Sodexo: announces better than expected Q3-2022 revenue growth

Issy-les-Moulineaux / FR. (so) France’s Sodexo announced a better than expected revenue growth in the third quarter of fiscal 2022. «Growth in the third quarter has been strong in all activities, segments and geographies, helped by post-Omicron On-site volume recovery and price revisions. Benefits + Rewards Services is accelerating in all regions,» Chairwoman and CEO Sophie Bellon said in the Company’s statement and continues: «We are making progress on our strategic priorities. We are moving ahead on improving the effectiveness of our On-site Services organization. We plan to transfer full P+L accountability to the countries, regrouped into three geographic zones, North America, Europe and the Rest of the World. This simplification will bring agility and speed to execution.»

Q3 Fiscal 2022 revenues

20220701-SODEXO-Q3-2022

Highlights of the period

  • Third quarter Fiscal 2022 consolidated revenues reached 5.5 billion euros, up +23.2 percent year-on-year including a net contribution from acquisitions and disposals of -1.7 percent, more than compensated by a strong positive currency impact of +6.6 percent, linked to the strength of the US dollar and the Brazilian Real. As a result, third quarter Fiscal 2022 organic growth was +18.3 percent, reaching 97 percent of Fiscal 2019 revenues at constant rates. Thanks to the acceleration in the quarter, revenue for the first nine months of Fiscal 2022, reached 15.8 billion euros, up +17.3 percent.
  • Third quarter Fiscal 2022 On-site Services organic growth was also up +18.3 percent and represented 97 percent of Fiscal 2019 revenues, against 94 percent in Second quarter Fiscal 2022 demonstrating a strong recovery post-Omicron.
    • Corporate Services continued to benefit from the return to office. Sports + Leisure activity was back up to 83 percent of Fiscal 2019 level, against only 61 percent in the previous quarter as the convention activity picked up strongly. Activity picked up in Universities as events and retail sites restarted, to 91 percent of 2019 level compared to 84 percent in the second quarter.
    • All other segments continued to perform well.
    • The Food Services recovery was strong, reaching 90 percent of Fiscal 2019 level compared to 82 percent in the previous quarter. Facilities Management services remained solid, well above pre-Covid level.
    • Organic growth was +22.6 percent in North America, +18 percent in Europe and +9.8 percent in Asia-Pacific, Latin America, Middle East and Africa.
    • In the Third quarter, the pricing effect is more than 5 percent against about 3 percent in the First half Fiscal 2022.
    • Year to date Development and Retention continues to improve in North America.
  • Benefits + Rewards Services organic growth was +17.7 percent, accelerating in the Third quarter, due to solid growth in all regions: +17.5 percent in Europe, USA and Asia and +18.0 percent in Latin America. Operating revenues were up +15 percent and Financial revenues were up +62.4 percent due, in particular, to the significant increase in the Selic (official interest rate) in Brazil.
  • Sodexo has accelerated its efforts against food waste with its waste prevention and reduction program, WasteWatch. This innovative program has been globally deployed across 2,500 sites, representing 38 percent of the total raw material cost (+10.4 points compared to end of Fiscal 2021) and is essential to achieving our 50 percent food waste reduction target by 2025.
  • Sodexo has also accelerated its climate related actions through strong partnerships:
    • In collaboration with EY and Traace, Sodexo released an innovative digital Carbon Trajectory Tool on a worldwide basis in April 2022. This tool is aimed at helping each activity, country by country, create and manage its carbon reduction roadmap by 2025 and beyond.
    • In April 2022, Sodexo greenhouse emission reduction targets for its Benefits + Rewards Services activity in Belgium have been validated by the Science Based Targets initiative (SBTi). The aim is to reduce absolute emissions by 64.9 percent by 2030, compared to a 2019 baseline.
  • As part of the strategic priority enhancing effectiveness of our organization, we plan to transfer full P+L accountability to the countries, regrouped into three geographic zones, North America, Europe and Rest of the World. In this plan, the three zones will be headed up by respectively Sarosh Mistry, Sunil Nayak and Johnpaul Dimech. The new On-site Services organization will be put in place progressively from September through to December, in compliance with the Group’s social dialogue as well as information and consultation processes, where necessary.
  • A Capital Markets Day will be held on November 02, 2022, in Paris, to present the Group’s strategy for its On-site Services and Benefits + Rewards Services and mid-term objectives.

Outlook

Sodexo confirms its expectations for:

  • Fiscal 2022 organic growth around the bottom of the range of +15 percent to +18 percent.
  • Fiscal 2022 Underlying Operating Profit margin close to 5 percent, at constant rates.

For additional information please read the Company’s PDF file below (310 KB):

20220701-SODEXO-Q3-2022
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