Sodexo Reports 8.1 Percent Revenue Growth For First Quarter

Jan. 12, 2012
Sodexo, based in Paris, France, announced consolidated revenues for the first quarter of fiscal 2012, which ended Nov. 30, 2011.

Sodexo, based in Paris, France, announced consolidated revenues for the first quarter of fiscal 2012, which ended Nov. 30, 2011. The company reported 8.1 percent revenue growth with 6.8 percent organic growth.

CEO Michel Landel said in a prepared statement:

"While the global economic environment remains volatile, revenues for the first three months of fiscal 2012 reflect dynamic sales activity and are in line with our objectives for the year. This growth is mainly a result of the excellent performance of the motivation solutions activity and in on-site service solutions, of the solid efforts of our teams in Latin America, Asia, Australia and remote sites. In addition, for the third consecutive time, we contributed to the success of the recent Rugby World Cup with the delivery of all hospitality services."

For the first quarter of Fiscal 2012, two acquisitions made at the beginning of the year increased revenue by 3.2 percent.

Sodexo completed the acquisition of Puras do Brasil on Sept. 6, 2011, becoming number one in Brazil’s fast growing on-site service solutions market.

On Sept. 22, the group also completed the acquisition in France of Lenôtre, which will enable Sodexo to expand its Prestige business portfolio in France and abroad, as well as its expertise in the luxury gastronomy business.

Finally, Sodexo acquired Roth Bros. on 30 Nov. 2011, a company based in the U.S. that designs, manages and implements facility management services such as HVAC, energy management, building automation and control and maintenance of fluids and energy. Roth Bros. will be consolidated in the group financial statements beginning Dec. 1, 2011.

The integration of these acquisitions is proceeding in line with expectations.

Financing for the three acquisitions represents less than one year of operating cash flow for Sodexo.

Organic growth in on-site service solutions was 6.6 percent.

Organic growth of nearly 10 percent in corporate reflects the contribution of the hospitality contract for the Rugby World Cup, held in September and October 2011 in New Zealand, and an excellent rate of development in the rest of the world (Latin America, Asia and Remote Sites), where organic growth was close to 20 percent.

Organic growth in health care and seniors and in education, 3.8 percent and 3.6 percent respectively, was slightly higher than the growth rate for the previous year.

At 5.1 percent, organic growth in corporate remains solid. This performance notably reflects the success of comprehensive service solution offerings in a market where conditions remained unfavorable for foodservices, as well as the success of remote sites in Canada. New contracts signed include Bombardier Recreational Products in Canada.

In health care and seniors, organic growth was 4.9 percent with growth on existing sites driven by construction projects and extension of services such as the maintenance of medical imaging equipment. Among the new contracts won by Sodexo were Chilton Hospital (New Jersey), Huntington Memorial Hospital (Indiana), Parkview Regional Medical Center (Indiana) and Rapides Regional Medical Center (Louisiana).

Organic growth of 4.7 percent in education reflects the impact of public school contracts won during the previous year, such as the City of Detroit (Michigan) and Lewisville (Texas). Among new contracts signed during the first Quarter were Floyd County Consolidated School District (Indiana) and Saginaw Public Schools (Michigan).

Organic growth in corporate was 2.2 percent, despite a particularly difficult economy and mainly resulted from comprehensive service offerings to large companies; as a recent example, the award of technical maintenance services to the Alcatel Group in France, Poland and Hungary.

In health care and seniors, organic revenue growth was 1.6 percent, and as in the previous year, reflected a modest increase on existing sites and low commercial development. However, the sale of new services to existing customers contributed to better on site growth in France. New contracts recently won include IRCCS Fondazione Don Gnocchi Firenze in Italy.

In education, revenues declined slightly by 0.7 percent with the gain of the major contract for 314 schools in the city of Marseilles not fully offsetting the termination of the contract with the schools of the city of Nice, which is returning to self-operation. Commercial development, however, remained active and led to new contracts such as with the Universidad Politecnica de Cataluna (Spain).

In addition, Sodexo signed an international framework agreement on Dec. 12, 2011 with the IUF (International Union of Food Workers) confirming Sodexo’s commitments to respecting fundamental rights at work and, specifically, the right of association and collective bargaining. This agreement is unique in the group’s industry sector, providing a framework for ongoing relations with the IUF and Sodexo employee representatives. It tangibly illustrates Sodexo's commitment to respect employee rights of association and expression, an essential factor for promoting dialogue, internal cohesion and progress. This agreement does not replace national negotiations or pre-existing agreements.