Sodexo Fiscal 2021 Results: Solid pick-up in activity and better than expected performance

At the Board of Directors meeting held on October 26, 2021 and chaired by Sophie Bellon, the Board closed the Consolidated and Company accounts for the fiscal year ended August 31, 2021.

  • Revenue trend improved quarter by quarter, +18.1% in H2
  • H2 UOP margin +20bps versus guidance at constant rates
  • Exceptional cash conversion, net debt ratio at 1.7 back in target range of 1-2
  • Dividend €2: €1.20 as per the dividend policy, plus a very exceptional €0.80 linked to the disposal program
  • 2022 Guidance:
    • Organic revenue growth of +15% to +18%
    • Underlying operating profit margin close to 5%, at constant rates

Financial performance for Fiscal 2021

"Organic growth was better than expected in both halves."

"Recovery in revenues has been progressive, quarter on quarter. By the fourth quarter, the Group reached 87% of Fiscal 2019 activity, with Healthcare, Schools and Benefits & Rewards Services already back up at pre-covid levels.

Our actions to renegotiate our client contracts, strictly control costs and implement the GET efficiency program are clearly visible in our better-than-expected Underlying operating profit margin. The step-up in the second half is significant given the traditional 100bps shortfall between the first and second halves.

Our cashflow has been very positive with a debt ratio, at 1.7, and liquidity stronger than ever at 6.4 billion euro.

The recovery is continuing into Fiscal 2022, with ongoing growth and margin improvement.

Our teams are focused on client retention, consumer satisfaction, growth opportunities, operational excellence, and employee engagement. We are also accelerating our transformation to meet the new demands of consumers for digitized, convenient, varied and healthy food, with holistic offers, adapted to more hybrid environments.

We are also actively managing our portfolio of services and activities to enhance the Group’s performance. We thank all our 412,000 employees for their impressive engagement to our clients and consumers. We also thank our shareholders for their support in this crisis and propose to resume our dividend policy this year."

