Turismo
Sodexo Q3 Fiscal 2024: continued robust growth, in line with expectations
Issy-les-Moulineaux, July 2, 2024 (7am)
Sodexo (Euronext Paris FR 0000121220-OTC: SDXAY)
Sodexo Q3 Fiscal 2024: continued robust growth, in line with expectations
Q3 FISCAL 2024 REVENUES
The accounting change in Rest of the World (ROW) weighed on the Group's growth by -0.4% and on ROW growth by -2.3%.
Commenting on the third quarter activity, Sophie Bellon, Sodexo Chairwoman and CEO, said:
"We have continued to deliver solid organic growth of +6.8% in the third quarter, up +8.6% in Food services and +3.5% in FM services. This performance is in line with our expectations, allowing us to confirm our full year guidance.
Our commercial momentum in Food services remains strong, driven by continued first-time outsourcing opportunities, the ramp-up of new operating models and the quality of our branded offers.
Our strategic initiatives are delivering results as we advance with our focus on tasty, healthy, and sustainable food offerings, strong digital features to enhance consumer experience, and increased selectivity in FM.
As we complete our final preparations to open the largest restaurant in the world, the teams are excited to showcase our sustainable culinary expertise and contribute to making the Paris 2024 Olympic and Paralympic Games a memorable event!
We are decisively progressing towards our ambition to be the world leader in sustainable food and valued experiences."
Highlights of the period
The Sustainability Committee will include 7 Sodexo's Board members, with expertise in sustainability, ethics, and corporate governance. It will be chaired by Véronique Laury, who has a long-standing commitment to driving sustainable and responsible business practices. By creating this committee, Sodexo reinforces its commitment to sustainable and ethical business practices and a better tomorrow for its employees, its communities, and the planet.
Outlook
Third quarter 2024 activity was in line with expectations. Consequently, Fiscal 2024 guidance is confirmed:
Conference call
Sodexo will hold a conference call (in English) today at 9:00 a.m. (Paris time), 8:00 a.m. (London time) to comment on its Q3 Fiscal 2024 revenues.
Those who wish to connect:
Followed by the access code 07 26 13 .
The live audio webcast will be available on www.sodexo.com
The press release, presentation and webcast will be available on the Group website www.sodexo.com in both the “Newsroom” section and the “Investors – Financial Results” section.
Financial calendar
These dates are indicative and may be subject to change without notice.
Regular updates are available in the calendar on our website www.sodexo.com
About Sodexo
Founded in Marseille in 1966 by Pierre Bellon, Sodexo is the global leader in sustainable food and valued experiences at every moment in life: learn, work, heal and play. The Group stands out for its independence, its founding family shareholding and its responsible business model. Thanks to its two activities of Food and Facilities Management Services, Sodexo meets all the challenges of everyday life with a dual goal: to improve the quality of life of our employees and those we serve, and contribute to the economic, social and environmental progress in the communities where we operate. For Sodexo, growth and social commitment go hand in hand. Our purpose is to create a better everyday for everyone to build a better life for all.
Sodexo is included in the CAC Next 20, Bloomberg France 40, CAC 40 ESG, CAC SBT 1.5, FTSE 4 Good and DJSI indices.
Key figures
Q3 Fiscal 2024 Activity Report
Continued robust growth in revenues, in line with expectations
In the third quarter Fiscal 2024, Sodexo revenues reached 6.1 billion euros , up +5.6% year-on-year including a negative currency impact of -0.2% and a net contribution from acquisitions and disposals of -1.0%.
Consequently, organic growth for the third quarter Fiscal 2024 was +6.8%, or +7.2% when adjusted for the negative impact of an accounting change for project works in a large contract in Rest of the World. The sequential slowdown in growth compared to the second quarter was explained by, on the one hand, lower pricing effect and a higher comparative base in the third quarter, and, on the other hand, a positive leap year impact in the second quarter.
About half of the organic growth was fueled by pricing which has fallen below 4% in the quarter. The remaining half reflects the net new business contribution and some volume growth.
Organic growth in the quarter was driven by Food services, up +8.6%, whereas FM services were up +3.5%, or +4.7% when adjusted for the accounting change in Rest of the World.
North America
From H1 FY24, Business & Administrations excludes Sodexo Live!, reported separately.
As part of the streamlining of the organization during Fiscal 2023, some contracts or operations have been reallocated between segments.
In the third quarter Fiscal 2024, North America revenues totaled 2.9 billion euros , up +9.0% organically. The ongoing return to the workplace and a strong performance of Sodexo Live!, particularly in the airline lounges, continue to drive growth, as well as the contribution of new business and pricing.
Within Business & Administrations, restated organic growth reached +12.1%, propelled by new business, strong growth in Food services from continued return to office and cross-sales, as well as project works and strong retail sales growth.
Sodexo Live! restated organic growth was +30.7%, driven by robust activity in all venues, and in particular strong per capita spend in sports stadiums and elevated attendance at conference centers and cultural destinations. Airline lounges also saw strong growth driven by higher passenger count, additional services and mobilization of new business.
Healthcare & Seniors restated organic growth was +5.6%, supported by strong performance in Healthcare through a combination of price increases, volume growth in particular in retail, and positive net new contribution. This growth was somewhat offset by Seniors contract losses at the end of the prior fiscal year.
In Education, restated organic revenue growth was +2.4%, affected by a calendar impact in Universities and the reduction in number of sites of a large schools contract.
