By Sarah Morland
(Reuters) -French catering company Elior warned on Thursday it was continuing to lose customers in the coronavirus pandemic, sending its shares almost 5% lower.
Europe's third biggest contract caterer said its customer retention rate fell to 91% in the six months to the end of March from 92% the year before - at a time when bigger rivals Compass Group (LON:CPG) and Sodexo (PA:EXHO) both saw improvements.
It did not give full-year guidance.
"We are in a contract business, it's an everyday battle," Chief Executive Philippe Guillemot told analysts in a call, adding the group's 95% customer retention target could be pushed back from an original 2024 deadline.
"Especially with COVID-19, assumptions used to sign contracts were not met for months, and we had to enter into negotiations," he added.
Credit Suisse (SIX:CSGN) analysts said the situation could get worse as some customers have decided to delay tenders.
Elior has around 14,000 contracts with organisations including schools, businesses and hospitals.
First-half revenues dropped 22%, for a core loss of 25 million euros ($30 million) - the first since the group's 2014 return to Euronext. https://
However, after over a year of lockdowns, results were better than feared, with Elior delivering a positive free cash flow and bolstering its cash reserves on the back of a state-backed loan.
Elior does not expect its business and industry operations to see material recovery before September, and warned of more stringent health restrictions in French schools - with entire classes sent home after a single positive COVID-19 test.
Compass, the world's largest catering company, and French rival Sodexo have had to cut jobs and clamp down on costs as extended lockdowns continue to eat into earnings.
($1 = 0.8207 euros)