Sodexo First half Fiscal 2025 results

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• Organic revenue growth of +3.5%
• Underlying operating profit up +6.4%, margin up +10 bps
• Full year Fiscal 2025 guidance:
  • Organic revenue growth between +3% and +4%
  • Underlying operating profit margin improvement between +10 and +20 bps, at constant currencies

At the Board of Directors meeting held on April 03, 2025, chaired by Sophie Bellon, the Board approved the consolidated financial statements for the First half Fiscal 2025 ended February 28, 2025.

First half Fiscal 2025 key figures

Line labeled "Group Net profit from continuing operations” reflects the presence of discontinued operations in Fiscal 2024. No discontinued contribution in Fiscal 2025

(1) ETR based on pre-tax profit excluding share of profit from equity method of 537 million euros in First half Fiscal 2025 and 595 millions euros in First half Fiscal 2024.

(2) Profit attributable to non-controlling interests were 5 million euros in First half Fiscal 2025 and 4 million euros in First half Fiscal 2024.

Sodexo Chairwoman and CEO, Sophie Bellon, said:

"Two weeks ago, we revised our guidance, acknowledging that some of our initial assumptions have not played out at the expected pace.

The challenges are concentrated in a few identified areas, and we are strengthening our action plan. Our immediate focus is on execution, restoring performance in these key areas and tightening predictability.

We are confident in our strategy and the solid fundamentals of our business. Our teams are highly committed to serve our clients and accelerate our development. We are investing in our future in a high-potential market, while continuing to transform the company."

Highlights of the period

• First half Fiscal 2025 consolidated revenues were at 12.5 billion euros, up +3.1% year-on-year, including a negative currency impact of -0.1% and a net contribution from acquisitions and disposals of -0.3%. Organic revenue growth was +3.5%.
• Food services continued to demonstrate solid organic growth of +4.5%, while FM services grew at +1.7%.
• By geography:
  • North America delivered organic growth of +3.5% in the First half. Strong performance in Sodexo Live! and Corporate Services was partially offset by the impact of contract demobilizations in the Education and Healthcare & Seniors segments. Second-quarter performance was softer than the first quarter, primarily due to a higher comparison base, as well as contract demobilizations in Corporate Services, including the impact from the loss of a global FM contract last year.
  • Europe grew +2.1% organically, driven by continued momentum in Healthcare & Seniors supported by net new wins, volume growth, and price adjustments. Growth was partly offset by softer activity in Facilities Management services, reflecting the current macroeconomic environment.
  • Rest of the World was up +6.6% organically. This sustained strong performance was driven by robust growth in India, Brazil and Australia. While China is gradually recovering, Chile and Peru were affected by previous year's site losses.
• Underlying operating profit was 651 million euros, up +6.4%. The Underlying operating margin was up +10 bps at 5.2%.
• Other operating income & expenses amounted to a negative 71 million euros, mainly from restructuring expenses and amortization of acquisition-related assets. The prior year positive number of 30 million euros included a gain from the disposal of the Homecare business.
• Operating profit came in at 580 million euros, compared to 642 million euros in the prior year, reflecting year-on-year differences in Other operating income and expenses.
• Net financial expense was -40 million euros against -46 million euros in the prior year.
• The Effective tax rate for the first half of Fiscal 2025 was 19.5%, mainly impacted by the update of the risk related to the Sodexo S.A. tax audit, following the finalization of related procedures during the period. In comparison, the effective tax rate for the first half of Fiscal 2024 was 16.6%, supported by the non-taxable capital gain from the Homecare disposal, as well as the utilization of previously unrecognized tax assets in France.
• Group net profit was down -12.5% to 434 million euros primarily due to an exceptional capital gain in the prior year.
• Underlying net profit adjusted for Other Operating income and expenses net of tax amounted to 450 million euros, up +5.4%.
• Free cash flow in the first half Fiscal 2025 was a seasonal negative -234 million euros, a decline relative to the -102 million euros in First half Fiscal 2024 due to an exceptional tax outflow related to a tax audit in France. Net capital expenditure was slightly up at 256 million euros, representing 2.1% of revenues.
• Net debt increased to 3.4 billion euros up from 2.6 billion euros at the end of Fiscal 2024, primarily due to the seasonality of cash movements. Given the 6% year-on-year increase in rolling 12-month EBITDA, the net debt to EBITDA ratio stands at 2.3x, up 0.6x since year end, and at the same level as at the the end of first half Fiscal 2024.

