Sodexo makes ‘good progress’ in Fiscal 2022

Sodexo’s Full Year Group Results show a strong increase in revenues and profitability in Fiscal 2022.

Q4 saw the global facilities provider return to pre-Covid levels, with Sodexo reporting Fiscal 2022 consolidated revenues had reached 21.1 billion euros, up +21.2% year-on-year, driven by organic growth of +16.9%, a net contribution from acquisitions and disposals of -1.2% and a strong positive currency impact of +5.5%.

On-site Services organic revenue growth was up +17.0%:

• In Business & Administrations, organic growth was +22.7%. This was driven by ongoing growth in Energy & Resources and Government & Agencies, the recovery of Sports & Leisure in the second half as events and conventions picked up strongly and Corporate Services benefiting from a solid return to the office. The trend in the last two months of the year was in line with Sodexo’s Work from Home estimates made in 2020 and the company says it anticipates further improvement.
• In Healthcare & Seniors, organic growth was +4.0%. Sodexo’s performance was driven by pricing, cross-selling and the progressive recovery of hospital retail sales and Seniors’ occupancy. This was partially offset by the early closure of the Testing centres in the UK at the end of March.
• In Education, organic growth was +22.0%, following the strong post-Covid recovery in activity in Universities and Schools in North America, China and India.

Client retention rate was 94.5%, +140 bps higher than the previous year. This record performance was the result of an improvement in almost all regions, especially in North America. In France, difficult inflation negotiations, particularly in public sector Schools, led to some contract exits.

Underlying operating profit was 1,059 million euros, up +83.3% and underlying net profit doubled to 699 million euros, compared to 346 million euros in Fiscal 2021. Underlying EPS was 4.78 euros, double the previous year.

In terms of the Group’s future outlook Sodexo has said given that On-Site activity in the fourth quarter was in line with pre-pandemic levels, it expects revenues and margins for Fiscal 2023 to return to Fiscal 2019 levels. As a result, Fiscal 2023 organic revenue growth is expected to be between +8 and +10%, with Fiscal 2023 underlying operating profit margin close to 5.5%.

Sodexo Chairwoman and CEO Sophie Bellon said of the results: “All our activities delivered a strong recovery in Fiscal 2022. Growth in Benefits & Rewards Services accelerated and On-site Services margins improved, despite the inflationary backdrop. Net new business was strong, and retention was at an all-time high. Our balance sheet has also been strengthened significantly.

“Good progress has been made on the priorities I set out at the beginning of the year: North America generated strong growth, improved profitability and its retention and development improved significantly. We accelerated the transformation of our food models through several organic and external investments while also actively managing our portfolio of activities.

“We expect that our financial performance will return to Fiscal 2019 levels this year. I am confident that for Fiscal 2023, we can achieve +8 to +10% organic growth and a margin close to 5.5%.”

Commenting on Sodexo’s performance in the UK and Ireland, Sean Haley, Chairman, Sodexo UK and Ireland said: “Over the past 12 months in the UK and Ireland, Sodexo has achieved better than expected recovery and underlying trade is now back to pre-pandemic levels. I hope this is the last time we will compare our performance in terms of the pandemic.  Our business is now fully open, with exciting offers and services that anticipate and meet what our clients and consumers demand.

“This growth was achieved across both the private and public sector, with some new partnerships that deliver a diverse range of services from food, FM, and property services to rehabilitation. We have welcomed organisations such as the Metropolitan Police, HMP Lowdham Grange, Bright Futures Educational Trust, and the new Nuffield Health contract at St Bartholomew’s Hospital in the City of London.

“Just as importantly, we also retained business and extended many of our long-term partnerships including Falkland Islands and Cyprus with the Ministry of Defence, and a number of prestigious independent schools such as Clifton College in Bristol, St Paul’s Cathedral School in London and Magdalen College School in Oxford.

“We continue to make significant progress on our social impact pledges. There are too many things to mention, but I would like to highlight our support for colleagues to help with the the cost of living through financial offers and wellbeing services; our continued support for SMEs; the 1,220 apprenticeship opportunities we have provided in and outside our business; the success we have had in helping to tackle modern slavery, and the launch and acceleration of our SBTi validated Net Zero targets.

“I am confident for the year ahead that we will make further progress and continue to grow with purpose, delivering a broad range of vital services in partnership with our valued clients- and all the time guided by our mission to improve the quality of life for our colleagues, those we serve and the communities in which we operate.”