UPDATE 1-Edenred confident over Latam despite weak currencies

Wed Feb 12, 2014 3:50am EST

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By Dominique Vidalon

PARIS, Feb 12 (Reuters) - French meal vouchers group Edenred said it was confident about growth prospects in key emerging markets in Latin America despite local currency fluctuations that dented 2013 earnings.

Edenred posted a 6.4 percent decline in full-year operating profit on Wednesday as weaker exchange rates notably in Brazil and Venezuela took their toll.

"Our business model is based on the growth of middle-income households, and this growth will take place mostly in emerging markets over the next 5-10 years," Chief Executive Jacques Stern told a conference call.

"This is why I am confident over the short and medium term. What we are seeing with emerging market currencies is a market correction, not a lasting trend."

Edenred, which also offers employee benefit management services and incentive schemes, competes with caterers Sodexo and Compass, as well as credit card networks MasterCard and Visa.

Full-year earnings before interest and tax (EBIT) were 343 million euros ($469.1 million), against 367 million in 2012 and below a Thomson Reuters I/B/E/S poll average of 347.5 million.

Edenred had warned in December that exchange rate changes in Venezuela could cut full-year operating profit by around 7.5 percent to between 340 million and 350 million euros. Latin America accounts for 63.5 percent of Edenred's operating profit and 47 percent of its sales.

On a like-for-like basis, excluding currency impacts, acquisitions and divestments, earnings rose 10.9 percent, however, driven by a 15 percent rise in Latin America, which more than offset a 0.1 percent decline in Europe.

Stern said that based on fourth-quarter trends, he was confident of the group's ability to "meet this year's objectives and to generate strong and sustainable growth".

Asked about the current quarter, he added: "Q1 is looking good. We are seeing the same trend as in Q4, double-digit growth in Latin America and the start of a recovery in Europe."

Issue volume, the face value of vouchers and pre-paid card top-ups, rose 11.8 percent like-for-like to 17.12 billion euros last year, driven by 16.8 percent growth in Latin America. Revenue grew 6.7 percent like-for-like to 1.03 billion.

Edenred said it would propose a dividend for 2013 of 0.83 euros a share, against 0.82 euros the previous year.

The company kept its goals for organic growth in issue volume of 8 to 14 percent in the mid-term and for more than 10 percent growth in funds from operations.

By 0825 GMT, Edenred shares were up 2.4 percent, outperforming a 0.3 percent gain for Sodexo and the French SBF 120 index. ($1 = 0.7312 euros) (Editing by James Regan)

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