Sodexo Q3 Fiscal 2022 better than expected Revenue growth: +23.2%

  • Q3 Organic revenue growth +18.3%
  • Activity back up to 97% of pre-Covid level, due to strong ramp-up in Corporate Services, Sports & Leisure and Universities
  • Growth acceleration in Benefits & Rewards Services
  • Full year guidance confirmed

Q3 Fiscal 2022 revenues

"Growth in the third quarter has been strong in all activities, segments and geographies, helped by post-Omicron On-site volume recovery and price revisions."

Sophie BellonChairwoman and CEO
"Benefits & Rewards Services is accelerating in all regions.
We are making progress on our strategic priorities. We are moving ahead on improving the effectiveness of our On-site Services organization. We plan to transfer full P&L accountability to the countries, regrouped into three geographic zones, North America, Europe and the Rest of the World. This simplification will bring agility and speed to execution.
We shall present our strategy at the Capital Markets Day, to be held on November 2, 2022."

Highlights of the period

  • Third quarter Fiscal 2022 consolidated revenues reached 5.5 billion euros, up +23.2% year-on-year including a net contribution from acquisitions and disposals of -1.7%, more than compensated by a strong positive currency impact of +6.6%, linked to the strength of the US dollar and the Brazilian Real. As a result, third quarter Fiscal 2022 organic growth was +18.3%, reaching 97% of Fiscal 2019 revenues at constant rates. Thanks to the acceleration in the quarter, revenue for the first nine months of Fiscal 2022, reached 15.8 billion euros, up +17.3%.
  • Third quarter Fiscal 2022 On-site Services organic growth was also up +18.3% and represented 97% of Fiscal 2019 revenues, against 94% in Second quarter Fiscal 2022 demonstrating a strong recovery post-Omicron. 
    • Corporate Services continued to benefit from the return to office. Sports & Leisure activity was back up to 83% of Fiscal 2019 level, against only 61% in the previous quarter as the convention activity picked up strongly. Activity picked up in Universities as events and retail sites restarted, to 91% of 2019 level compared to 84% in the second quarter.
    • All other segments continued to perform well.
    • The Food Services recovery was strong, reaching 90% of Fiscal 2019 level compared to 82% in the previous quarter. Facilities Management services remained solid, well above pre-Covid level.
    • Organic growth was +22.6% in North America, +18% in Europe and +9.8% in Asia-Pacific, Latin America, Middle East and Africa.
      In the Third quarter, the pricing effect is more than 5% against about 3% in the First half Fiscal 2022.
    • Year to date Development and Retention continues to improve in North America.
  • Benefits & Rewards Services organic growth was +17.7%, accelerating in the Third quarter, due to solid growth in all regions: +17.5% in Europe, USA and Asia and +18.0% in Latin America. Operating revenues were up +15% and Financial revenues were up +62.4% due, in particular, to the significant increase in the Selic (official interest rate) in Brazil.
  • Sodexo has accelerated its efforts against food waste with its waste prevention and reduction program, WasteWatch. This innovative program has been globally deployed across 2,500 sites, representing 38% of the total raw material cost (+10.4 points compared to end of Fiscal 2021) and is essential to achieving our 50% food waste reduction target by 2025.
  • Sodexo has also accelerated its climate related actions through strong partnerships:
    • In collaboration with EY and Traace, Sodexo released an innovative digital Carbon Trajectory Tool on a worldwide basis in April 2022. This tool is aimed at helping each activity, country by country, create and manage its carbon reduction roadmap by 2025 and beyond.
    • In April 2022, Sodexo greenhouse emission reduction targets for its Benefits & Rewards Services activity in Belgium have been validated by the Science Based Targets initiative (SBTi). The aim is to reduce absolute emissions by 64.9% by 2030, compared to a 2019 baseline.
  • As part of the strategic priority enhancing effectiveness of our organization, we plan to transfer full P&L accountability to the countries, regrouped into three geographic zones, North America, Europe and Rest of the World. In this plan, the three zones will be headed up by respectively Sarosh Mistry, Sunil Nayak and Johnpaul Dimech. The new On-site Services organization will be put in place progressively from September through to December, in compliance with the Group’s social dialogue as well as information and consultation processes, where necessary.
  • A Capital Markets Day will be held on November 2, 2022, in Paris, to present the Group’s strategy for its On-site Services and Benefits & Rewards Services and mid-term objectives.

Outlook

We confirm our expectations for:

  • Fiscal 2022 organic growth around the bottom of the range of +15% to +18%.
  • Fiscal 2022 Underlying Operating Profit margin close to 5%, at constant rates.

 

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 3rd quarter Fiscal 2022 revenues. Those who wish to connect may dial:

  • from the UK +44 (0) 121 281 8004, or
  • from France +33 (0) 1 70 91 87 04, or
  • from the USA ++1 718 705 8796,
  • followed by the passcode 00 98 16.

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