Edenred: Q3 2010 Revenue

Oct 19, 2010, 14:48 ET from Edenred

    PARIS, October 19, 2010 /PRNewswire-FirstCall/ --
    - Faster Growth in Issue Volume, Up 13.7% in the Third Quarter
    - Operating Revenue Up 9.5% in the Third Quarter
    - Full-Year EBIT Target Raised to EUR310/330 Million

    - Faster growth in the third quarter

       - Issue volume up 13.7% like-for-like vs. 7.8% in the first half

       - Operating revenue up 9.5% like-for-like vs. 4.2% in the first half

    - A business environment made of:

       - A strong momentum in Latin America

       - First signs of jobless rates stabilizing in Western Europe, but a
         persistently challenging environment in Eastern Europe

    - Full-year EBIT target raised from EUR300/330 million to EUR310/330
      million

       - Despite the expected negative currency effect from translation of
         South American currencies


    (in EUR             2009       2010     % change     % change
    millions)
                     (9 months) (9 months) (reported) (like-for-like)
    Issue volume       9,119      9,843      +7.9%         +9.7%
    Operating            582        629      +8.1%         +5.9%
    revenue
    Financial             74         58     -22.3%        -21.1%
    revenue
    Total revenue        656        687      +4.6%         +2.8%

ISSUE VOLUME FOR THE FIRST NINE MONTHS UP 9.7% LIKE-FOR-LIKE

Issue volume for the first nine months of 2010 amounted to EUR9,843 million, up 9.7% like-for-like. The reported increase was 7.9%, reflecting a 2.4% negative currency effect for the period.

The pace of growth accelerated in the third quarter to 13.7% like-for-like, translating robust economic environment in Latin America as well as business performance, benefiting also from a low basis of comparison. During that period, there were signs of unemployment rates stabilizing in Western Europe.

    Growth in issue volume by region was as follows:

     Like-for-like           Q1 2010  Q2 2010 Q3 2010  First 9 months
     growth in issue volume

     France                   +4.7%    -7.9%   +3.2%       -0.4%
     Rest of Europe           +4.9%    +5.6%   +6.1%       +5.5%
     Latin America           +10.6%   +17.9%  +22.8%      +17.3%
     Rest of the world        +5.4%   +18.5%  +19.4%      +14.3%
     TOTAL                    +7.2%    +8.4%  +13.7%       +9.7%

In France, third quarter issue volume was up 3.2% like-for-like, matching the second quarter growth rate excluding CESU Social human service vouchers[1].

In the Rest of Europe, issue volume rose 6.1% like-for-like in the third quarter, reflecting the first signs of jobless rates stabilizing in Western Europe and despite the persistently challenging economic environment in Eastern Europe.

Strong momentum in Brazil and Venezuela lifted third quarter issue volume in Latin America by 22.8% like-for-like, confirming the favorable trend observed since the start of the year.

OPERATING REVENUE FOR THE FIRST NINE MONTHS UP 5.9% LIKE-FOR-LIKE

Operating revenue for the first nine months of 2010 totaled EUR629 million, representing an increase of 5.9% like-for-like. The reported increase was 8.1%, after taking into account:

    - The 2.9% positive impact of changes in scope of consolidation.

    - The 0.7% negative currency effect, reflecting:

    - The 8.0% negative effect of applying the new official exchange rate for
      the Venezuelan bolivar against the dollar (from VEF 4.3 to VEF 5.3).

    - The 5.2% positive effect of the Brazilian real's appreciation over the
      period.

Third quarter reported operating revenue rose by a strong 9.0% against 7.7% in the first half, due to:

    - The 9.5% increase in operating revenue like-for-like (vs. 4.2% in the
      first half).

    - The 3.3% negative currency effect (vs. a 0.5% positive impact in first
      half), mainly due to the recognition during the quarter of the full
      effect of applying the new official exchange rate for the Venezuelan
      bolivar since the beginning of the year.


