Edenred profits beat forecasts as employers boost staff benefits

By Diana Mandia

(Reuters) -Edenred on Tuesday beat full-year core profit expectations, as companies used the French group's gift cards and other vouchers to help staff with the cost of living crisis and to retain employees in a tight labour market.

Voucher providers have adapted their products to the more challenging economic environment, which has helped to drive growth, while staff shortages pushed employers to spend more on workers' benefits in 2022.

Edenred, known for its "Ticket Restaurant" vouchers, said part of the positive impact of these measures was still to come.

"It's only the beginning of the process," Chairman and Chief Executive Officer Bertrand Dumazy said in a call with analysts.

Voucher providers benefit from inflation, as companies often use products such as meal vouchers to bridge a gap that can open up between the inflation rate and salary increases.

If inflation cools down, as a poll of economists from the European Central Bank forecasts it will do by 2025, the difficulties that companies face hiring staff when the unemployment rate is a at record low in the euro zone should provide support.

"There will probably be less inflation, but we will continue to have business leaders who want to compensate for the erosion of purchasing power," Dumazy said in a call with reporters. "Above all, what we will always have is the war for talent and the desire to retain."

Edenred's Employee Benefits division, the group's biggest business by sales, generated 1.15 billion euros in operating revenue last year.

The company confirmed its 2023 target, set in October, for annual like-for-like growth of more than 12% in core profit.

Edenred's shares fell 2% early on Tuesday on inflation concerns and an outlook described as "conservative" by J.P.Morgan and Bryan Garnier, but were 1.4% higher by 1145 GMT.

The group reported earnings before interest, taxes, depreciation and amortization (EBITDA) of 836 million euros ($893.27 million) in 2022, exceeding a company-compiled consensus of 830 million euros.

($1 = 0.9359 euros)

(Reporting by Diana Mandiá and Federica Mileo; Editing by Sherry Jacob-Phillips and Jane Merriman)