(Update: stock price, analyst comments, comments from Sodexo executives on the group’s outlook and on B&R activity)
PARIS (Agefi-Dow Jones)–The collective catering and prepaid service voucher group Sodexo fell on the stock market on Friday after being cautious for its staggered 2021-2022 financial year, due to uncertainties linked to the Covid-19 pandemic. 19 and the war in Ukraine.
Around 1:30 p.m., Sodexo shares lost 8.3% to 67.68 euros and recorded the largest drop in an SBF 120 index, up 0.4%. The group has yet reported strong growth in its results in the first half ended at the end of February.
Sodexo now expects organic revenue growth for the 2021-2022 financial year to be “around the bottom” of the 15% to 18% range announced last October.
“The environment remains uncertain. We are seeing local resurgences of Covid-19, several contract start-ups in Russia that will not take place and Testing Centers in the UK have closed earlier than expected,” the group said in a statement. a statement.
Covid test centers in the UK thus closed at the end of March instead of the end of July, which implies a loss of revenue of around 150 million euros, explained the financial director of Sodexo, Marc Rolland, during a meeting. a conference call with analysts.
For the second half alone, the group said it was confident in the continuation of the return of face-to-face employees and in the resumption of sporting and cultural events, but also underlined the uncertainties linked to the war in Ukraine. Currency effects should still continue to be favorable to it in the second half, said Sodexo.
At the same time, the group confirmed its objective of an operating margin close to 5% at constant exchange rates for the year.
“Our teams successfully managed margins in the first half and are strongly mobilized to offset uncertainties including additional inflation resulting from supply chain disruptions due to the war in Ukraine,” Sodexo said.
A margin forecast considered very optimistic
The group is thus convinced of “being able to manage the inflationary pressures on the margins of the year”, indicated the CEO of Sodexo, Sophie Bellon.
For JPMorgan analysts, however, these words are “very optimistic”, given the current extent of inflationary pressures.
During the first half from September to February, Sodexo recorded a turnover of 10.26 billion euros, an improvement of 19.4% year on year in reported data. On an internal basis, i.e. at constant scope and exchange rates, the group’s revenues increased by 16.7% over one year.
In the first half, Sodexo’s net income group share stood at 337 million euros, against 33 million euros a year earlier when the group’s results had been heavily burdened by the health crisis.
Operating income reached 538 million euros, against 265 million euros a year earlier. At the same time, the corresponding margin increased to 5.2%, compared to 3.1% in the first half of 2020-2021.
According to a consensus established by FactSet, analysts on average anticipated a turnover of 10.14 billion euros, an operating result of 521.6 million euros and a net result of 333 million euros.
“Revenue growth and margin expansion were strong in the first half. This performance reflects a solid recovery in the Education, Business Services and Sports & Leisure segments. Omicron impacted the recovery in the second quarter , but we have seen better momentum since the end of February,” explained Sophie Bellon.
Decision on the Benefits and Rewards activity before the summer
Sodexo also continues to explore options for its Benefits & Rewards business, also known by its acronym “B&R”.
The process is continuing and “we should be ready to make a decision in the coming months, and in any case before the summer”, indicated Sophie Bellon, while recalling that Sodexo intended to retain control of this activity, which manages the issue of prepaid service vouchers.
Last October, Sodexo announced that it had decided to explore “a number of strategic options” to strengthen its Benefits and Rewards Services activities and accelerate its growth.
In addition, the restructuring plan called GET (“Group Effectiveness and Transformation”) launched by the group at the end of 2020 in order to counter the impact of the pandemic on its activity and its prospects ended in the first half, “with results better than expected”, commented Sophie Bellon.
The plan achieved 382 million euros in savings against a target of 350 million euros and a savings to cost ratio of 117% against 100% initially planned, the group said.
In addition, Sodexo indicated that it had no activity in Ukraine and specified that it had a “modest presence” in the field of on-site services in Russia, representing “less than 1% of the group’s turnover”. “We are closely monitoring the situation and examining different options at this time,” added Sodexo.
-Alice Doré, Agefi-Dow Jones; +33 (0)1 41 27 47 90; [email protected] ed: LBO – ECH
SODEXO FINANCIAL RELEASES:
http://www.sodexo.com/en/home/finance/presentations-and-publications/financial-results.html
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April 01, 2022 07:45 ET (11:45 GMT)