      Like-for-like growth      Q1 2010  Q2 2010  Q3 2010  First 9 months
      in operating revenue

      France                     +4.2%    +1.9%    +8.6%       +4.7%
      Rest of Europe             +0.3%    -1.4%    +3.6%       +0.7%
      Latin America              +9.1%   +11.7%   +16.6%      +12.6%
      Rest of the world          -6.8%    -0.6%    -3.3%       -3.6%
      TOTAL                      +3.8%    +4.5%    +9.5%       +5.9%

    - Operating revenue for the first nine months in France: EUR101 million

In France, operating revenue increased by 4.7% like-for-like in the first nine months of the year and by 8.6% in the third quarter.

The Ticket Restaurant(R) business maintained the momentum observed since the start of the year, with operating revenue rising 11.7% like-for-like in the third quarter, while the more cyclical Incentive & Rewards business experienced a 2.6% like-for-like decline in issue volume for the period, in a highly competitive environment.

- Operating revenue for the first nine months in the Rest of Europe:

EUR222 million

In the Rest of Europe, operating revenue increased by 0.7% like-for-like in the first nine months, led by a strong 3.6% gain in the third quarter that represented a step change from the increase of just 0.3% in the first quarter and the 1.4% decline in the second.

Italy and Romania remained the two countries most affected by the recession, reporting like-for-like decreases in third quarter operating revenue of 2.3% and 33.7% respectively. Although there were signs in Italy that the jobless rate was starting to stabilize, stiff local competition in both countries put pressure on commission rates.

In Belgium, operating revenue for the first nine months rose 21.3% like-for-like (with increases of 19.3% in the first quarter, 22.3% in the second and 22.5% in the third), led by good performances by the Ticket Restaurant(R) business and EcoCheque(R).

In the United Kingdom, the Childcare Vouchers business benefited from sustained demand, while the Incentives & Rewards business continued to operate in a challenging environment. In all, operating revenue in the United Kingdom rose by 3.7% like-for-like in the first nine months of the year and also in the third quarter.

- Operating revenue for the first nine months in Latin America: EUR258

million

In Latin America, operating revenue rose 12.6% like-for-like over the first nine months. The pace of growth accelerated to 16.6% like-for-like in the third quarter, from 11.7% in the second and 9.1% in the first, reflecting a combination of a robust local economic environment, a strong marketing performance and a low basis of comparison in third-quarter 2009.

In Brazil, the good marketing performance by Edenred's teams in a very buoyant macro-economic environment drove up the pace of growth in the third quarter, for both Employee & Public Benefits and Performance Products. Meal & Food Vouchers and Ticket Car(R) operating revenue rose by respectively 14.5% and 15.3% like-for-like in the third quarter, versus 8.5% and 8.4% in the second quarter. In all, operating revenue was 12.9% higher like-for-like in the third quarter, compared with gains of 7.6% in the first quarter and 8.6% in the second.

Similarly, in Hispanic Latin America, growth in operating revenue accelerated to 21.7% like-for-like in the third quarter, from 10.8% in the first quarter and 15.5% in the second. In Venezuela, sustained demand was accompanied by an 18% increase in the average face value of vouchers in the third quarter.

FINANCIAL REVENUE FOR THE FIRST NINE MONTHS DOWN 21.1%

Financial revenue, which was impacted by lower interest rates, fell 21.1% like-for-like in the first nine months of 2010. The rate of decline slowed over the period, however, standing at 11.6% in the third quarter versus 20.4% in the second and 29.5% in the first.

In Latin America, financial revenue contracted by 20.6% over the nine months. The downtrend reversed in the third quarter, with financial revenue rising 2.5% like-for-like after falling 38.7% in the first quarter and 16.4% in the second, thanks mainly to higher interest rates and the increased float[2] in Brazil in the third quarter.

There were no major changes in financial revenue in Europe during the period. In France and in the Rest of Europe, financial revenue fell by 17.9% and 19.1% respectively during the third quarter, on the back of declines of 27.9% and 20.3% in the first quarter and 28.3% and 19.0% in the second.

