Turismo
Sodexo: Q1 Fiscal 2018 in line with expectations; annual objectives maintained
Sodexo (NYSE Euronext Paris FR 0000121220-OTC: SDXAY), world leader in Quality of Life Services, today reported its revenues for the first quarter of Fiscal 2018, which ended on November 30, 2017.
The Group maintains the following objectives for
The Group confirms the :
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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.
Revenue Analysis
Fiscal 2018 first quarter consolidated revenues totaled 5,312 million euro, down -2.6% on the previous year period. The currency impact weighed on this performance by -4.1% due to the weakness of all currencies against the euro, and in particular, the US dollar and the Brazilian Real. The net contribution of acquisitions and disposals was -0.3%, with the impact of the deconsolidation of , the Group's subsidiary in New Caledonia and some other activities in the Middle East and Africa region last year, offsetting the ongoing contribution from the acquisitions signed last year as well as the first contributions from in October Fiscal 2018 and in November Fiscal 2018. and will be consolidated from January 2018.
Organic revenue growth was +1.9%. On-site services were up +1.8%, resulting from a solid performance in Business & Administrations and modest growth in Health Care, despite a soft start to the year in Education due to a calendar shift of one and a half day and lower prior Fiscal year retention in North America. Benefits & Rewards services were up +3.8% with a strong performance in Europe compensating a tough quarter in Brazil as interest rates and inflation fell, not yet compensated by rising volumes.
Analysis of organic revenue growth in On-site Services
Business & Administrations
First quarter Fiscal 2018 revenues totaled 2.7 billion euro, up +5.2% compared with the first quarter of Fiscal 2017. This performance reflects robust growth in the airport lounges business, a very strong performance in Energy & Resources and a pick-up in activity in France. Government & Agencies grew in all regions as well this quarter.
Organic growth in was New airline lounge contracts and strong demand for additional facilities management services among corporate clients continued to drive growth, helped this quarter by some project-work.
was up + On the one hand, in France, the tourism activities continued to perform better and new business wins were significant. On the other hand, Energy & Resources continued to remain very weak, down -19% during the period. Government & Agencies saw strong growth despite some significant contract losses in the UK which will affect revenues progressively during the year.
In , organic growth remained strong at , reflecting the recovery in Energy & Resources and the last quarter of the ramp-up of the large contract. Corporate Services growth also remained extremely robust due to both the extension of contracts with existing clients and a high level of start-ups for new clients.
Health Care & Seniors
In , revenues totaled 1.2 billion euro, with organic growth at +1.0%.
Organic growth in was , consistent with the last few quarters' performance, due to a lack of new signatures in prior quarters. The recent proposed tax legislation on healthcare reimbursements is accelerating hospital group mergers, productivity efforts and the development of out-patient service alternatives. This is creating a tough operating environment in the short-term although it should provide medium term opportunity.
In organic growth was up + reflecting the lack of new business over the last 18 months because of much greater selectivity in bidding for hospital contracts, particularly in the UK and France. Nevertheless, retention remains high, same site sales have been good and, in the last months, a couple of hospital contracts have been signed in the UK.
In , growth is particularly strong at due to many contract start-ups in Brazil and strong same site sales in all regions.
Education
In , revenues for the first quarter of Fiscal 2018 amounted to 1.3 billion euro, down -4.0% on an organic basis, due mainly to poor prior year retention but also a negative calendar impact in Q1 in North America.
The organic decline in sales in of is the result of lower prior year retention in Universities and a negative calendar impact of 1.5 days in both Schools and Universities during the quarter. This calendar impact should be partially reversed in Q2, with an extra half day.
In , organic growth was with the UK benefitting from strong new business signed last year and solid same site sales growth across the region, particularly in the Med region, offset somewhat by the impact of some strike days in France.
In , organic growth remained strong with the ramp-up of several new School contracts in China, Singapore and India, at .
On-site Services Revenues by region
Benefits & Rewards Services
Benefits & Rewards Services revenue amounted to 194 million euro, down -10.4%. Currencies contributed -5.0% to this decline, due principally to the weakness of the Brazilian real. The sale of in the USA (last quarter of Fiscal 2017) also weighed on sales growth, with net disposals at -9.3%. Organic growth was +3.8%, compared to growth in total issue volume of +5.9%.
Issue volume
Revenues
In organic growth in issue volume and revenues remains strong this quarter at and respectively. This performance is due to solid growth in issue volume in Europe in many countries, particularly boosted by double digit growth in Romania, the Czech Republic and Turkey. This was slightly offset by weakness in India ahead of the mandatory transfer from paper to card from January 2018. Revenue growth was even stronger, amplified by the continued growth in the Incentive and Recognition activities, particularly in the UK. These activities do not generate issue volume.
Organic growth in was slower than in recent quarters, with issue volume at and revenues turning negative at This reflects the combination in Brazil of lower inflation currently running at around 2.8%, and the continued decline in interest rates, as well as an environment which remains very competitive, not yet compensated by the expected pick up in the number of beneficiaries. On the other hand, growth remains strong in Chile and Mexico.
Financial position
There were no material changes in the Group's financial position as of November 30, 2017, relative to that presented in the Fiscal 2017 Registration Document published on November 20, 2017.
The acquisition of Centerplate, announced on November 15, closed on 27 December. Thus, the committed acquisition spend of 650 million euro, as reported in November is effective.
Principal risks and uncertainties
There were no significant changes to the principal risks and uncertainties identified by the Group in the Risk Factors section of the Fiscal 2017 Registration Document filed with the AMF on November 20, 2017.
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.
Operating profit excluding other operating income and other operating expenses. Other operating income and expenses will include gains or losses related to perimeter changes and on changes of post-employment benefits, restructuring and rationalization costs, M&A costs, amortization of client relationships and trademarks and impairment of non-current assets.
Underlying Operating profit divided by Revenues.
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 = 3,345 VEF (vs. VEF 3.250 for Fiscal 2017).
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