Sodexo announces solid H1 Fiscal 2024 results

• Organic Revenue growth +8.5%
• Underlying operating profit +16.9% at constant currencies, margin up +40 bps
• Fiscal 2024 guidance:
  • Organic 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

At the Board of Directors meeting held on April 18, 2024, chaired by Sophie Bellon, the Board closed the Consolidated accounts for the First half Fiscal 2024 ended February 29, 2024.

For more detail on the Group Net Profit including discontinued operations, please refer to section 1.2.6 of the Financial Report.

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.
• Net financial expense was 46 million euros against 43 million euros in the previous year.
• The Effective tax rate was at 16.6% against 26.2% in the previous year mainly due to the non- taxable capital gain on the Homecare disposal, as well as the utilization of previously unrecognized tax assets due to better results in France.
• 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%.
• Free cash flow in the first half was a seasonal negative -102 million euros, an improvement relative to the -236 million euros in First half Fiscal 2023. Net capital expenditure⁽¹⁾ was stable at 246 million euros, representing 2% of revenues.
• Net debt increased to 3.4 billion euros up from 2.9 billion euros at the end of Fiscal 2023⁽²⁾ due to the seasonality of cash movements. Given the year-on-year increase in EBITDA, the Net debt to EBITDA ratio⁽¹⁾ is 2.3x, up only 0.1x since year end, and well below the level at the end of First half Fiscal 2023 of 3.2x.

_{(1) New definitions of Net Capital expenditure and EBITDA, please refer to section 1.1 of the Financial Report.
(2) Net debt as of August 31, 2023, was adjusted to reflect the post spin-off situation, please refer to section 1.3.3 of the Financial Report.}

The Pluxee spin-off took place on February 1, 2024 in line with the plans laid out a year ago.
Sodexo has become a pure-player in Food and FM services. The operating performance has remained on track throughout the process.