    TOTAL REVENUE FOR THE FIRST NINE MONTHS UP 2.8% LIKE-FOR-LIKE

    Like-for-like        Q1 2010 Q2 2010  Q3 2010 First 9 months
         growth
    Operating revenue     +3.8%   +4.5%    +9.5%       +5.9%
    Financial revenue    -29.5%  -20.4%   -11.6%      -21.1%
    Total revenue         -0.4%   +1.8%    +7.3%       +2.8%

Total revenue for the first nine months of 2010 came to EUR687 million, up 2.8% like-for-like and 4.6% as reported. Reported growth reflected the positive 2.5% impact of changes in scope of consolidation and a 0.8% negative currency effect, corresponding to the 5.0% positive effect of the Brazilian real's appreciation and the 7.7% negative impact of the change in the official exchange rate for the Venezuelan bolivar against the dollar (from VEF 4.3 to VEF 5.3).

CONCLUSION

The faster growth in issue volume in the third quarter, at 13.7% like-for-like versus 7.8% in the first half, reflected the good overall momentum enjoyed by the business.

The 9.5% like-for-like increase in operating revenue in the third quarter was led by vibrant demand in Latin America, where the number of people in work increased during the period, particularly in Brazil. The quarter also saw the first signs of jobless rates stabilizing in Western Europe, although the environment remained challenging in Eastern Europe.

The decline in financial revenue slowed to 11.6% like-for-like in the third quarter from 25.3% in the first half, helped mainly by higher interest rates and the increased float in Brazil. On this basis, the Group now expects financial revenue to decline by around 10% like-for-like in the second half, compared with the previous forecast of a 10% to 20% fall.

For the full year, based on the trends observed over the first nine months and:

    - The target of a flow-through ratio[3] of 40% to 50% like-for-like in
      2010,

    - The estimated EUR8 million negative impact on EBIT for the full year of
      applying the new official exchange rate for the Venezuelan bolivar,

    - The expected weakening of the South American currencies in the fourth
      quarter (with a USD 0.1 decline translating into a EUR3m negative
      impact on Q4 EBIT),

the Group's EBIT target is raised from EUR300/330 million to EUR310/330 million.

Quarterly Report

FINANCIAL POSITION AND RESULTS

In September, Edenred issued EUR800 million worth of 7-year 3.625% bonds due October 6, 2017. The bonds were placed with some 90 European institutional investors.

The proceeds were used to refinance the EUR600 million one-year bridge to bonds facility set up in June 2010. The new issue has strengthened the Group's liquidity position, diversified its financing sources and extended the average life of its debt.

Edenred confirms its objective of maintained a strong investment grade credit rating.

INVESTOR CALENDAR

Fourth quarter revenue announcement on January 18, 2011

Edenred, the world leader in prepaid service vouchers, provides solutions that enhance personal well-being and improve the performance of organizations. Operating in 40 countries, with 6,000 employees, nearly 500,000 private and public sector customers, 33 million users and 1.2 million affiliates, Edenred offers a wide range of products in two categories:

    - Employee and public benefits related to meals and food (Ticket
      Restaurant, Ticket Alimentation) or quality of life (Ticket CESU,
      Childcare Vouchers, etc.)

    - Performance products in the areas of expense management (Ticket Car),
      incentive and reward (Ticket Compliments, Ticket Kadeos) and new
      prepaid electronic solutions.

In 2009, Edenred generated total issue volume of EUR12.4 billion, of which more than 50% in emerging markets.