Commercial momentum

• Net new development was 1.2% on a last-12-months (LTM) basis as of the end of February 2025:
  • LTM client retention of 93.9%, reflecting the weaker performance of the second half last year;
  • LTM development of 7.3%, within the 7-8% of expected range for the year;
  • Over First half Fiscal 2025, 1 billion euros in new contracts signed, including cross-sell.

Progress on sustainability

• Sodexo has been included in the S&P Global Sustainability Yearbook 2025, which recognizes 780 companies out of over 7,690 assessed across 62 industries for their progress in sustainability.
• Sodexo advanced in the EcoVadis scoring from the top 5% to the top 2% in sustainability rankings with an overall score of 79 out of 100, a 7-point improvement year-on-year.
• Sodexo has been recognized as one of the World's Most Ethical Companies^® by Ethisphere for the second consecutive year. In 2025, 136 companies from 19 countries and 44 industries were recognized, Sodexo being the sole honoree in the Food service industry.

Bellon SA: Shareholding Update Bellon SA, on February 03, 2025 announced its intention to purchase shares and invest up to 100 million euros in Sodexo. As of February 28, 2025, Bellon SA held 43.6% of Sodexo's share capital and 58.7% of the exercisable voting rights.

Outlook

The full-year Fiscal 2025 guidance was updated in a press release issued on March 20, 2025.

• Organic revenue growth between +3% and +4% (from +5.5% to +6.5% in the initial guidance)

  The underlying trend should be +3.5% to +4.5%, excluding the base effect of the Olympics, the Rugby World Cup and the leap year in Fiscal 2024.

• Underlying operating profit margin improvement between +10 and +20 bps, at constant currencies (from +30 to +40 bps in the initial guidance).

The adjustment to the full-year organic revenue growth guidance is primarily driven by weaker-than-expected volume trends in Education in North America in the First half, which are expected to persist. Additionally, in North America, delays in certain contracts start dates especially in Healthcare, and softer commercial performance in the First half have impacted expectations for net new contributions in the second half.

Similarly, the revision of the Underlying operating margin guidance mainly reflects the full-year impact of the revenue shortfall.

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 First half Fiscal 2025 results.

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.

Financial calendar

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

About Sodexo

Founded in Marseille in 1966 by Pierre Bellon, Sodexo is the global leader in sustainable food and valued experiences at every moment in life: learn, work, heal and play. The Group stands out for its independence, its founding family shareholding and its responsible business model. Thanks to its two activities of Food and Facilities Management Services, Sodexo meets all the challenges of everyday life with a dual goal: to improve the quality of life of our employees and those we serve, and contribute to the economic, social and environmental progress in the communities where we operate. For Sodexo, growth and social commitment go hand in hand. Our purpose is to create a better everyday for everyone to build a better life for all.

Sodexo is included in the CAC Next 20, Bloomberg France 40, CAC 40 ESG, CAC SBT 1.5, FTSE 4 Good and DJSI indices.

Key figures

1. First half Fiscal 2025 Financial Report

1.1 H1 Fiscal 2025 performance

1.1.1 Consolidated income statement

Line labeled "Group Net profit from continuing operations” reflects the presence of discontinued operations in Fiscal 2024. No discontinued contribution in Fiscal 2025

(1) ETR based on pre-tax profit excluding share of profit from equity method of 537 million euros in First half Fiscal 2025 and 595 millions euros in First half Fiscal 2024.

(2) Profit attributable to non-controlling interests were 5 million euros in First half Fiscal 2025 and 4 million euros in First half Fiscal 2024.

