Issy-les-Moulineaux / FR. (so) Sodexo, world leader in Quality of Daily Life Solutions, announces solid organic revenue growth and an increase in operating profit for the first half fiscal 2012. At the Board of Directors meeting this week, chaired by Pierre Bellon, Chief Executive Officer Michel Landel presented the Group´s performance for H1/2012.
| (Millions in EUR) | H1/2012 | H1/2011 | excl. Currency Impacts (1) | Currency Impacts | Total Change |
| Income Statement Highlights | |||||
| Revenues | 9’069 | 8’269 | + 10,3% | – 0,6% | + 09,7% |
| Organic growth | + 6,4% | + 4,8% | – | – | – |
| Operating profit | 559 | 488 | + 16,0% | -1,5% | + 14,5% |
| Operating margin | 6,2% (2) | 5,9% | – | – | – |
| Group net income | 297 | 252 | + 19,4% | -1,5% | + 17,9% |
| Financial structure highlights | |||||
| Net cash provided by operating activities | 315 | 284 | |||
| . | 2012.02.29 | 2011.02.29 | |||
| Gearing | 38% | 26% | |||
| (1) The currency impact is determined by applying the average exchange rate for the first half of the previous year to the figures for the first half of the current year. (2) 5,9 percent excluding the 26 million EUR favourable adjustment for pensions in the United Kingdom. |
|||||
Commenting on the results, CEO Michel Landel said: «Our first half results are solid, demonstrating the relevance of Sodexo´s strategy and Quality of Life services offer, illustrated by the major contract wins of the past several months. Organic growth is increasing, driven by development of more than ten percent in our Facilities Management services and in our Motivation Solutions activity. In a tough economic environment, our teams are fully mobilized to provide clients the innovation and productivity they expect. We are maintaining our full year Fiscal 2012 objectives of an increase of around ten percent in operating profit based on organic revenue growth of between six and seven percent, with acquisitions also impacting revenues by around four percent».
Revenue growth
Consolidated revenues for the first half of Fiscal 2012 increased 9,7 percent to 9,1 billion EUR, reflecting solid organic growth of 6,4 percent, a 3,9 percent increase related to acquisitions and changes in consolidation scope, and a negative currency impact of 0,6 percent. At 6,2 percent, organic growth in On-site Service Solutions accelerated versus the prior year, a result in particular of the Rugby World Cup hospitality contract as well as the excellent pace of activity in the Rest of the World (Latin America, Asia, Australia and Remote Sites). For the first time in three years, Motivation Solutions recorded double-digit organic growth (plus 11,5 percent). This excellent performance mainly comes from Latin America, but also reflects new growth in Europe and Asia.
Acquisitions
During the first half of Fiscal 2012, the three main acquisitions made at the beginning of the fiscal year contributed 3,9 percent to the increase in revenues.
- On September 06, 2011 Sodexo acquired Puras do Brasil and became the leader in On-site Service Solutions in Brazil, one of the world´s most dynamic economies offering Sodexo considerable growth potential.
- On September 22, 2011 the Group acquired Len?´tre in France. Len?´tre´s recognized brand and savoir faire as well as its strong reputation, its three-star restaurant and eleven Meilleurs Ouvriers de France (a prestigious award for culinary masters) will allow Sodexo to reinforce its gastronomic expertise.
- On November 30, 2011, Sodexo acquired U.S.-based Roth Bros, which designs, manages and delivers technical facilities management services (HVAC, energy management, facilities automation and control, and fluid and energy maintenance services).
Integration of these acquisitions is proceeding successfully and in line with the Group´s expectations.
Increase in operating profit
Operating profit was 559 million EUR, a 14,5 percent increase at current exchange rates, or 16 percent excluding currency impacts. It should be noted that operating profit for the first half of the year benefited from a favourable 26 million EUR accounting adjustment related to the cost of retirement plans in the United Kingdom. The Group elected to replace the Retail Price Index (RPI) with the Consumer Price Index (CPI), as permitted by new regulations, in the calculation of pension obligations to certain beneficiaries of its retirement plan. Excluding this favourable accounting adjustment, the Group´s operating profit increased by 9,2 percent, or 10,7 percent at constant exchange rates and its consolidated operating margin was 5,9 percent, a level similar to that achieved for the same period in the prior year. This performance reflects: a slight increase in On-site Service Solutions in the context of high food price inflation in certain countries; a very good performance in Motivation Solutions (plus 24,2 percent at constant rates) as a result of increased volumes and a number of favourable non-recurring items.
Increase in Group net income
Group net income was 297 million EUR, a 17,9 percent total increase, or a 19,4 percent increase excluding currency effects. Excluding the favourable accounting adjustment related to the cost of retirement plans in the United Kingdom, Group net income increased by 10,1 percent (an 11,7 percent increase excluding currency effects) and includes an eight million EUR increase in net financial expenses compared to the first half of Fiscal 2011, which resulted from financing costs for the recent acquisitions.
Net cash provided by operating activities and net borrowing rate
Net cash from operating activities was 315 million EUR, compared to 284 million EUR during the first half of the previous fiscal year, an increase in line with the growth in operating profit. On February 29, 2012, net borrowing as a percentage of equity was only 38 percent. The Group´s financial ratios remain very strong.
Fiscal 2012 Outlook
At the April 17, 2012 Board of Directors´ meeting, Chief Executive Officer Michel Landel reminded the Board of the progress made on performance indicators in four main areas (Development, Management, Human resources, and Sustainable development). He then presented the outlook for the remainder of Fiscal 2012. He emphasized that significant prudence was still required in a macro-economic climate that remains uncertain and which is still marked by inflationary pressures on food costs. In these difficult conditions, Sodexo teams continue to seek productivity gains and cost savings in response to client requirements. On the strength of its performance in the first half of the fiscal year and in spite of the tense economic environment, the Group confirms its objectives for the full year Fiscal 2012.
