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TheStreet Open House

Sodexo: Solid Revenue And Profit Growth In Fiscal 2012

Subsequent events

Sodexo completed its acquisition of Servi-Bonos, S.A. de C.V. in Mexico on November 2, 2012. Servi-Bonos will be consolidated in the Group’s financial statements for ten months in Fiscal 2013.

Servi-Bonos is a leading provider of food and meal vouchers and cards, serving close to 5,000 clients in Mexico through its nationwide network. In 2011, Servi-Bonos generated issue volume (the face value of vouchers and cards multiplied by the number of vouchers and cards issued) of close to 300 million euros.

This acquisition reinforces Sodexo’s international leadership in Quality of Life services in the buoyant Mexican growth economy.

Outlook

At the November 6, 2012 Board of Directors meeting, Chief Executive Officer Michel Landel underlined the effectiveness of the Group’s long-term strategy, based on a unique range of Quality of Life services, and an unparalleled global network and undisputed leadership in emerging countries.

Michel Landel said that Fiscal 2013 begins with sharply contrasting trends:

On the one hand, the Group benefits from:

  • sustained development and growth in Sodexo's activities (in On-site Services and Benefits and Rewards Services) in emerging economies, where the Group continues to strengthen its positions
  • important new contract awards, such as with HCR ManorCare, one of the largest chains of nursing homes in the U.S. and a stronger pipeline of prospective clients in North America, notably in Health Care and Seniors
  • a differentiated integrated service offering that responds to the increasing demand for mutualized services by major international companies.

At the same time, the current economic environment is weighing on profitability, particularly in Europe.

As a result, for Fiscal 2013 Sodexo projects modest growth 1 in revenues and operating profit compared to the previous year, which benefited from specific events (Rugby World Cup, the Olympics and a 53 rd week in North America).

In this context, Sodexo’s management and teams are fully mobilized around specific actions to:

  • accelerate profitable growth by capitalizing particularly on Sodexo's offers and expertise, by client segment and sub-segment
  • strengthen competitiveness with a program of operational efficiency and cost reduction. During the past three years, the Group has achieved 150 million euros in economies in overheads. The program launched today should allow Sodexo, within three years, to reduce on site operating costs by 0.6% of revenues and lower overhead costs by 0.4% of revenues, improving productivity at all levels. The program’s implementation will result in exceptional costs between 130 and 150 million euro over the next 18 months with a positive impact of the same amount in Fiscal 2015 and the following fiscal years.

As a result of the initiatives undertaken and the effectiveness of the Group's strategy, CEO Michel Landel confirms Sodexo’s medium term objectives to:

  • achieve an average of 7% annual consolidated revenue growth
  • reach a consolidated operating margin of 6.3% by the end of Fiscal 2015.

Michel Landel underlined Sodexo’s major strengths:

  • a potential market estimated at over 800 billion euro
  • a unique Quality of Life services offer particularly adapted to respond to changing client needs
  • an unparalleled global network covering 80 countries
  • undisputed leadership in the emerging markets
  • a strong culture and engaged teams
  • excellent financial strength
  • its independence.

These strengths enable Sodexo to look to the future with confidence and to maintain its investments, particularly in the development of its human resources and the reinforcement of its expertise.

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