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Results for the first half 2005-2006
5/11/2006
Organic growth: + 5.5 %; Continuing improvement in operating profit drives strong increase in Group net income; Objectives for Fiscal 2006 confirmed
Paris, May 11, 2006 - SODEXHO ALLIANCE (Euronext Paris FR0000121220 - SW / NYSE:SDX) Sodexho Alliance's Board of Directors, chaired by Pierre Bellon, met on May 9, 2006, to close the Group's financial statements for the first half of fiscal 2006, which ended on February 28, 2006.
Financial Highlights
Sodexho Alliance has applied International Financial Reporting Standards (IFRS) since September 1, 2005.
Comparative amounts have been presented also using the new accounting standards.
In million of euro | Fist Half fisacl 2005 | First Half Fiscal 2006 | Change (excluding currency impact) | Currency impact(2) | Total change |
Revenues | 5,902 | 6,546 | +5.5% | +5.4% | +10.9% |
Operating profit excluding settlement of U.S. litigatiion(1) | 270 | 315 | +11.4% | +5.3% | +16.6% |
Operating profit | 210 | 315 | +43.3% | +6.7% | +50.0% |
Financial expense | (54) | (52) | -8.1% | +2.8% | -5.3% |
Income tax | (57) | (102) | +70.9% | +8.4% | +79.3% |
Group net income excluding resolution of U.S. litigation(1) | 134 | 160 | +11.6% | +8.4% | +20.0% |
Group net income | 94 | 160 | +62.5% | +8.4% | 70.9% |
(1) Operating profit and net income for the first half Fiscal 2005 include a provision for 60 million euro (40 million euro after tax) corresponding to the estimated charge at the time of the settlement of this litigation.
(2) For the first time in three years, the translation of the U.S. dollar into euro resulted in a favorable exchange rate impact on the consolidated income statement.
Organic revenue growth of 5.5 %
Organic revenue growth for the first half of fiscal 2006 was solid in all activities, particularly in the Healthcare and Seniors segment (+8.2%) in Food and Management Services and also in Service Vouchers & Cards (+16.8%).
Revenues for the first half of fiscal 2006 were reported on April 5, 2006, and the related press release is available on the Group's website : www.sodexho.com
Operating profit: +11.4 % excluding currency impact
In Service Vouchers & Cards, operating profit was 53 million euro, a particularly strong improvement (+43.5%) (1) resulting from very positive business development, notably in Latin America.
Food and Management Services (1):
- In North America, operating profit was 152 million euro, an increase of 7.8%. This results notably from improved performance both from volume growth and on-site productivity in the Healthcare and Seniors and Education segments
The modest improvement in operating profit (+1.5%) in Continental Europe to 103 million euro resulted primarily from:- the impact of start-up expenses of certain significant new contracts signed last year in France and,
- continuing client headcount decreases, most particularly in Northern Europe.
- In the United Kingdom and Ireland, operating profit was 17 million euro and in line with the Group's recovery strategy.
This represents a significant improvement over the comparable period in Fiscal 2005. - In the Rest of the World (Latin America, Asia, Oceania and Remote Sites), operating profit was 11 million euro.
This performance reflects both the scheduled completion of certain infrastructure development contracts in the Remote Sites activity
in Australia and slightly decreased activity levels in the Gulf of Mexico following the hurricanes at the beginning of the fiscal year.
Group net income
Group net income rose by 70.9% or 62.5% at constant currency during the first half of Fiscal 2006.
First half Fiscal 2005 net income included a 40 million euro (net of taxes) charge for resolution of the U.S. litigation.
After adjusting the prior comparable base for this effect, Group net income increased 20%, or 11.6 % at constant currency.
Financial situation
At February 28, 2006, net debt amounted to 683 million euro, representing 31% of Group shareholders' equity.
(1)Comparisons with the prior year are at constant currency and excluding settlement of the U.S. litigation
Fiscal 2005 - 2006 outlook
On May 9, 2006, the Sodexho Alliance Board of Directors confirmed, for Fiscal 2006, the high end of the objectives announced in November 2005:
- Organic revenue growth of around 5%;
- Increase in operating profit of about 6%, excluding currency impact.
Ambition 2015
Developed by 350 managers from around the world to unite the Group's 324,000 employees around a clear vision for the future, Sodexho's “Ambition 2015” is to be the premier global outsourcing expert in quality of life services.
Commenting on this strategic vision, Sodexho CEO Michel Landel said, “Mobilized around this collective goal, we are determined to improve our operational efficiency and competitiveness. Given the enormous growth potential within Sodexho's markets, we have an ambition to accelerate our organic revenue growth, in particular through the development and extension of our proven Facilities Management service offerings. "
Analyst and journalist briefings
SODEXHO ALLIANCE will hold a briefing for analysts today at 8:30 am (Paris time) and for journalists at 11:00 am (Paris time) at Espace Etoile-St-Honoré, 23, rue Balzac, 75008 Paris.
The analyst meeting will be webcast and will begin at 8:30 am (Paris time). The presentation will be available on the Group's web site by clicking on the link www.sodexho.com under the “latest news” section, beginning at 7:30 a.m. The audio proceedings also can be followed by dialing +33 (0)1 72 26 01 65. An audio recording of the analysts briefing will be available for one week by dialing + 33 (0)1 72 28 01 49, access code 179927#.
Financial communications calendar
- First-nine months 2005 - 2006 fiscal revenues
Wednesday, July 5, 2006, conference call. - Full year 2005 - 2006 fiscal revenues
Wednesday, October 4, 2006, conference call. - Full year 2005 - 2006 fiscal results
The press release for full year fiscal 2005 - 2006 results will be published on November 16, 2006.
Presentations for analysts and journalists will be held the same day, at Etoile-St-Honoré, 23, rue Balzac, 75008 Paris.
The above dates are provided for information only and are subject to change.
Access to the on-demand broadcast
Download the presentation in pdf Download annex in pdf
About SODEXHO ALLIANCE
SODEXHO ALLIANCE, founded in 1966 by Pierre Bellon, is the leading global provider of Food and Management services, with more than 324,000 employees on 26,700 sites in 76 countries. For Fiscal 2005, which closed August 31, 2005, SODEXHO ALLIANCE had sales of 11.7 billion euro. Listed on Euronext Paris and on the New York Stock Exchange, the Group's current market capitalization is 6.2 billion euro.
This press release contains 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995. These include, but are not limited to, statements regarding anticipated future events and financial performance with respect to our operations. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like 'believe,' 'expect,' 'anticipate,' 'estimated' , 'project ' , 'plan' 'pro forma,' and 'intend' or future or conditional verbs such as 'will,' 'would,' or 'may.' Factors that could cause actual results to differ materially from expected results include, but are not limited to, those set forth in our Registration Statement on Form 20-F, as filed with the Securities and Exchange Commission (SEC), the competitive environment in which we operate, changes in general economic conditions and changes in the French, American and/or global financial and/or capital markets. Forward-looking statements represent management's views as of the date they are made, and we assume no obligation to update any forward-looking statements for actual events occurring after that date. You are cautioned not to place undue reliance on our forward-looking statements.
