Sodexo announces financial results for the first-half fiscal 2024 ending February 29, 2024.
Sophie Bellon, Sodexo chairwoman and CEO, said in the announcement: “The spin-off of Pluxee has been successfully completed. Sodexo is now a pure-player in Food and Facilities Management services! We are making progress in transforming our Food services, developing our branded offers, boosting our convenience activity and enhancing our purchasing, particularly in North America. Our organization has been considerably simplified and streamlined: we are gaining in agility. The first half performance is solid. Organic growth is robust and the margin is up +40bps. Net new business momentum is also solid with a further improvement in retention. We are progressing towards our ambition to be the world leader in sustainable food and valued experiences. I would like to thank all our teams, who have worked so hard to execute the spin-off of Pluxee while delivering a solid operational performance!”
First-half fiscal 2024 results
First-half fiscal 2024 consolidated revenues were at 12.1 billion euros, up +4.5% year-on-year. Acquisitions and disposals impacted growth by -0.7%, linked to the sale of the Homecare activities in October only very partially offset by some bolt-on acquisitions, particularly in North America convenience. The negative currency impact amounted to -3.3%. As a result, organic revenue growth was +8.5%.
This organic growth was fueled by pricing for about half and net new business and some volume growth for the other half.
By geography:
- North America achieved organic growth of +10.0%.
- Europe was up +8.0%, boosted 80bps by the Rugby World Cup, in the first quarter.
- Rest of the world was up +5.7%, impacted by an accounting change for project works in a large contract. Excluding this, organic growth of the zone was +8.4%.
Food services organic growth, at +10.7%, continued to outperform FM services, at +4.5%.
Underlying operating profit was 612 million euros, up +12.3%, or +16.9% at constant currencies. The Underlying operating margin was up +40 bps at 5.1%.
Other operating income & expenses amounted to a positive 30 million euros, with the gain on the sale of the Homecare services more than offsetting restructuring, spin-off costs and amortization of acquisition-related assets.
Operating profit was up +26.1%, or +30.1% at constant currencies, at 642 million euros compared to 509 million euros in the previous year.
Group net profit from continuing activities was up +46.3% to 496 million euros. Underlying net profit adjusted for Other Operating income and expenses net of tax amounted to 427 million euros, up +15.4%.
Commercial momentum
During first-half fiscal 2024, last-12-months (LTM) net new development signed increased to 2.4%, up from 2.2% at year end fiscal 2023 due to:
- LTM client retention of 95.5%, another record for Sodexo.
- LTM development of 6.8%, slightly short of the 7-8% expected range for the year due to phasing.
Outlook
Given the solid commercial momentum, some ongoing volume growth, the contribution of the Paris Olympics and Paralympics Games in the fourth quarter, and pricing expected at close to +4% for the full year, Fiscal 2024 guidance is:
- Organic revenue growth now expected at the top of the +6% to +8% range.
- Underlying operating profit margin improvement confirmed at +30 to +40 bps, at constant currencies.
