Catering group Sodexo eyes bigger profits on school reopenings
2:53 am Thursday, July 01st, 2021
(Reuters) -French catering and food services group Sodexo on Thursday raised its second-half revenue and profit margin forecasts, betting on the full reopening of U.S. schools.
The Paris-based firm, one of the world’s biggest catering companies alongside Britain’s Compass, now expects an operating profit margin of 3.5% for the six months ended August 31, compared with 3.1% forecast earlier.
Revenue is now expected to rise around 15% on a like-for-like basis, the top end of its previous 10% to 15% outlook.
Like-for-like revenues for its third quarter jumped 19.0% to 4.48 billion euros ($5.30 billion), beating analysts’ 12.1% estimates.
“Sodexo has now beaten expectations for four consecutive quarters, and its guidance provides a nice set-up for this to continue in the fourth quarter,” said analysts at Morgan Stanley.
Sodexo benefited from a rapid COVID-19 testing centre contract in Britain, as airline lounges began to open up in North America and children returned to schools across Europe.
Most schools were open in Europe during the spring – despite some class closures and a third lockdown in France – while in the United States, school districts are expected to resume in-person classes in the fall.
With university registrations taking place over July, Chief Executive Denis Machuel predicted that business for the start of the 2021 academic year would be very different from last year.
“Students want to return to campus, and our university clients want to see the students come back,” he said.
Compass Group also predicted last month its food catering volumes would pick up from September as students return to campuses, audiences attend sports and music events and economic activity recovers.
($1 = 0.8446 euros)
(Reporting by Sarah Morland and Dagmarah Mackos; Editing by Aditya Soni and John Stonestreet)
