In the second half, growth in issue volume should be sustained by strong dynamism in Latin America, despite a higher basis of comparison, and by slightly improving trends in Europe, mainly explained by the first signs of stabilization in Central Europe.
Operating revenue should benefit from the gradual stabilization of client fee rates in some countries, while rising interest rates should drive up financial revenue, despite higher prior period comparatives in Latin America as from the fourth quarter.
On this basis, assuming that the operating flow-through ratio is within the target range of 40% to 50% and that the extra costs generated by the digital transition are in the region of €10 million to €15 million, Edenred expects to report full-year 2011 EBIT between €340 million to €360 million.
CONCLUSIONEdenred's first-half results support the aims of its two-pronged strategy to " Conquer 2012" by:
- G rowing issue volume in the core business by 6% to 14% a year over the medium-term, in line with the confirmed target, in particular by creating new solutions and penetrating new geographic markets. Recent innovations include the Expendia Smart expense management solution in Italy and the Junaeb card used to distribute public social benefits to students in Chile.
- Accelerating the digital transition, with the goal of generating 50% of issue volume through paperless solutions by 2012 in order to increase the scope for long-term growth. In 2011, the digital transition is accelerating in Hispanic Latin America, while in Europe, card-based solutions are being launched in Belgium and Sweden.
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