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Sodexo on the right path to enhance productivity

Sodexo has published its annual results for the fiscal year ended 31 August 2018, reporting its figures are in line with those presented in its trading update in March.

The results show an increase in organic revenue of 2 per cent. There was an acceleration in the fourth quarter due to a return to record levels of summer tourism in France, an expected board days shift in universities in North America from the third to fourth quarter, and, in Benefits & rewards, a strong-pick up in activity in Brazil. Underlying operating profit margin was in line at 5.7 per cent, excluding currency impact, or 5.5 per cent as published.

On-site Services saw an organic growth rate of 1.4 per cent. There was -1.1 per cent decline in revenue in North America, and growth of +4.5 per cent in all other regions, with double digit growth in Asia, Brazil and Latin America.

Acquisitions, net of disposals amounted to €697 million. Centerplate, a provider of food and beverage, merchandise and hospitality services at sports facilities, conventions centres and entertainment facilities in the United States and Europe was the biggest. The company contributed €509 million to Group revenue this year and was accretive to operating margin. Centerplate doubles the Group’s presence in the Sports & Leisure segment, particularly strengthening its position in the North America market.

Other acquisitions during the year included Kim Yew to strengthen the Group’s technical expertise and capacities in Singapore, Morris Corporation to enhance the Group’s presence in remote site services for the mining industry in Australia. Since year end, further acquisitions have been made, including Crèche de France, doubling the Group’s presence in the child-care market in France and Novae Restauration, significantly enhancing the Group’s presence in the high-end catering market in French-speaking Switzerland.

Sodexo’s engagement in corporate responsibility continued to be recognised within the investment community, with the highest marks of its sector in RobecoSAM’s 2017 “Sustainability Yearbook”, for the 11th consecutive year. Sodexo also remains the top-rated company in its sector within the Dow Jones Sustainability Index (DJSI), for the 14th consecutive year.

For Fiscal Year 2019, the strategic agenda is aimed at delivering market leading growth. The Group is confident that organic revenue growth should be between 2 and 3 per cent, with underlying operating margin for the year being between 5.5 and 5.7 per cent, excluding the currency impact.

Commenting on the results, Sodexo CEO Denis Machuel said: “The results for Fiscal 2018 are in line with what we signposted during the trading update in March.

“This has been a challenging year for Sodexo, but we know what went wrong, and we know what we need to do to fix it. Healthcare and Education in North America continue to drag on our performance, and the turnaround is going to take some time. Vigorous action plans are being deployed across the organisation by the new Executive Committee to address our execution issues. We are laser-focused on sales and retention, discipline and accountability.

“I am convinced that we are on the right path to enhance productivity, giving us the means to reinvest in accelerating growth, which is our absolute priority today. My ambition is to get growth at Sodexo back up to best-in-class, and I’m confident we will get there.”


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