    APPENDICES

                                           Issue Volume

                                    Q1             Q2            H1
                                 2009    2010  2009   2010   2009  2010
    In EUR millions

    France                         612    641   659    607  1,271  1,248
    Rest of Europe               1,044  1,135 1,084  1,183  2,128  2,318
    Latin America & Caribbean    1,246  1,301 1,327  1,536  2,573  2,837
    Rest of the world               91     97    89    115    180    212

    TOTAL ISSUE VOLUME           2,993  3,174 3,159  3,441  6,152  6,615

                                    Q1                Q2                H1
                               Change  Change  Change  Change  Change  Change
                              reported  L/L*  reported  L/L*   reported  L/L*
              In %

    France                        4.7%   4.7%   -7.9%  -7.9%   -1.8%  -1.8%
    Rest of Europe                8.7%   4.9%    9.1%   5.6%    8.9%   5.3%
    Latin America & Caribbean     4.4%  10.6%   15.8%  17.9%   10.3%  14.4%
    Rest of the world             7.1%   5.4%   29.2%  18.5%   18.1%  11.9%

    TOTAL ISSUE VOLUME            6.1%   7.2%    8.9%   8.4%    7.5%   7.8%

    (continued)


                                           Q3           September end (YTD)
                                       2009    2010       2009       2010
    In EUR millions

    France                              502    518        1,773      1,766
    Rest of Europe                    1,016  1,107        3,145      3,425
    Latin America & Caribbean         1,363  1,488        3,935      4,325
    Rest of the world                    86    114          266        327

    TOTAL ISSUE VOLUME                2,967  3,227        9,119      9,843

                                       Q3               September end (YTD)
                                     Change  Change       Change     Change
                                    reported  L/L*       reported     L/L*
              In %

    France                              3.2%   3.2%        -0.4%      -0.4%
    Rest of Europe                      8.9%   6.1%         8.9%       5.5%
    Latin America & Caribbean           9.2%  22.8%         9.9%      17.3%
    Rest of the world                  32.3%  19.4%        22.7%      14.3%

    TOTAL ISSUE VOLUME                  8.8%  13.7%         7.9%       9.7%

    * At constant scope of
      consolidation and exchange rates



                                           Operating Revenue

                                  Q1            Q2             H1
                              2009  2010    2009  2010     2009   2010
    In EUR millions

    France                      35    36      34    33       69     69
    Rest of Europe              69    79      69    73      138    152
    Latin America & Caribbean   74    78      81    91      155    169
    Rest of the world           15    15      15    17       30     32

    OPERATING REVENUE          193   208     199   214      392    422

                                   Q1              Q2                H1
                           Change   Change  Change   Change  Change    Change
                          reported   L/L*   reported   L/L*  reported    L/L*
              In %

    France                    0.9%    4.2%    -2.9%    1.9%   -1.0%   3.0%
    Rest of Europe           15.0%    0.3%     5.5%   -1.4%   10.3%  -0.5%
    Latin America & Caribbean 5.7%    9.1%    13.0%   11.7%    9.5%  10.4%
    Rest of the world        -0.5%   -6.8%    13.1%   -0.6%    6.3%  -3.7%

    OPERATING REVENUE         7.7%    3.8%     7.6%    4.5%    7.7%   4.2%

    (continued)

                                       Q3           September end (YTD)
                                  2009    2010        2009     2010
    In EUR millions

    France                          30      32         100      101
    Rest of Europe                  63      70         201      222
    Latin America & Caribbean       82      89         237      258
    Rest of the world               15      16          44       48

    OPERATING REVENUE              190     207         582      629

                                       Q3               September end (YTD)
                                Change    Change     Change        Change
                               reported    L/L*      reported        L/L*
              In %

    France                        6.1%    8.6%            1.2%        4.7%
    Rest of Europe               11.0%    3.6%           10.5%        0.7%
    Latin America & Caribbean     8.1%   16.6%            9.0%       12.6%
    Rest of the world            11.1%   -3.3%            7.9%       -3.6%

    OPERATING REVENUE             9.0%    9.5%            8.1%        5.9%


    * At constant scope of
      consolidation and exchange rates




                                            Financial Revenue

                                    Q1            Q2            H1
                               2009  2010    2009  2010     2009  2010
    In EUR millions

    France                        7     5       6     5       13     10
    Rest of Europe                9     8      10     8       19     16
    Latin America & Caribbean    11     6       8     6       19     12
    Rest of the world             1     -       -     1        1      1

