Catering group Elior's shares slumped during this week after the company forecast a fall in full-year sales and reported lacklustre earnings for the first half.
The group predicted that for the full year 2018/19 organic sales would decline by 1%, taking into account the sale of the company's Areas concessions business.
Elior, which also reported a lower operating margin for the first-half, had previously anticipated full-year organic sales growth of 1%.
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"This is a true sale warning," one trader said. "Some fund managers are starting to think they are dealing with a serial disappointer."
Last month, Elior got a firm offer of €1.54 billion from private equity firm PAI Partners for the Areas business.
Elior said it expected to close the sale during this summer, and would use the proceeds of the deal to cut its debt. The company also said it might return up to €350 million in cash to its shareholders either through share buybacks or dividend payments after the sale.
The size of the returns to shareholders will depend on opportunities Elior sees for acquisitions.
"With the sale of Areas we are opening a new chapter in Elior's history," CEO Phillipe Guillemot told a conference call.
Elior said the sale would reduce its leverage ratio to within a range of 1.5-2.0 times core profit (EBITDA), giving it the resources to develop its business and at the same time return cash to shareholders.
First-half revenue rose 1.4% to €2.6 billion year-on-year. On an organic basis, which reflects voluntary contract exits in Italy, revenue was down 0.6%.
The adjusted EBITA margin fell to 4.7% of sales from 5.1%, reflecting the group's modernisation strategy and the impact of capital expenditures in prior years.
Elior said it was confident of achieving a target to improve margins in the second half of its financial year.
For the full year, Elior expects a stable adjusted EBITA margin at 3.6% of sales and capital expenditures representing less than 3% of revenue.
Elior also unveiled medium-term targets, which call for an annual organic sales growth of 2-4%, an increase in adjusted EBITA margin of 10-30 basis points per year and capex below 3% of revenue.