1.1.2 Revenues

First half Fiscal 2025 revenues totaled 12.5 billion euros, up +3.1% year-on-year, including a negative currency impact of -0.1% and a net contribution from acquisitions and disposals of -0.3%. Consequently, First half Fiscal 2025 organic growth was +3.5%.

Organic growth in the first half Fiscal 2025 was driven by Food services, up +4.5%, whereas FM services were up +1.7%.

A portion of the organic growth was driven by pricing, which is currently trending around 3% in the semester. The remainder reflects contributions from net new business and volume growth.

Net new development was 1.2% on a last 12 months (LTM) basis as of the end of February:

• LTM client retention reached 93.9%, reflecting the weaker performance of the second half last year;
• LTM development of 7.3%, within the 7-8% range expected for the year;
• Over First half Fiscal 2025, 1 billion euros in new contracts signed, including cross-sell.

North America

(1) During First half Fiscal 2025, some contracts or operations have been reallocated between segments.

In North America, First half Fiscal 2025 revenues totaled 6.0 billion euros, up +3.5% organically.

Within Business & Administrations, organic growth reached +6.5%, driven by strong growth in Food Services, supported by the continued return to office, cross-sales, and price increases. While first quarter benefited from strong net new contributions, this slowed in the second quarter due to some contract demobilization, including the impact from the loss of a major global FM contract last year.

Sodexo Live! delivered organic growth of +15.5%, fueled by strong activity in the first quarter in conference centers, stadiums, arenas, and airline lounges. Growth softened in the second quarter due to the timing of events and a higher comparison base from last year.

Healthcare & Seniors organic growth was +2.5%, driven by strong Healthcare performance in the first quarter, supported by price increases, volume growth, and cross-sales. However, growth softened in the second quarter notably due to a higher comparative base from a large contract that started last year.

Education organic revenue growth was -1.9%, which continued to be impacted by negative net new business contribution and reduced volumes due to unfavorable weather conditions, fewer working days and Election Day closures specific to schools during first quarter. These impacts were partially offset by price increases.

Europe

(1) During First half Fiscal 2025, some contracts or operations have been reallocated between segments.

In Europe, First half Fiscal 2025 revenues amounted to 4.3 billion euros, up +2.1% organically.

In Business & Administrations, organic growth was +0.8%, supported by price revisions and new openings. However, reduced activity, certain site closures, and a decline in hard FM project work offset these benefits.

Sodexo Live! organic growth was negative at -2.8%, due to a high comparison base related to Rugby World Cup last fiscal year, partially offset by Paralympics at the beginning of this fiscal year. Excluding this impact, restated organic growth was +1.6%, driven by higher volumes in Airport Lounges and Stadiums in the UK, offset by lower tourist activity in France following the Olympics and unfavorable weather conditions.

Healthcare & Seniors organic growth stood at +6.3%, driven by volume growth, price revisions and the contribution of new business in France and Belgium.

Education organic revenue growth was +3.3%, reflecting the positive impact of price revisions, partly offset by the exit in the previous year of some low performing contracts and reduced activity particularly in France.

Rest of the World

(1) During First half Fiscal 2025, some contracts or operations have been reallocated between segments.

Rest of the World First half Fiscal 2025 revenues amounted to 2.2 billion euros, up +6.6% organically.

Business & Administrations organic growth was +5.6%. Growth remained particularly strong in India, driven by new business and increased volumes at existing sites, and in Australia, driven by additional volumes and robust development. In Brazil, growth was fueled by extra volumes, while Chile and Peru were impacted by previous year's site losses. In China, business is gradually recovering despite the challenging environment.

Sodexo Live! organic growth was +19.0% (principally airline lounges), benefiting from new lounges openings and strong passenger traffic.

Healthcare & Seniors organic growth was +14.0%, with strong growth in India and Chile.

Education organic growth was +12.3%, fueled by increased volumes and ramp-ups in existing sites in Brazil and India.

1.1.