Europe
From H1 FY24, Business & Administrations excludes Sodexo Live!, reported separately.
As part of the streamlining of the organization during Fiscal 2023, some contracts or operations have been reallocated between segments.
In Europe , third quarter Fiscal 2024 revenues amounted to 2.1 billion euros , up +5.4% organically, holding up well despite the sequential slowdown in the pricing impact, due to increased volumes and the contribution of net new business.
In Business & Administrations , restated organic growth was +5.9%. This was supported by Corporate services, benefiting from both price increases, volume growth and new openings, coupled with new Government business in the United Kingdom. Türkiye also contributed with very strong growth, helped by pricing pass-through.
Sodexo Live! restated organic growth was slightly negative at -0.4%, affected by the base effect of ticketing for the World Baseball Classic Hospitality in Japan last year. Excluding this impact, restated organic growth was +6.2%, driven by strong overall activity in France especially in sports and cultural venues and event catering.
Healthcare & Seniors restated organic growth stood at +4.4%, driven by inflation pass-through in the United Kingdom, new business particularly in Spain along with price revisions and new openings in France.
Education restated organic revenue growth was +7.7%, reflecting the significant positive impact of price revisions in the UK and in France.
Rest of the World
From H1 FY24, Business & Administrations excludes Sodexo Live!, reported separately.
As part of the streamlining of the organization during Fiscal 2023, some contracts or operations have been reallocated between segments.
Rest of the World third quarter Fiscal 2024 revenues totaled 1.1 billion euros , up +3.6% organically, impacted by the change in revenue recognition on project activity in Energy & Resources. Excluding this impact, the organic growth was +5.9%, a slowdown from the second quarter, due to a deceleration in price increases, and a slowdown in China and Chile.
Business & Administrations restated organic growth was +2.7%, or +5.3% excluding the accounting change. Growth continues to be particularly strong this quarter in India driven by new business and additional volumes on existing sites, and in Australia fueled by strong development and price renegotiation. Chile experienced a deceleration in growth in this quarter due to lower price increases and the end of several Energy & Resources fixed-term projects. In China, the activity was affected by downsizing in the tech sector.
Sodexo Live! revenues (principally airline lounges) almost doubled due to the opening of new lounges in Hong Kong.
Healthcare & Seniors restated organic growth was +3.9%, with strong growth in India and Latin America, somewhat offset by Brazil and China.
Education restated organic growth was +10.8%, fueled by new business and ramp ups in existing sites in Brazil and India.
CURRENCY EFFECTS
Exchange rate fluctuations do not generate operational risks because each subsidiary bills its revenues and incurs its expenses in the same currency.
The negative currency impact for third quarter Fiscal 2024 of -0.2% results from the depreciation of the Chilean Peso and the Turkish Lira, mainly offset by the appreciation of the British pound.
The currency effect is determined by applying the previous year's average exchange rates to the current year figures.
FINANCIAL POSITION
Apart from the seasonal changes in working capital, there were no material changes in the Group's financial position as of May 31, 2024, relative to that presented in the Fiscal 2023 Universal Registration Document filed with the AMF on November 3, 2023 and the Interim Financial Report published on April 19, 2024.
PRINCIPAL RISKS AND UNCERTAINTIES
There were no significant changes to the principal risks and uncertainties identified by the Group in the Risk Factors section of the Fiscal 2023 Universal Registration Document filed with the AMF on November 3, 2023.
ALTERNATIVE PERFORMANCE MEASURE DEFINITIONS
Growth excluding currency effect
The currency effect is determined by applying the previous year's average exchange rates to the current year figures except in hyper-inflationary economies where all figures are converted at the latest closing rate for both periods when the impact is significant.
Organic growth
Organic growth corresponds to the increase in revenue for a given period (the “current period”) compared to the revenue reported for the same period of the prior fiscal year, calculated using the exchange rate for the prior fiscal year; and excluding the impact of business acquisitions (or gain of control) and divestments, as follows:
Underlying operating profit margin
The Underlying operating profit margin corresponds to Underlying operating profit divided by revenues.
Underlying operating profit margin at constant rates
The Underlying operating profit margin at constant rates corresponds to Underlying operating profit divided by revenues, calculated by converting 2024 figures at Fiscal 2023 rates, except for countries with hyperinflationary economies.
New segment reporting following evolution of the organization
As part of the streamlining of the organization, from Fiscal 2024, some contracts or operations have been reallocated between segments, with main impacts in Europe from Healthcare & Seniors to Education.
Restated revenue breakdown for Fiscal 2023:
REVENUE FOR THE FIRST 9 MONTHS FISCAL 2024
From H1 FY24, Business & Administrations excludes Sodexo Live!, reported separately.
As part of the streamlining of the organization during Fiscal 2023, some contracts or operations have been reallocated between segments.
From H1 FY24, Business & Administrations excludes Sodexo Live!, reported separately.
As part of the streamlining of the organization during Fiscal 2023, some contracts or operations have been reallocated between segments.
From H1 FY24, Business & Administrations excludes Sodexo Live!, reported separately.
As part of the streamlining of the organization during Fiscal 2023, some contracts or operations have been reallocated between segments.
From H1 FY24, Business & Administrations excludes Sodexo Live!, reported separately.
As part of the streamlining of the organization during Fiscal 2023, some contracts or operations have been reallocated between segments.
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