Foodservice

COVID-19 delivers Sodexo a hefty loss for fiscal 2020

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October 29, 2020

Sodexo, a Paris-based foodservices and facilities company, reported a net loss of 315 million euros ($370 million) for the fiscal year ending Aug. 31,compared with a profit of EUR665 million ($776.14 million) the previous year, according to an earnings report.

The company has decided not to propose a dividend.

Revenue declined 12%, to EUR19.32 billion ($22.55 billion), while operating profit fell from EUR 1 billion ($1.17 billion) to EUR 65 million ($75.86 million). Earnings per share fell from EUR 456 ($5.32) to a EUR 2.16 ($2.52) loss. Underlying earnings per share fell from EUR 5.25 ($6.13) to EUR 2.10 ($2.45).

Shares traded at $63.75 Thursday compared to $116.83 one year ago.

"Fiscal 2020 was a tale of two halves," Denis Macheul, CEO, said in a prepared statement. "Up to the end of February, we were on track with our focus on growth strategic agenda in terms of growth and productivity with enhanced execution on large contracts. We were on track to meet our guidance of 4% organic growth in revenues."

COVID-19 interrupted this momentum, he noted.

"While the first half organic growth was 3.2%, the second half was down 27.5%, impacted by the COVID-19 pandemic," the company said in the earnings report.

Operating profit dropped to EUR65 million from EUR1.06 billion the previous year.

By segment, healthcare and seniors were relatively protected, down only 11.1%, while education, business and administrations were down 47.2% and 29.2%, respectively.

Business, administrations, government, agencies, energy and resources combined were up 1.3% while sports, leisure and corporate services were down 88% and 26%, respectively.

The company board will not propose a dividend for fiscal year 2020 to "protect the balance sheet given the severity of the COVID-19 downturn in activity, and the uncertainty as to the timing of recovery, and in solidarity with the teams," according to the earnings report.

Looking ahead, Sodexo expects organic revenue to decline 20% to 25% and the underlying operating margin to be between 2% and 2.5% in the first half of fiscal 2021.

For an update on how the coronavirus pandemic is affecting convenience services, click here.