Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Caterer Sodexo to reorganise main unit as serves up sales beat

Published 07/01/2022, 01:10 AM
Updated 07/01/2022, 05:25 AM
© Reuters. FILE PHOTO: The logo of French food services and facilities management group Sodexo is seen at the company headquarters in Issy-les-Moulineaux near Paris, France, November 30, 2018. REUTERS/Gonzalo Fuentes

By Federica Mileo and Diana Mandia

(Reuters) -French catering and food services group Sodexo (EPA:EXHO) announced on Friday a reorganisation of its main on-site services business to improve effectiveness and said it expects revenue and margin to return to pre-pandemic levels in 2023.

Reporting better-than-expected third-quarter revenue helped by price hikes and post-Omicron volume recovery, the group said activities returned to 97% of pre-COVID levels, as events and retail sites restarted and more people returned to offices.

"In 2023 we will get back to pre-pandemic revenue and margin", Chairwoman and CEO Sophie Bellon said on a call with journalists.

Sodexo shares rose more than 4% before paring gains with Bernstein analysts describing the reorganisation as the "bigger news".

"The long-suggested reorganisation of the business back to geographic segments (North America, Europe, Rest of the World) matches [rival] Compass and should simplify the business," they said in a note.

They added that they saw this quarter as the beginning of management winning back investor trust and starting to show acceleration in growth.

After being hit by COVID-19 lockdowns, caterers are now renegotiating tariffs and supplier agreements as the sector faces soaring energy and food prices triggered by Russia's invasion of Ukraine, both major wheat exporters.

CFO Marc Rolland said Sodexo's tariffs over the third quarter rose more than 5% year-on-year, as it managed to pass more inflation to its clients. He added the group expects tariffs to increase 4 to 5% by the end of the year.

"We cannot avoid to pass inflation on to clients, it is part of our 'savoir-faire'", said Bellon.

Sodexo, which in May dropped the option of opening up the capital of its voucher business to an external investor, said it would present its strategy for the division and the on-site services unit together with its mid-term objectives on Nov. 2 during its Capital Markets Day.

By 0848 GMT, its shares were up 2.8%, having risen as much as 4.2% earlier, while rival Elior was 5.3% higher.

© Reuters. FILE PHOTO: The logo of French food services and facilities management group Sodexo is seen at the company headquarters in Issy-les-Moulineaux near Paris, France, November 30, 2018. REUTERS/Gonzalo Fuentes

The group's revenue rose 18.3% to 5.52 billion euros ($5.77 billion) in the quarter ended May 31, against a 5.33 billion euro average estimate from analysts polled by the company, and confirmed the full-year outlook it had lowered in April.

($1 = 0.9573 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.