, thanks in particular to strong growth in Venezuela, and despite a high basis of comparison in Mexico in the first quarter of 2015. The Expense Management business grew by 5.0% like-for-like due to the high basis of comparison in Mexico in the prior-year period and a non-recurring impact coming from a ramp-up from new clients more progressive than anticipated in this country. However, the level of growth in Mexico3 achieved during the first quarter 2016 is not indicative of the country's expected performance for the full year 2016.

Lastly, issue volume in the Rest of the World was up 12.1% like-for-like in the first quarter, driven mainly by strong growth in Turkey, the region's primary contributor.

First-quarter 2016
In € millions Revenue Like-for-like
growth
Operating revenue with IV 197 +5.8%
Operating revenue without IV 36 +6.6%
Financial revenue 16 -3.1%
Total revenue 249 +5.2%

Total revenue up 5.2% like-for-like at €249 million

Total revenue for the first quarter of 2016 amounted to €249 million, representing a 5.2% like-for-like increase over the prior-year period. Total revenue comprises operating revenue with issue volume (up 5.8% like-for-like), operating revenue without issue volume (up 6.6% like-for-like) and financial revenue (down 3.1% like-for-like).

On a reported basis, the period-on-period change was a decrease of 5.2%, after taking into account a 1.9% positive impact from changes in the scope of consolidation4 , mainly related to the integration of ProwebCE5 , and a 12.3% negative currency effect.

5 The Group increased its stake in ProwebCE from 10% to 62% in the first half of 2015. The French leader in solutions for works councils, ProwebCE offers a comprehensive range of solutions, which includes an e-commerce platform that enables employees to use the funds allocated to them annually by their works council to purchase culture and leisure-related goods and services.

3 Total issue volume growth in Mexico amounted to 2.9% in the first quarter of 2016, versus 25.0% in first-quarter 2015.

4 Including the acquisition of ProwebCE in France, disposals in China and South Korea, and a cut-off effect.

Operating revenue with issue volume up 5.8% like-for-like

Operating revenue with issue volume amounted to €197 million, up 5.8% like-for-like, reflecting balanced growth across the various regions, with an acceleration in Europe and sustained growth in Latin America.

Operating revenue with issue volume by region

First-quarter 2016
In € millions Operating
revenue with IV
Like-for-like
growth
Europe 105 +5.1%
Latin America 83 +6.2%
Rest of the World 9 +7.9%
TOTAL 197 +5.8%

The take-up rate6 in first-quarter 2016 stood at 4.6%, a good performance versus the prior-year period (4.7%).

Financial revenue down 3.1% like-for-like

Financial revenue decreased 3.1% like-for-like to €16 million. The change is the result of a 7.1% like-for-like increase in Latin America, and a 16.3% like-for-like decline in Europe due to lower interest rates.

6 Ratio of operating revenue with issue volume to total issue volume.

Conclusion

In the first quarter of 2016, the Group recorded solid 7.4% like-for-like growth in issue volume, in line with expectations. The increase reflects the acceleration of growth in Europe and a high basis of comparison in Latin America.

Total revenue over the period rose 5.2% like-for-like, in spite of a 3.1% decrease in financial revenue. This performance reflects solid 5.8% growth in operating revenue with issue volume, notably with a good performance of the take-up rate.

The significant negative currency impacts during the quarter were mainly due to the depreciation of the Brazilian real and the Mexican peso.

For full-year 2016, like-for-like issue volume growth is therefore expected to be in line with the Group's historical medium-term target of between 8% and 14% a year, at the lower end of the range.

Quarterly information

Creation of a joint venture with Brazilian group Embratec

Edenred announced in January 2016 the signature of an agreement with Brazilian group Embratec, whereby the two companies will combine their expense management assets in Brazil in a joint venture 65%-owned by Edenred and 35%-owned by Embratec's founding shareholders.

The joint venture will enable Edenred to double the size of its fuel card business in Brazil, giving birth to a major player in this market offering significant potential. With approximately 60 billion liters of fuel consumed in 2014 and a low penetration rate (between 15% and 20%), the Brazilian B2B fuel card sector has scope for considerable growth.

Through the new company, Edenred will occupy a key position in the Brazilian market for fuel and maintenance cards, with market share of approximately 18% (excluding freight). The Group will serve around 27,000 customers, representing one million cards that can be used at 23,500 affiliated service stations, or 58% the country's total. The transaction is subject to approval by the relevant authorities, including the Brazilian competition authority (CADE). It is expected to be completed in the first half of 2016.

