At the Board of Directors meeting held on April 8, 2020 and chaired by Sophie Bellon, the Board closed the Consolidated accounts for the First Half Fiscal 2020 ended February 29, 2020.

  • Organic growth at +3.2%
  • Q2 organic growth better than expected
  • Flat Underlying operating profit margin, in line with expectations
  • Mild H1 COVID-19 impact absorbed
  • COVID-19 volume decline will significantly impact H2 results

Sodexo CEO Denis Machuel said:

“The First Half was better than we expected, with many positive signs in most segments that the underlying dynamics were improving.

With the rapid spread of COVID-19 around the world, our focus is on protecting the health and safety of our people, consumers and clients and ensuring business continuity.

We have seen a significant number of sites fully or partially closed in Education, Corporate Services and Sodexo Live！, and the Olympics Games have been pushed back a year. We immediately identified all means to reduce our costs, reduce our capex and ensure that we collect and protect our cash to reduce the impact of this revenue shortfall. We are using all proposed government measures to protect employment. We know that this situation will have a significant impact on our results for the year.

I am extremely proud of our teams’ exemplary efforts and engagement and am convinced that the improved momentum in this first half will help us emerge stronger than we were before.”

Highlights of the period

  • First Half Fiscal 2020 Group revenue was 11,692 million euro, up +5.9%, helped by a positive currency and M&A contribution, resulting in Group organic revenue growth at +3.2%.
  • On-site Services organic revenue growth was also +3.2%.
  • Underlying operating profit increased +5.9% resulting in an Underlying operating margin of 5.9%, stable against last year both at current and constant exchange rate.
  • Other operating expenses (net) amounted to 66 million euro, more or less stable compared to the First Half of the previous fiscal year.
  • Reported net profit of 378 million euro was up +3.8%. Basic EPS was €2.59, up +3.7%. Underlying Net profit totalled 424 million euro, up +2.8%.
  • Sodexo’s commitment in corporate responsibility continues to be recognized within the financial community, with the highest marks in SAM’s “Sustainability Yearbook” for the13th consecutive year, as well as gold class recognition by EcoVadis. Sodexo also remains the top-rated company in its sector within the Dow Jones Sustainability Index (DJSI), for the 15th consecutive year and was included in the 2020 Bloomberg Gender-Equality Index, recognizing commitment to advancing women in the workplace. Sodexo also joined The Valuable 500 initiative to place disability on the business agenda, reinforcing its commitments to disability inclusion.

Outlook

The COVID-19 pandemic started to be a concern in the second half of January for our business in China, leading to a rapid deterioration worldwide in February, moving from region to region and generating more and more government precautionary measures to limit the spread of the virus.

Sodexo is coordinating globally, regionally and locally to manage its business continuity and pandemic plans to support and protect its employees and consumers across all of its geographies. The health and safety of Sodexo employees and consumers is our utmost priority. Sodexo has reinforced the existing rules for food safety, personal hygiene and infection control.

As the situation is an evolving one, Sodexo teams are adhering to guidelines of health advisories and local authorities and will continue to closely monitor the situation.

As of April 9, 2020, for the Group, our top-line model show a reduction of revenues in the second half of between 2.4 and 2.8 billion euro compared to last year.

At this stage, after these strong mitigating measures taken on-site and strict implementation of SG&A reductions, we estimate the Underlying operating profit flow-through to be circa 25% of revenue shortfall.

We remain confident on our strong market and financial position, and the mid-term positive perspectives and potential of Sodexo.

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