Sophie BellonSodexo Chairwoman and Interim CEO

Highlights of the period

  • Fiscal 2021 consolidated revenues was 17.4 billion euro, down -9.8% year-on-year including a negative net contribution from acquisitions and disposals of -0.2% and a negative currency impact of -4%. As a result, the organic decline was -5.6%, with the combination of a first half down -21.7%, followed by a second half up +18.1% as the comparable base reflected the start of the pandemic in the previous year, better than guidance.
  • On-site Services revenues declined by -6.0% overall for the year. Following the deepest downturn ever registered by the Group due to the pandemic in the second half Fiscal 2020, activity has picked up progressively quarter by quarter, reaching 87% of pre-Covid Fiscal 2019 revenues at constant rates, by the fourth quarter. Healthcare & Seniors picked back up to 100%, and Schools to 99% (of pre-Covid levels). However Business & Administrations remained impacted by the slow return to work in Corporate Services, which was at 79% (of pre-Covid levels), and the recovery in Sports & Leisure, at only 43% (of pre-Covid levels) which really only started from July in Sports events, while the Convention Centre activity is only just seeing the recovery in reservations.
    • Key Performance Indicators continued to be impacted by the pandemic, even though there are clear signs of an improvement in quality:
      • client retention rate at the end of the year was 93.1%, down -40 bps, compared to the previous year. However, this included the impact of the British Government's decision to take back the Transforming Rehabilitation contracts which accounted for 40 bps. Excluding this contract, retention would have been flat. While retention was better in most segments and most geographies, and particularly in Healthcare and Universities in North America, the performance was impacted by the loss of a large Schools contract in North America in the last month of the year.
      • new sales development was up +110 bps at 6%, with a solid contribution from all segments. The quality continues to improve with an increase in the average gross margin of +80 bps.
      • although same site sales were down -6.3%, the performance was better than in the previous year at -11.9% reflecting the recovery in volumes in the second half and more cross-selling of services on existing sites.
  • Fiscal 2021 Benefits & Rewards Services revenue was up +3.9% organically, with the first half down -8.1% and a second half up +18.2%. Employee benefits organic growth was +3.8% compared to an issue volume up +5.2%, the performance gap being attributable in particular to delayed reimbursement volumes during the year due to the closure of restaurants during confinement. Services Diversification was up +4%. Growth in Europe, USA and Asia was positive at +6.4% whereas, Latin America was down due to fierce competitive pressures in Brazil.
  • Fiscal 2021 Underlying operating profit was 578 million euro, up +1.6%, or +12.4% excluding the currency effect. The Underlying operating margin was 3.3%, up +40 bps or +60 bps excluding the currency mix effect. Despite the traditional seasonal gap in the second half margin versus the first half, particularly in Education, the performance improved, from 3.1% in first half Fiscal 2021 to 3.5% in the second half Fiscal 2021, or 3.7% at constant rates, +20 bps better than guidance. The significant step-up in the underlying operating margin since the second half Fiscal 2020 at -1.5% reflects the improvement in activity levels, very tight cost control, numerous contract renegotiations in the On-site activities, more active portfolio management, and the contribution from the GET restructuring program.
  • Other operating expenses (net) amounted to 239 million euro compared to 503 million euro in the previous year. The GET program represented a further 153 million euro of restructuring costs in Fiscal 2021, compared to a total amount of restructuring costs of 191 million euro in the previous year.
  • Group net profit was 139 million euro, compared to a net loss of 315 million euro in Fiscal 2020. Underlying net profit adjusted for Other Operating income and expenses net of tax amounted to 346 million euro, compared to 306 million euro in Fiscal 2020, up +13.1% at current rates and +30.5% at constant rates.
  • Free cash flow for the full year reached 483 million euro, representing a cash conversion of 347%, well above the objective of 100%, reflecting improvements in operating cashflow, working capital and lower capex. This performance is also attributable in part to delays in certain specific elements such as the cashing out of the restructuring costs and the reimbursement of government Covid-linked aid and the Tokyo Olympics hospitality packages, now expected to come out in Fiscal 2022.
  • Consequently, net debt has fallen year on year from 1.9 billion euro to 1.5 billion euro, representing a gearing of 47%, and a net debt ratio  of 1.7, back into the target range of between 1 and 2.
  • The Board has decided to propose a Fiscal 2021 dividend of 2.00 euro, which includes a recurring 1.20 euro, reflecting the dividend policy of a pay-out ratio of 50% of Underlying net profit, and a very exceptional non-recurring element of 0.80 euro, reflecting the distribution of the cash related to the disposals program of about 120 million euro.
  • Portfolio management
    • As part of the simplification of the On-site services, the Group has continued to reduce the number of countries in which it is present, now down to 56 from 80 at the start of 2018. This process has led to a more disciplined approach to reduce the Group’s presence in certain smaller countries, where either the size, or the growth opportunities were lacking.
    • A decision was made in July 2021 to enter into exclusive negotiations to combine the childcare activities with those of the Grandir group, thereby creating an ambitious project to become a global early education leader. Sodexo will maintain a minority stake in the new childcare entity to ensure a smooth transition. The transaction is expected to be finalized during First-half 2022.
    • Rydoo, the Group's business travel and expense management activities, has been sold to the global investment firm Marlin Equity Partners, due to the sizeable investments required to sustain the business model.
    • As part of the Group’s portfolio management program, the Board of Directors has confirmed that it is necessary to accelerate the growth and diversification plans of Benefits & Rewards Services and has therefore decided to explore a number of strategic options to enhance support, focus and resources of Benefits & Rewards Services, while retaining control. The Group will keep the market informed of the evolution of this project.
  • During the quarter, Sodexo also reinforced its commitments to reduce its environmental footprint. Sodexo is advancing along its Better tomorrow 2025 roadmap, which is guiding our route towards our nine objectives set in 2017. Some of these objectives are more challenging than others, but despite the pandemic, there are great things being achieved in Fiscal 2021:
    • We have an Employee engagement target at 80% for 2025. In the latest survey we reached 78.3%, coming out of the pandemic, and just slightly below last year’s level of 80.1% in the midst of the pandemic.
    • We are also doing well in integrating SMEs into our value chain, reaching a value of 6.9 billion euro in Fiscal 2021, up from 4.5 billion euro in the previous year, and on track for 10 billion euro by 2025.
    • In Fiscal 2021 Scope 3 supply chain carbon emissions are down 23.2% versus the base line of 2017. The 2025 objective is to achieve a 34% reduction in total Scope 1, 2 and 3 emissions against the base line. This target has been approved by the Science Based Targets initiative (SBTi) and is in accordance with the Paris Agreement 1.5°C scenario. Since 2017, Sodexo has already reduced its direct greenhouse gas emissions (Scopes 1 and 2) by 37.2%, more than the objective.
    • Waste reduction of 48% has been achieved in the 878 sites reporting in Fiscal 2021, in line with the 2025 objective of 50%. Despite the program delay due to a lot of sites being closed or at very low levels of activity, implementation is now picking up fast. We had 878 reporting in Fiscal 2021 vs 291 in Fiscal 2020.  Currently we are getting to 1300 sites deployed.
    • This year we have introduced a new KPI, which we have been putting in place for several years. Today, 73.8% of our sites provide consumers with a healthy lifestyle option. This compares to our 2025 objective of 100%.
  • Organizational changes for transition
    Sophie Bellon took over as Interim Chief Executive Officer on the departure of Denis Machuel on September 30, 2021. The key elements of this transition are:
    • To enhance efficiency in Schools and Government & Agencies, the segments will now be managed locally. As a result, each Region/Country chair will be responsible for the segment in their region. These two segments are present in size in North America, the UK and France
    • A Transition Committee, composed of 12 people and chaired by Sophie Bellon, has been created to steer progress on the priorities defined for the transition period, manage business performance and prioritize projects and investments. This committee is composed of representatives of the activities, segments, regions and functions.  Key Strategic priorities of the Transition Committee during the transition period are:
      • Enhance the effectiveness of our organization.
      • Manage more actively our portfolio,
      • Accelerate the food model transformation,
      • Boost US growth,
  • Evolution of the Board of Directors
    • Emmanuel Babeau has decided not to seek reelection at the next Shareholders Meeting due to increased responsibilities at PMI. The Board warmly thanks Emmanuel Babeau for his extensive contribution to the Board’s discussions, in particular, on performance, strategy and financial matters, as well as his active participation on the Audit and Compensation Committees.
    • Jean-Baptiste Chasseloup de Chatillon will be proposed as a new member of the Board and Audit Committee. He is Executive Vice President and Chief Financial Officer of Sanofi, since 2018. Before joining Sanofi, Jean-Baptiste Chasseloup de Chatillon was finance director and member of the Management board and Executive committee of PSA-Peugeot Citroën, where he spent nearly 30 years in different finance, commercial and operational roles in several European countries. He brings significant experience in mergers and acquisitions, organizations’ transformation, financing and information technology.
    • Should all the resolutions concerning the appointment and reelection of Board members be approved at the Shareholders Meeting, 70% of its elected members will be independent and 60% will be women.
    • Luc Messier will join the Nominating Committee. He will bring his strong understanding of different cultures given his experience living and working in several countries in Europe, Asia, and North America. The committee now has a majority of independent members and remains chaired by an independent Director.


