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Sodexo reports strong half-year results

Sodexo’s results for first half Fiscal 2022 show Group revenue was 10,262 million euro, up +19.4%, with strong recovery coming through in all segments that were severely impacted by Covid.

Group organic revenue growth was +16.7%, back up to 95% of pre-Covid levels.

On-site Services organic revenue growth was +17.0%, with a particularly strong first quarter up +17.9% and a second quarter at +16.1%, impacted by Omicron. The recovery was solid with the first quarter ending at 95 % of pre-Covid levels but falling back slightly to 94% in the second quarter due to Omicron.

  • In Business & Administrations, organic growth was +19.5%. It reflects a strong recovery in Corporate Services, back up to 89% of pre-Covid levels in Q2, due to a gradual but regular return to the workplace. Sports & Leisure is back up to 61%, as the number of events has picked up significantly. Energy & Resources and Government & Agencies remained solid.
  • In Healthcare & Seniors, organic growth was +5.0%, with the first quarter up +7.4% and the second quarter up +2.5% reflecting a much tougher comparative base in Europe, including a high level of activities at the Testing Centers contract in the UK last year.
  • In Education, organic growth was +29.5%. While the recovery in activity in Universities in North America was very strong during the period, Omicron did have an impact on the growth in the second quarter in Schools in North America and Europe. Relative to preCovid levels, Education was at 88% in the second quarter, back down from 92% in the first quarter.

Group net profit recovered significantly at 337 million euros against 33 million euros in the previous year.

Outlook

The First half Fiscal 2022 benefited from a strong recovery, post-Covid, in the Corporate Services, Sports & Leisure and Education segments but it was also impacted by Delta and Omicron in the second quarter. Since the end of February, Sodexo says momentum is picking back up, however, the current environment remains full of uncertainties. There is a resurgence of localised Covid outbreaks, several mobilisations in Russia will not happen, and the Testing Centres in the UK are closing earlier than expected. As a result, the Group expects Fiscal 2022 organic growth to be around the bottom of the range of +15% to +18% given in October 2021.

Sodexo Chairwoman and CEO Sophie Bellon said: “Revenue growth and margins improvement have been strong in this First half, reflecting the solid recovery in Education, Corporate Services and Sports & Leisure segments. Omicron did have an impact on the recovery in the second quarter, but we are seeing a pick-up since the end of February.

“In the second half of the year, we are confident that the return to the workplace and Sports & Leisure events will continue to recover. However, the environment remains uncertain with intermittent local outbreaks of Covid-19, and the war in Ukraine. We are confident that we can manage the year end inflationary pressure on margins. Currencies should give us a nice tailwind, but we expect organic revenue growth to be around the bottom of the range we had given in October 2021.

“Our teams are mobilised to meet the challenges and I warmly thank them for their impressive engagement in the field with our clients and our suppliers. We remain confident in our capacity to continue to grow our business.”

Sean Haley, Region Chair for Sodexo UK & Ireland said: “We continue in our commitment to grow responsibly with a defined purpose and over the last six months have made advances in our positive impact on the communities in which we live and work. This includes the publication of our roadmap to net zero and decarbonisation of our business. One area of progress on this is our engagement with industry and political stakeholders to address the urgent issue of tackling food waste through our Appetite for Action campaign.

“Our growth continues and since September we have been appointed as sole supplier on the property services integrator framework for the Mayor’s Office for Policing and Crime (MOPAC), we are now the exclusive venue partner at DW Stadium and have also begun a five-year contract at her Majesty’s Royal Naval Base in Portsmouth.

“Further highlights of this period include the delivery of a full hospitality programme at RHS Chelsea Flower Show – which was delayed due to Covid and held in September – and the launch of Sodexo’s innovation lab in the UK and Ireland to attract innovative start-ups to work with us.

“We continue to develop our services to meet the needs of our clients as we learn to live with Covid. In Healthcare, where our teams deliver excellence at hospitals across the country, we have launched two new services. The first, Protecta, through our new partnership with the Infection Prevention Society, is an evidence-based infection prevention approach for hospitals. The second, Experiencia, is a unique insights platform enabling our teams to gather meaningful, in the moment, feedback from patients on their non-clinical experience. This includes everything from the cleanliness of the care environment through to the meals they are served.

“Another new and exciting collaboration in the last six months is the one we commenced with the British Nutrition Foundation to create the Healthy Futures Partnership. This will work towards improving future health outcomes for children and young people. Just this week we have announced the enhanced Powering Performance programme for independent schools, one of the first projects the Healthy Futures Partnership has supported.

“Finally, as Covid-19 test centres closed in England yesterday, We are enormously proud of everything our teams have achieved to support the government’s national response to the pandemic. Irrespective of the exceptional circumstances, we are committed that every single one of our colleagues and casual workers is treated fairly and recompensed in accordance with their employment rights and are doing all we can to help them secure new work and prepare for their future. We are pleased to see our Sodexo Live! business reinvigorated and workplaces welcoming workers back, this is also helping us to offer our test centre colleagues redeployment opportunities as we strengthen our teams in these areas.

“It remains a challenging time for all and we remain committed to ensuring that through our operations we have a positive impact on the communities in which we live, work and serve, and will continue to do all we can to support the health and wellbeing of our colleagues.”

 

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