EuroBusiness Media (EBM): Elior is one of the world’s leading operators in the contracted food and supply services industry. Today it’s unveiling its new strategy looking ahead to 2020. I have the pleasure of meeting with its Chairman and Chief Executive, Philippe Salle, hello. It is the 24th of September today, it was the day of the big announcement of the new strategy up until 2020. What are its major points?
Philippe Salle: First, we want to reinforce our positioning which is food. We are a food caterer and I think it’s very important to continue to say that the food business is our core business. We will, of course, also enter into the B2B Services other than Food, but Food will stay and remain our core business. Second, the underlying aspect or words for this plan are really how we are going to differentiate, how we are going to innovate and how we are going to accelerate.
EBM: On that question of differentiating yourself from the other players in the industry, how do you intend to make the difference?
Philippe Salle: We want to do it in two different aspects. The first, of course, is Food. Food in terms of quality and also the quality of service that we produce day-to-day in our premises. And the second aspect is to be a differentiator in the digital world.
EBM: If we break it down now into different categories, if we look at the Contract catering business for a start, what are your priorities there?
Philippe Salle: In the Contract business we have four priorities. The first one is to reinforce the position that we have in continental Europe, in France, in Spain, Portugal and Italy. The second is to push very hard in the UK; we are number 5 today and we want to enter into the top 3 players in this country. The third one is the US: we want to continue a niche strategy, so we don’t want to hunt for the big contracts, but we want also to develop very rapidly our presence, probably multiplying by 3 our presence in the US. And finally, we also want to enter Asia in the future. It will be probably after 2017 but definitely we also want to push the presence of the Group outside of Europe and in the US.
EBM: If we look now at the concession catering market, what are your plans there?
Philippe Salle: For concessions, I think, it’s also similar. We want to reinforce our position in Continental Europe, so in France again, Spain, Portugal and Italy. And we have still a little presence in the US and there we also want to grow rapidly: we definitely want, for example, to double the size in the US in the Concessions business. Elsewhere in the airport business we want to enter into new areas, so typically, in the Middle East, probably in Asia too.
EBM: Looking now at B2B Services, what are your priorities in that field going to be?
Philippe Salle: In the B2B Services, we will be probably be more selective. What we want to say is that we are already in the B2B Services outside of Food in France. We will probably enter in the UK or in the US also in this type of services, but again what we want is really to be selective and to make sure that we add value to the final clients.
EBM: Looking ahead to 2020, what are your plans for external growth?
Philippe Salle: For external growth, we will probably spend up to €1 billion in cash, mainly in the Contract business, a little bit in the Concessions, mainly in the airports which we want to target, typically in the Middle East and Asia. But the bulk of the investment will be in the Contract business, and as I say, probably a large part of it will be in the UK and in the US.
EBM: Looking ahead to 2020 then, what kind of overall economic performance do you hope to achieve?
Philippe Salle: We are trying to achieve three financial targets. The first one is on sales. We want to reach between €7 and €8 billion by 2020. The second one is on profitability. We want to touch a 9% to 10% EBITDA margin. And the last one is on cash flow, what we call the yield, which is the free cash flow developed by EBITDA. What we want to achieve is between 45% and 50%. Cash, of course, is very important because we want to have our own way to spend on M&A and be financially independent. And also, to fulfil these financial objectives, we are going to launch a big programme named Tsubaki: 8 different projects that will follow exactly all the different tasks we need to achieve to make sure we are going to reach the targets by 2020.
EBM: Will you be making any changes from an organisational point of view?
Philippe Salle: Yes, we will, in fact, mirror the strategy into the organisation. So we will organise by business. There will be one organisation dedicated to the Contract business and I will take the helm of this department. The second one will be Services and the third one will be the Concession business where Pedro Fontana is managing Concessions at the worldwide level.
EBM: In terms then of your overall vision within this strategy, how do you see the Elior of tomorrow?
Philippe Salle: Tomorrow, we'll be more international. As I say, we'll probably enter new areas, typically Asia. It will be also more digital, so more probably the IT will take a big part of it. And let’s remember also that HR is part of our strategy, of course: I would say our people, our staff will also play a very important role in this strategy and to push the values of Elior, mainly the quality.
EBM: Philippe Salle, thank you very much indeed.
Philippe Salle: Thank you.
