SODEXO CUTS ITS FORECAST, CITING UNCERTAINTIES RELATED TO COVID AND THE WAR IN UKRAINE
(Reuters) – Sodexo on Friday cut its forecast for organic revenue growth for the full year, citing uncertainties related to the COVID-19 pandemic and the closure of testing centers in the United Kingdom, as well as the war in Ukraine.
The group, which is among the largest catering companies in the world with the British Compass Group, now expects organic growth in turnover around the low end of the range of 15% to 18% communicated in October 2021. , for its fiscal year ending August 31.
He said he ended his investments in Russia following the war in Ukraine, explaining that contracts won last year and which should have come into force in the second half of 2022 would not materialize.
The loss of revenue related to the termination of these contracts is estimated at 40 million euros. The group’s activities in Russia represent less than 1% of its turnover.
On the Paris Stock Exchange, Sodexo shares fell more than 7% around 12:20 p.m. GMT, the largest drop in the SBF 120 index, then up 0.59%.
“Our business in Russia is minor, but it was growing,” Chief Financial Officer Marc Rolland told analysts in a meeting call.
Furthermore, the war in Ukraine is clouding the outlook for the global economy while fueling soaring food prices.
“Inflation is a subject on which we are working a lot. We are very vigilant because indeed, the situation around the war in Ukraine is bringing some volatility to certain commodities, so it is something that we are monitoring like milk. on fire,” said Marc Rolland.
Sodexo said it was in negotiations with suppliers and was considering changing some in the face of rising prices.
“The relationship with suppliers is built over a long period of time,” said the CFO. “It’s not just about buying the cheapest of what’s available on the market.”
The group also warned that the Omicron and Delta variants of the coronavirus impacted the recovery in the second quarter.
Sodexo also said contracts to operate COVID-19 testing centers in the UK ended on March 31, much earlier than expected.
However, the group remains confident in its ability to manage price pressure on margins.
JP Morgan analysts nevertheless consider the group’s forecasts “very optimistic”.
Sodexo posted recurring operating profit of 538 million euros in the first half of 2022, slightly beating analysts’ forecasts of 530 million euros, and said it saw better momentum since late February.
(Report by Federica Mileo and Diana Mandiá; French version Dina Kartit, edited by Nicolas Delame and Matthieu Protard)