Sodexo Reports 5.4 Percent Revenue Gain In 2011

Nov. 14, 2011
Sodexo reported revenue growth of 5.4 percent in fiscal 2011.

Sodexo reported revenue growth of 5.4 percent in fiscal 2011. Sodexo's consolidated revenue grew by 5.4 percent overall to 16 billion euro in fiscal 2011, with organic growth of 5.2 percent.

This level of organic growth is double the figure achieved in fiscal 2009 and fiscal 2010, and exceeds the targets announced at the beginning of the year.

Commenting on the results, Sodexo CEO Michel Landel said in a prepared statement: "In a continued tense environment, Sodexo achieved good results for the fiscal year ended Aug. 31, 2011 as a result of the commitment of all our teams throughout the world. I thank them for their efforts.

“These results demonstrate the relevance of Sodexo's unique positioning and development strategy. We have become an integrator of quality of life services and hold leadership positions in high potential economies such as the BRIC countries. We are continuing to invest for the future in areas such as human resources and talent development and the implementation of our technical service offerings. While we remain prudent given the increasingly uncertain economic context, the objectives announced today demonstrate our confidence in our strategy, our employees and our financial model."

Organic growth accelerated during the course of the year, in particular as a result of the following:

The success of Sodexo's offerings, and in particular its facilities management services, which in fiscal 2006 represented only 18 percent of group revenue, rising to 25 percent in fiscal 2011. In fact facilities management services grew three times as fast as Foodservices in the course of the year.

Sodexo's solid positions in the rest of the world, and in particular its rapid development in the emerging markets.

Revenues for on-site service solutions increased 5.2 percent to 15.3 billion euro, with organic growth increasing 5.1 percent.

Fiscal 2011 highlights by client segment included:

Organic growth of 6.7 percent in corporate, compared with 2 percent in fiscal 2010; this reflects solid development for Sodexo in emerging markets and the significant impact of the phasing in of comprehensive service solutions contracts in the justice, defense and corporate segments.

Sodexo registered 17.9 percent organic growth in justice, 6.5 percent in defense and 15.9 percent in remote sites.

3.5 percent growth in health care and seniors, resulting from an extension of the services supplied to existing clients in North America, offset by a short-term decline in outsourcing in Europe and the United Kingdom.

A 3.4 percent increase in education resulting in particular from continuing growth in university enrollments in North America.

Most of the 6.9 percent organic growth in motivation solutions resulted from the excellent performance of Sodexo's Latin American teams, with issue volume rising to 13.7 billion euro, up nearly 9 percent (excluding currency translation effects) over the prior year.

Sodexo's key performance indicators were as follows:

The 94 percent level of client retention was comparable to the previous year;

The 4.3 percent growth on existing sites compares to 2 percent for the prior year. The acceleration results partially from the impact of rising food inflation;

The rate of development, or new contract wins, was 7.4 percent;

The employee retention rate reached 61.9 percent with a level of 83.6 percent for site managers (compared with 82.9 percent in the previous year);

The number of training hours provided was 4.8 million hours for all employees worldwide, an increase of more than 150,000 hours over the previous year;

85 percent of employees consider Sodexo to be a better employer than its competitors according to the most recent employee engagement survey, conducted in Fiscal 2010.

Operating profit increases 10.6 percent.

Operating profit was 853 million euro, an increase of 10.6 percent. Excluding currency effects, revenues rose 10.4 percent, representing an improved operating margin of 0.20 percent over the previous year.

For on-site service solutions:

Operating profit increased 8.6 percent (excluding currency effects), mainly a result of: -- improved profitability in North America, rising from 4.8 percent to 5.1 percent;

Growth in volumes in the rest of the world.

Motivation Solutions: Operating profit rose by 20 percent at constant exchange rates, thanks to higher volumes and productivity gains. The operating margin for this activity increased from 32.4 percent in fiscal 2010 to 36.5 percent in fiscal 2011, thereby reaching in advance the medium-term objective set by the group.

Increase in net income and earnings per share.

Group net income was 451 million euro compared with 409 million euro for the previous year, an increase of 10.3  (9.3 percent at constant exchange rates). Growth was slightly lower than the increase in operating profit, a result primarily of a higher effective tax rate, which rose from 33 percent to 35.4 percent.

Earnings per share was 2.95 euro, an increase of 11.7 percent. The increase is higher than the rise in net income because of an increase in the number of treasury shares. These shares are excluded from the calculation of earnings per share.