    Financial Revenue            28    19      24    20       52     39

                                 Q1               Q2               H1
                           Change  Change   Change  Change   Change  Change
                          reported  L/L*    reported  L/L*   reported  L/L*
              In %

    France                  -27.9% -27.9%    -28.3%  -28.3%    -28.1% -28.1%
    Rest of Europe          -17.1% -20.3%    -16.5%  -19.1%    -16.8% -19.6%
    Latin America
    & Caribbean             -45.2% -38.7%    -17.2%  -16.4%    -33.3% -29.3%
    Rest of the world       -29.5% -30.1%     -2.7%  -11.5%    -17.3% -21.6%

    Financial Revenue       -31.0% -29.5%    -19.4%  -20.4%    -25.6% -25.3%


    (continued)
                                           Q3            September end (YTD)
                                     2009    2010        2009    2010
         In EUR millions

    France                              5       4          19      14
    Rest of Europe                      9       8          28      23
    Latin America & Caribbean           7       6          25      19
    Rest of the world                   1       1           2       2

    Financial Revenue                  22      19          74      58

                                          Q3            September end (YTD)
                                   Change  Change      Change     Change
                                   reported  L/L*      reported     L/L*
              In %

    France                          -17.9%  -17.9%      -25.1%     -25.1%
    Rest of Europe                  -17.4%  -19.1%      -17.0%     -19.5%
    Latin America & Caribbean       -11.4%    2.5%      -27.3%     -20.6%
    Rest of the world                 6.0%   -4.7%       -9.8%     -16.2%

    Financial Revenue               -14.9%  -11.6%      -22.3%     -21.1%


    * At constant scope of
      consolidation and exchange rates




                                                 Total Revenue

                                    Q1             Q2             H1
                                2009   2010    2009   2010    2009   2010
         In EUR millions

    France                        42     41      40     38      82     79
    Rest of Europe                78     87      79     81     157    168
    Latin America & Caribbean     85     84      89     97     174    181
    Rest of the world             16     15      15     18      31     33

    Total Revenue                221    227     223    234     444    461

                                 Q1                Q2                H1
                           Change  Change    Change  Change    Change  Change
                           reported  L/L*    reported  L/L*    reported  L/L*
              In %

    France                -3.7%    -1.0%      -6.8%  -2.8%      -5.3%  -1.9%
    Rest of Europe        11.2%    -2.1%       2.8%  -3.5%       7.0%  -2.8%
    Latin America
    & Caribbean           -0.7%     3.0%      10.3%   9.2%       4.9%   6.2%
    Rest of the world     -2.1%    -8.1%      12.4%  -1.1%       5.1%  -4.6%

    Total Revenue          2.9%    -0.4%       4.7%   1.8%       3.8%   0.7%


    (continued)
                                       Q3           September end (YTD)
                                  2009    2010       2009       2010
         In EUR millions

    France                          35      36        118        115
    Rest of Europe                  72      77        229        245
    Latin America & Caribbean       90      96        262        277
    Rest of the world               15      17         47         50

    Total Revenue                  212     226        656        687

                                        Q3           September end (YTD)
                                   Change  Change     Change     Change
                                  reported  L/L*     reported     L/L*
              In %

    France                          2.4%   4.5%        -3.0%       0.0%
    Rest of Europe                  7.4%   0.7%         7.1%      -1.7%
    Latin America & Caribbean       6.6%  15.5%         5.5%       9.4%
    Rest of the world              10.8%  -3.3%         7.0%      -4.2%

    Total Revenue                   6.5%   7.3%         4.6%       2.8%


    * At constant scope of
      consolidation and exchange rates

[1] A one-off initiative by the French government to support people who were the hardest hit by the recession, representing an issue volume of EUR71 million in June 2009.

[2] Negative Working Capital

[3] Flow-through ratio: ratio between the like-for-like change in operating EBIT and the like-for-like change in operating revenue.

SOURCE Edenred