July 27, 2018 / 2:55 PM / 2 months ago

UPDATE 1-Autogrill cuts 2018 outlook after US labour costs hit margins

(Adds CFO, CEO comments, details)

By Francesca Landini

MILAN, July 27 (Reuters) - Italian travel caterer Autogrill said it cut its outlook for this year after restructuring charges and higher labour costs in North America dented its first-half results.

But despite “challenges” in the first half, the group will meet its targets for next year, CEO Gianmario Tondato said on Friday.

The company, which runs restaurants and coffee shops along motorways and in airports around the world, generates around half of its sales in North America.

In North America, the group’s profitability, as measured by underlying core profit margin, fell to 9.4 percent in the first half from 10.4 percent in the same period last year.

“We are implementing actions to make our cost base leaner (in the United States),” CFO Alberto De Vecchi said.

The group is confident that margins would partially rebound in the second half as it moves to adjust prices to offset wage inflation.

Overall the company, which is controlled by the Benetton family, recorded revenue of 2.1 billion euros, up 3.9 percent on a like-for-like basis.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell to 1.3 percent to 140 million euros, with margin on sales shrinking to 6.6 percent.

The pressure on margins and restructuring charges will take their toll on full-year results.

The group said its 2018 underlying EBITDA was expected to come in at between 410 million and 420 million euros, barely unchanged from last year.

Its underlying earnings per share (EPS) are estimated at 0.38-0.42 euros for 2018, compared with 0.42 euros last year.

Shares in the group were up 3.5 percent at 1440 GMT after briefly dropping in negative territory immediately after results.

The stock took a hit earlier this month when some analysts warned about rising labour costs in the United States. (Editing by Giulia Segreti and Jane Mrriman)

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