(BFM Bourse) – The catering specialist delivered comparable growth slightly below expectations for its third quarter. The company also announced the loss of a major facility management contract that will weigh on its retention rate.
Sodexo had made a good habit of almost systematically delivering publications above expectations in recent years. However, this is not the case this Tuesday. The collective catering group controlled by the Bellon family published revenues of 6.07 billion euros in the third quarter of its 2023-2024 financial year, the period from the beginning of March to the end of May. Growth was 5.6% over one year in published data and 6.8% in comparable data.
However, this progression is slightly lower than expected since the consensus was 7% in comparable data according to Morgan Stanley.
By region, Sodexo benefited from good activity in North America where growth was 9% in comparable data. Europe (+5.4%) and especially the “rest of the world” (+3.6%) were less dynamic, the second region suffering from restructuring in tech in China and a slowdown in Chile.
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Loss of contract
By type of business, catering services saw their revenues increase by 8.6% in comparable data while those of “facilities management” (elevator maintenance, cleaning, concierge, laundry) increased less sharply, by 3.5% in comparable data.
Above all, it is in this “facilities management” activity that Sodexo lost a “major contract”. The company’s CFO, Sébastien de Tramasure, told analysts that the loss of this contract would penalize its client retention rate by around 60 basis points (0.60 percentage points) in 2024. The manager nevertheless confirmed that the company still expected to achieve a retention rate of 96% in the 2023-2024 financial year.
“It is above all the loss of this contract which is causing the action to waver, retention is the component of growth most closely watched by the market,” estimates an analyst based in Paris.
On the Paris Stock Exchange, Sodexo shares fell by 4.7% at around 2:30 p.m. after having fallen by up to 6.6% during the morning.
Sébastien de Tramasure specified that the loss of this contract would not have an impact on the group’s revenues for the 2023-2024 financial year, but the impact would then gradually be felt in the following financial year.
At the end of this quarter, Sodexo confirmed all of its outlook for the 2023-2024 financial year, namely like-for-like growth at the top of a range of between 6% and 8% and growth in its operating margin of 30 to 40 basis points at constant exchange rates.
Julien Marion – ©2024 BFM Bourse
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