Sodexo Confirms Full Year Targets Amid International Expansion

The Tip Desk · February 29, 2012 · 2 min read

The services provider is integrating three new acquisitions while navigating food inflation and macroeconomic uncertainty.

Sodexo is integrating three major acquisitions to strengthen its presence in emerging markets and specialized services. The company acquired Puras do Brasil, the second-largest site services provider in Brazil, which employs 22,000 people across more than 1,300 sites. In France, the company added Lenôtre to develop its prestige gastronomy portfolio. In the United States, the company finalized the purchase of Roth Bros, a technical maintenance firm.

These investments are expected to weigh slightly on short-term operational profitability. The company said it is pursuing productivity efforts and cost savings to meet client expectations during a period of food inflation and macroeconomic uncertainty.

Despite these pressures, the company confirmed its full-year targets for 2011-2012. It expects internal revenue growth between 6 and 7%, with an additional contribution of approximately 4% from recent acquisitions. The company also targets operational result growth of approximately 10%, excluding currency effects and a favorable accounting adjustment related to United Kingdom pension plan costs.

For the medium term, the company aims for an average annual consolidated revenue growth of 7% and a consolidated operational margin of 6.3% by the end of the 2014-2015 fiscal year.

Financial activity during the first half included the payment of 221 million euros in dividends to parent company shareholders, representing 1.46 euros per share. The company also delivered 40 million euros of shares following the exercise of employee stock options.

Debt levels shifted as the company utilized a multi-currency confirmed credit line, with draws reaching 330 million euros by February 29, 2012. The company reported 865 million euros in unused bank credit lines at the end of the first half. As of February 29, 2012, 98% of consolidated debt is at a fixed rate with an average financing rate of 5.9%.

Revenue for the second half will include the effect of a 53rd week of activity, following North American industry standards.