In 2016, Edenred proved that it has set itself on a course of profitable and sustainable growth, with EBIT at an all-time high and cash flow generation up sh¬arply. The Group delivered solid performances in Europe and a good level of growth in Latin America despite a difficult economic environment in Brazil.
The key figures (like-for-like)
- Operating EBIT margin up 1.1 points to 28.3%
- EBIT at an all-time high of €370 million despite a €32 million negative currency effect
- Net profit, Group share up 1.9% to €180 million
- Recommended dividend of €0.62 per share, representing a payout ratio of 80%
- Net debt reduced by €49 million to €588 million
Bertrand Dumazy, Chairman and Chief Executive Officer of Edenred, said: "In 2016, Edenred proved that it has set itself on a course of profitable and sustainable growth, with EBIT at an all-time high and cash flow generation up sharply. We delivered solid performances in Europe and a good level of growth in Latin America despite a difficult economic environment in Brazil. In the Employee Benefits business line, we continued to enhance our offering and to develop innovative new digital and mobility solutions. On the corporate vehicle fleet management market, we became market leader in Latin America following our acquisition of Embratec in Brazil. We also recently increased our stake in UTA to 51%, becoming the number two issuer of multi-brand Europe-wide solutions."
"We are confident as we move into 2017 and will pursue our Fast Forward strategic plan with the aim of developing new sources of growth, especially in corporate payment solutions. Value creation is at the heart of our strategy as we focus on growth in operating revenue and operating EBIT. We intend to continue generating strong levels of cash flow so that we can return a high dividend to our shareholders while retaining enough financial flexibility to leverage external growth opportunities and maintain our 'Strong Investment Grade' credit rating".
Significant achievements paving the way for success with the Fast Forward strategic plan:
- A good performance in the Employee Benefits business, with an 8.5% rise in issue volume (like-for-like) driven by commercial success, innovative initiatives in mobile payment solutions and new value-added services
- A sharp rise in Expense Management as a percentage of Edenred's total business, accounting for 18% of consolidated operating revenue versus 14% in 2015. This reflects the two-fold increase in the size of the business in Brazil following the acquisition of Embratec assets, and double-digit organic growth in operating revenue (up 13% like-for-like);
- Onging shift to digital solutions, which accounted for 70% of total issue volume in 2016 compared to 65% in 2015.
The Group expects its performance in 2017 to be in line with the medium-term outlook announced at the time of presenting its Fast Forward three-year strategic plan:
Like-for-like growth of more than 7% in operating revenue, driven by a mid-single-digit rise in operating revenue for the Employee Benefits business line and a double-digit increase in Expense Management operating revenue (on a like-for-like basis).
Like-for-like growth of more than 9% in operating EBIT.
Like-for-like growth of over 10% in funds from operations before non-recurring items (FFO).
The Group expects continued strong growth of its business in Europe in 2017. Latin America should evolve broadly in line with 2016, with robust growth in Mexico despite certain emerging macroeconomic uncertainties and a continued contrasted performance in Brazil, shaped by weak growth in Employee Benefits owing to rising unemployment but strong double-digit growth in Expense Management.
In line with its strategic goals, the Group will focus on delivering growth in operating revenue and in operating EBIT while continuing to generate high levels of cash flow and maintaining its "Strong Investment Grade" rating.