Sodexo Q3 Fiscal 2024: continued robust growth, in line with expectations

Jul. 02, 2024
PR Q3 Fiscal 2024 Revenues

Organic Revenue growth of +6.8%, or +7.2% excluding accounting change
Fiscal 2024 guidance confirmed:
- Organic growth at the top of the +6% to +8% range
- Underlying operating profit margin improvement of +30 to +40 bps, at constant currencies

Q3 Fiscal 2024 Revenues

Commentingonthethirdquarteractivity

"We have continued to deliver solid organic growth of +6.8% in the third quarter, up +8.6% in Food services and +3.5% in FM services. This performance is in line with our expectations, allowing us to confirm our full year guidance.
Our commercial momentum in Food services remains strong, driven by continued first-time outsourcing opportunities, the ramp-up of new operating models and the quality of our branded offers.
Our strategic initiatives are delivering results as we advance with our focus on tasty, healthy, and sustainable food offerings, strong digital features to enhance consumer experience, and increased selectivity in FM.
As we complete our final preparations to open the largest restaurant in the world, the teams are excited to showcase our sustainable culinary expertise and contribute to making the Paris 2024 Olympic and Paralympic Games a memorable event!
We are decisively progressing towards our ambition to be the world leader in sustainable food and valued experiences."

Sophie BellonSodexo Chairwoman and CEO

Highlights of the period

Third quarter Fiscal 2024 consolidated revenues reached 6.1 billion euros, up +5.6% year-on-year including a negative currency impact of -0.2%, a net contribution from acquisitions and disposals of -1.0% and Organic revenue growth of +6.8%.
Organic growth was impacted by an accounting change for project works in a large contract in Rest of the World. Excluding this, third quarter organic growth stood at +7.2%. The sequential slowdown in growth compared to the second quarter was explained by, on the one hand, lower pricing effect and a higher comparative base in the third quarter, and, on the other hand, a positive leap year impact in the second quarter.
About half of the organic growth was fueled by pricing which has fallen below 4% in the quarter. The remaining half reflects the net new business contribution and some volume growth.
By geography:
- North America achieved Organic growth of +9.0%. The ongoing return to the workplace and a strong performance of Sodexo Live!, particularly in the airline lounges, continue to drive growth, as well as the contribution of new business and pricing.
- Europe was up +5.4% organically, holding up well despite the sequential slowdown in the pricing impact, with increased volumes and the contribution of net new business.
- Rest of the World was up +3.6% organically, or +5.9% excluding the accounting change, slowing from the second quarter notably due to a deceleration in price increases, and a mixed performance between regions, with strong growth in India and Australia and a slowdown in China and Chile.
Food services organic growth, at +8.6%, continued to outpace FM services, at +3.5%, or +4.7% excluding the accounting change.
At its meeting of June 27, 2024, the Board of Directors decided to create a Board-level Sustainability Committee starting October 2024. This committee will play a pivotal role in the governance of Sodexo's sustainability initiatives and their alignment with the long-term business goals. Key responsibilities of the committee will include:
- Sustainability oversight to monitor and evaluate goals, initiatives, and performance;
- Ethical governance to ensure adherence to highest ethical standards;
- Stakeholder engagement;
- Promotion of innovation and best CSR practices;
- Reporting and transparency quality.

The Sustainability Committee will include 7 Sodexo's Board members, with expertise in sustainability, ethics, and corporate governance. It will be chaired by Véronique Laury, who has a long-standing commitment to driving sustainable and responsible business practices. By creating this committee, Sodexo reinforces its commitment to sustainable and ethical business practices and a better tomorrow for its employees, its communities, and the planet.

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Outlook

Third quarter 2024 activity was in line with expectations. Consequently, Fiscal 2024 guidance is confirmed:

Organic revenue growth is expected at the top of the +6 to +8% range;
Underlying operating profit margin is anticipated to grow by +30 to 40 bps at constant rates.

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 Q3 Fiscal 2024 revenues.

Those who wish to connect:

From the UK: +44 121 281 8004, or
From France: +33 1 70 91 87 04, or
From the US: +1 718 705 8796,

Followed by the access code 07 26 13.

The live audio webcast will be available on www.sodexo.com

The press release, presentation and webcast will be available on the Group website www.sodexo.com in both the “Newsroom” section and the “Investors – Financial Results” section.

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Financial Calendar

Fiscal 2024 Annual Results: October 24, 2024
Fiscal 2024 Annual Shareholders Meeting: December 17, 2024
Fiscal 2025 First quarter Revenues: January 07, 2025

These dates are indicative and may be subject to change without notice. Regular updates are available in the calendar on our website www.sodexo.com