French caterer Sodexo sees softer sales growth in 2025 after annual beat
5:25 am Thursday, October 24th, 2024
By Dimitri Rhodes
(Reuters) -French food caterer Sodexo expects its organic sales growth to slow down to between 5.5% and 6.5% in the fiscal 2025, it said on Thursday, after reporting higher-than-expected 7.9% growth for the year through Aug. 31.
Sodexo, which spun off its voucher business Pluxee in February and is now fully focused on catering, said growth would be driven by new contract wins, pricing and positive volume growth even after the post-COVID volume recovery waned.
Shares in the Paris-listed company rose 5.4% by 0855 GMT, and J.P.Morgan analysts said the results were likely to be supportive to the broader catering sector, particularly in terms of pricing resiliency and new business wins.
Sodexo has slowed down the pace of its price hikes, but it still expects to raise them by another 3% in 2025, compared to 4% in the previous year.
It reported a record year in terms of new contracts which exceeded 1.9 billion euros ($2.05 billion) including cross-selling. It also benefited from contracts related to the Paris Olympics and the Rugby World Cup during the year.
However, its retention rate fell by 1 percentage point to 94.2% due to the loss of a large global facility management contract and two smaller contracts in Latin America.
“It is rare that we lose a very large contract,” CEO Sophie Bellon told analysts in a call, adding the LATAM contract losses were due to a “very specific competitive environment” this year.
Asked about the Bloomberg News report that last month said Sodexo was weighing a possible acquisition of Aramark, Bellon told reporters the company was not in talks with its U.S. rival.
Finance chief Sébastien de Tramasure said Sodexo was closely monitoring the French government’s 2025 budget proposal that could include a special contribution from companies with annual revenues exceeding 1 billion euros.
“France accounts for 12% of the group’s revenue, and the French market is far from being our most profitable, so this tax will apply to the results of our subsidiary in France,” he added.
($1 = 0.9258 euros)
(Reporting by Dimitri Rhodes in Gdansk; editing by Milla Nissi)
