Turismo
Sodexo: Revenues for first Nine Months Fiscal 2018 in line with revised expectations
- Sodexo (NYSE Euronext Paris FR 0000121220-OTC: SDXAY), world leader in Quality of Life Services, today reported its revenues for the first nine months of Fiscal 2018, which ended on May, 31, 2018.
The Group maintains the following revised objectives for :
The 53 week adjustment is linked to the change from weekly to monthly accounting as from September 2017 in North America. Weekly accounting has the side effect of losing one or two days per year, depending upon whether there is a leap year or not. These lost days are usually recovered in the accounts in a one-off every 5 to 6 years. In Fiscal 2017, this 53 week effect is the equivalent of six more days of trading which will not reoccur in Fiscal 2018. The Impact of the 53rd week was estimated at +0.7% on Fiscal 2017 revenues and therefore
-0.7% for Fiscal 2018 revenues.
to comment on its First nine months Fiscal 2018 revenues. Those who wish to connect from the UK may dial or from France , or from the USA followed by the passcode .
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Founded in Marseille in 1966 by Pierre Bellon, Sodexo is the global leader in services that improve Quality of Life, an essential factor in individual and organizational performance. Operating in 80 countries, Sodexo serves 100 million consumers each day through its unique combination of On-site Services, Benefits and Rewards Services and Personal and Home Services. Through its more than 100 services, Sodexo provides clients an integrated offering developed over 50 years of experience: from food services, reception, maintenance and cleaning, to facilities and equipment management; from services and programs fostering employees' engagement to solutions that simplify and optimize their mobility and expenses management, to in-home assistance, child care centers and concierge services. Sodexo's success and performance are founded on its independence, its sustainable business model and its ability to continuously develop and engage its 427,000 employees throughout the world.
Sodexo is included in the CAC 40 and DJSI indices.
This press release contains statements that may be considered as forward-looking statements and as such may not relate strictly to historical or current facts. These statements represent management's views as of the date they are made and Sodexo assumes no obligation to update them. The reader is cautioned not to place undue reliance on these forward-looking statements. Figures have been prepared in thousands of euro and published in millions of euro.
(September 1, 2017 to May 31, 2018)
Revenue Analysis
Fiscal 2018 first nine months revenues amounted to 15.5 billion euro, down -2.9%. During the period, the currency impact was -6.6% due particularly to the weakness of the dollar and the real. Net acquisitions contributed +2.2% during the nine months, accelerating in the third quarter, with contributing for the full quarter. Organic revenue growth was +1.6%. This growth was made up of +1.5% for On-site Services and +4.2% for Benefits & Rewards Services.
The third quarter Fiscal 2018 organic growth was +1.4%, slightly below the first half trend. As expected, slowed down in On-site Services to +1.1% and improved in Benefits & Rewards Services to +6.9%.
Analysis of organic revenue growth in On-site Services
Business & Administrations
revenues amounted to 8.1 billion euro, with organic growth up at +4.2%, driven by solid momentum in Asia and Latin America.
Organic growth in . While the first quarter was boosted by significant project-work, the second and third quarters have been impacted by a major site closure in the onshore activities offsetting strong new business in Airline lounges.
organic growth was . France remained solid, helped by the recovery in tourism and some improvement in net new business, despite the strikes in the last quarter. On the other hand, the Government and Agencies business has been progressively affected since January by the exit of some British army contracts.
In , organic growth remained strong at reflecting strong demand in all the regions and despite a comparative base which includes many of the larger start-ups last year.
Health Care & Seniors
revenues amounted to 3.5 billion euro, with organic growth up at +0.7%, driven by very strong development in China, India and Brazil, and despite ongoing weakness in North America and Europe.
Organic growth in . Despite the lack of new signatures and some contract losses in March, third quarter sales trended positively due to a lower comparative base.
sales were flat, with organic growth at . However, the trend was better in the UK, helped by the start-up of several contracts, and in Seniors in France in the third quarter.
In , organic growth remained strong at helped by a significant number of contract start-ups in Brazil and strong same site sales in China, and India.
Education
revenues were 3.3 billion euro during the first 9 months of Fiscal 2018, down organically at -3.5%, impacted by the weakness in Universities in North America.
Organic growth in impacted heavily in the third quarter by the five fewer University Board days. Schools activity was impacted marginally by teacher strikes in certain States during the third quarter. Retention in universities has improved this year and indications on new signatures are also slightly better.
sales generated organic growth of . France was impacted by the bank holiday calendar in the third quarter, compensated by strong growth in Schools in Spain.
In , organic growth remained strong at due to strong sales growth in Asia, particularly in China and Singapore.
On-site Services Revenues by region
Organic growth outside North America was +4.3%.
Benefits & Rewards Services
Issue volume
Revenues
revenue amounted to 623 million euro, down -7.4%. Currency impact, especially the Real weakness, accounted for more than the fall in revenues. The sale of led to a net disposal impact of -4.1%. Organic growth in revenues was +4.2%, compared to issue volume organic growth of +6.0%.
Organic growth in was strong at , boosted by issue volume growth of +5.6%, which was solid across our market with robust growth in France, Italy and Turkey. Growth has also been strong in the Mobility and Incentive & Recognition activities. The latter do not generate issue volume.
In , organic growth in revenues was positive for the first nine months of the year at and issue volumes were up +6.6%. After a weak start to the year, there has been an improvement in the third quarter in Brazil. The number of beneficiaries has increased and client commissions showed signs of slight improvement. As in previous quarters, growth remains strong in Mexico.
Financial position
The financial position of the Group has not changed materially since the 1 half closing at February 28, 2018.
On May 22, 2018, Sodexo issued a 7-year (May 2025) 300-million-euro bond with a coupon of 1.12%. On June 27, 2018, Sodexo issued a 5-year (June 2023) 400-million-dollar private placement in the USA with a coupon of 3.7%.
Following these two transactions the average maturity of the Group's debt has been increased by one year to almost six years, the euro/dollar mix is evenly split and the average financing cost remains the same. As a result, the Group's financing capacity for future acquisitions is preserved.
The 300-million-euro share buy-back program is underway, with approximatively one third executed to date. We plan to have completed the buyback program by the end of August.
Main risks and uncertainties
The main risks and uncertainties are not materially different from those described in the "Risk Factors" section of the Fiscal 2017 Registration Document, filed with the (AMF) on November 20, 2017 except for litigations mentioned in note 6.4.11 of the First Half Fiscal 2018 consolidated financial statements.
Exchange rates and currency effect
Exchange rate fluctuations do not generate operational risks, because each subsidiary bills its revenues and incurs its expenses in the same currency.
Note: Reference rate Fiscal 2017 is the average rate for Fiscal year 2017.
Issue volume corresponds to the total face value of service vouchers, cards and digitally-delivered services issued by the Group (Benefits and Rewards Services activity) for beneficiaries on behalf of clients.
Underlying Operating profit divided by Revenues.
Margin calculated converting FY2018 figures at FY 2017 rates, except for countries with hyperinflationary economies.
Organic growth corresponds to the increase in revenue for a given period (the "current period") compared to the revenue reported for the same period of the prior fiscal year, calculated using the exchange rate for the prior fiscal year; and excluding the impact of business acquisitions (or gain of control) and divestments, as follows:
For countries with hyperinflationary economies all figures are converted at the latest closing rate for both periods. As a result, for the calculation of organic growth, Benefits & Rewards figures for Fiscal 2017 and Fiscal 2018 in Venezuelan Bolivar have been converted at the exchange rate of USD 1 = 80,000 VEF (vs. VEF 3,250 for Fiscal 2017).
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