Sodexo sticks to financial goals as growth accelerates

PARIS: French food services group Sodexo reported a stronger-than-expected rise in first-half revenues as growth accelerated in north America during the second quarter, and the company also stuck to its financial goals for the year.

Sodexo, which is the world’s second-biggest catering company ater Compass Group, said core first half profits also rose although investment costs and other costs associated with renewing a major US Marine Corps contract weighed on profit margins, as the company had previously flagged in January.

Underlying operating profit rose 3.1 per cent from last year to 647 million euros ($729.6 million), giving an operating margin of 5.9 per cent, down from 6.1 per cent a year ago.

Revenues reached 11.045 billion euros, marking a 3.1 per cent rise, which beat analysts’ expectations for 2.7 per cent growth in an Infront Data poll for Reuters.

In the second quarter alone, revenue growth accelerated to 3.6 per cent as business in north America improved. Europe remained solid while developing economies were also strong for Sodexo.

Sodexo kept its forecast for organic revenue growth of between 2-3 per cent and an underlying operating profit margin of 5-5.7 per cent for the full year ending Aug. 31.

Sodexo struck a slight tone of caution for the second half of its financial year.

Sodexo’s results during the last year have been impacted by some weakness in north America, where cost savings have lagged and several large contracts have taken time to pay off.