Massive deployment of the vaccination in many countries has led to reopening or ramping-up of sites in all our major markets, some segments and activities faster than others. Benefits & Rewards Services has also seen its merchant revenues picking up with the reopening of restaurants.

In this context, we remain confident in our capacity to continue the recovery to pre-covid levels with:

  • Fiscal 2022 organic growth expected between +15 and +18%.
  • Fiscal 2022 Underlying operating margin of close to 5%, at constant rates.

Looking further out, we expect On-site services to exceed pre-Covid levels and the performance of Benefits & Rewards Services to accelerate out of the crisis. Our aim is that the Group rapidly returns to regular and sustained growth and over the pre-Covid Underlying operating margin. The boost in US growth, accelerated deployment of the new food model, active portfolio management, a more effective organization and the structural reduction in SG&A will all contribute.

To read the full version of the press release, please download the PDF:

Conference call

Sodexo will hold a conference call (in English) today at 9:00 a.m. (Paris time), 8:00 a.m. (London time) to comment on its Fiscal 2021 results. Those who wish to connect:

  • from the UK may dial +44 (0) 2071 928 338, or
  • from France +33 (0) 1 70 70 07 81, or
  • from the USA +1 646 741 3167,
  • followed by the passcode 13 79 054.

The press release, presentation and webcast will be available on the Group website in both the "Latest News" section and the "Finance - Financial Results" section.