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Edenred's record annual profit overshadowed by higher financial expenses

FILE PHOTO: Brazil meal payments overhaul delayed by central bank standoff

By Diana Mandia

(Reuters) - Gift and restaurant voucher provider Edenred reported a record annual core profit on Tuesday, but the result was overshadowed by higher financial expenses related to a recent acquisition and rising interest rates, sending its shares lower.

The French company, which is known for its "Ticket Restaurant" vouchers, reported earnings before interest, taxes, depreciation and amortization (EBITDA) rose 31% to 1.09 billion euros ($1.18 billion) in 2023, just above a company-compiled consensus of 1.08 billion euros.

Like its peer Sodexo, which has just spun off its voucher division, Edenred has seen strong demand for its gift and restaurant vouchers from employers as a way to help staff cope with rising inflation without hiking wages.

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Edenred's Employee Benefits and Engagement division, its biggest by sales, generated 1.45 billion euros in operating revenue last year, up 25.7%.

However, Edenred's net profit missed forecasts, coming in at 425 million euros in 2023, below a company-compiled consensus of 469 million euros.

AlphaValue analyst Nupur Gupta said the net profit miss was likely due to a net financial expense of 172 million euros linked to debt raised to fund the acquisition of Britain's Reward Gateway in May.

The company said its net financial expenses had risen by 118 million euros since last year due to higher interest rates and debt raised for the Reward Gateway purchase.

The net figure excludes the impact of a 158-million euro fine relating to the French antitrust authority, which was paid in 2021 and booked in 2023.

The group also announced on Tuesday two agreements to buy Danish SaaS2 platform Spirii and Brazilian transport benefits platform RB.

Edenred' shares, were down 3% at 12:37 GMT on Tuesday.

($1 = 0.9217 euros)

($1 = 0.9211 euros)

(Reporting by Diana Mandiá; Editing by Mark Potter, Susan Fenton and Sharon Singleton)