Oct 19 (Reuters) - Employee benefits firm Edenred expects operating profit to grow by at least 9 percent a year over the next three years as it diversifies further into areas such as fuel and vehicle maintenance cards, it said on Wednesday.
Shares in the French company jumped as much as 10 percent after it said in a strategy update it aimed to pay out at least 80 percent of net profit group share in dividends.
While that compares with the current level of at least 90 percent of recurring profit after tax, it is more than some analysts anticipated as the company looks to invest.
“We believe the decision is positive for the company over the long term as it would create enough headroom on the balance sheet to lead industry consolidation,” said Goldman Sachs analysts, who have a “neutral” rating on the stock.
Edenred, which helps companies to manage staff expenses and is best know for its “Ticket Restaurant” meal vouchers, said it expected to double its fuel and vehicle maintenance card business by 2020.
As part of this, it will exercise an option in 2017 to take a controlling stake in German company Union Tank Eckstein (UTA), an issuer of fuel cards for heavy vehicle fleets in Europe.
The company also said it had won a tender to set up and manage a global prepaid private network in the travel industry which would cover annual transactions of more than $20 billion involving more than 10,000 entities in over 70 countries.
Over the next three years, it is targeting growth in annual like-for-like operating revenues of at least 7 percent and growth in annual like-for-like operating earnings before interest and tax of at least 9 percent.
UBS analysts, who have a “neutral” rating on the stock, said the targets were in line or slightly below its expectations, but that investors might be relieved by the news on the dividend.
At 1245 GMT, Edenred shares were up 7.4 percent at 21.85 euros.
$1 = 0.9096 euros Reporting by Alan Charlish, additional reporting by Thyagaraju Adinarayan in Gdynia; Editing by Mark Potter