Appointment to Edenred's Board of Directors

At its meeting on March 23, 2016, Edenred's Board of Directors appointed Sylvia Coutinho, Country Head of UBS Brazil, as a Director of Edenred.

Sylvia Coutinho's international experience, acquired by spending her entire career in multinational companies, her in-depth understanding of Brazil and her expertise in the banking industry and more particularly in e-banking, will all be significant assets for the Group, which has made the shift to digital a key strategic objective.

The Board of Directors noted that Sylvia Coutinho qualifies as an independent Director according to the AFEP/MEDEF corporate governance code. Shareholders will be asked to ratify this appointment at the next Annual Meeting on May 4, 2016.

UPCOMING EVENTS

May 4, 2016: Annual Shareholders' Meeting

July 22, 2016: First-half 2016 results

October 13, 2016: Third-quarter 2016 revenue

October 19, 2016: Investor Day in London

Edenred, which invented the Ticket Restaurant® meal voucher and is the world leader in prepaid corporate services, designs and manages solutions that improve the efficiency of organizations and purchasing power to individuals. By ensuring that allocated funds are used specifically as intended, these solutions enable companies to more effectively manage their:

  • Employee benefits (Ticket Restaurant® , Ticket Alimentación, Ticket CESU, Childcare Vouchers, etc.)
  • Expense management process (Ticket Car, Ticket Clean Way, Repom, etc.)
  • Incentive and reward programs (Ticket Compliments, Ticket Kadéos, etc.)
  • The Group also supports public institutions in managing their social programs.

Listed on the Euronext Paris stock exchange, Edenred operates in 42 countries, with 6,300 employees, 660,000 companies and public sector clients, 1.4 million affiliated merchants and 41 million beneficiaries. In 2015, total issue volume amounted to €18.3 billion.

Ticket Restaurant® and all other tradenames of Edenred products and services are registered trademarks of Edenred SA.

Follow Edenred on Twitter: www.twitter.com/Edenred

CONTACTS

___

___

Media Relations

Anne-Sophie Sibout +33 (0)1 74 31 86 11 [email protected]

Astrid de Latude +33 (0)1 74 31 87 42 [email protected]

Investor and Shareholder Relations

Louis Igonet +33 (0)1 74 31 87 16 [email protected]

Aurélie Bozza +33 (0)1 74 31 84 16 [email protected]

Appendices

Issue volume

Q1
In € millions 2016 2015
France 767 735
Rest of Europe 1,452 1,346
Latin America 1,872 2,284
Rest of the world 193 188
Total 4,284 4,553
Q1
In % Change
reported
Change L/L
France 4.4% 4.2%
Rest of Europe 7.9% 8.4%
Latin America -18.0% 7.5%
Rest of the world 2.7% 12.1%
Total -5.9% 7.4%

Operating revenue with issue volume

Q1
In € millions 2016 2015
France 32 31
Rest of Europe 73 68
Latin America 83 104
Rest of the world 9 10
Total 197 213
Q1
In % Change
reported
Change L/L
France 1.4% 1.9%
Rest of Europe 6.3% 6.6%
Latin America -20.1% 6.2%
Rest of the world -2.2% 7.9%
Total -7.7% 5.8%

Operating revenue without issue volume

Q1
In € millions 2016 2015
France 13 6
Rest of Europe 10 11
Latin America 5 6
Rest of the world 8 8
Total 36 31
Q1
In % Change
reported
Change L/L
France 129.0% 4.4%
Rest of Europe 0.7% 8.7%
Latin America -23.6% 4.4%
Rest of the world 3.2% 7.5%
Total 20.0% 6.6%

Financial revenue

Q1
In € millions 2016 2015
France 3 4
Rest of Europe 4 4
Latin America 7 10
Rest of the world 2 1
Total 16 19
Q1
In % Change
reported
Change L/L
France -25.1% -25.1%
Rest of Europe -9.8% -9.1%
Latin America -19.4% 7.1%
Rest of the world 2.5% 14.3%
Total -17.0% -3.1%

Total revenue

Q1
In € millions 2016 2015
France 48 41
Rest of Europe 87 83
Latin America 95 120
Rest of the world 19 19
Total 249 263
Q1
In % Change
reported
Change L/L
France 16.7% -0.3%
Rest of Europe 4.7% 6.0%
Latin America -20.3% 6.2%
Rest of the world 0.5% 8.0%
Total -5.2% 5.2%

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