Vending

Sodexo beats expectations for Q3 2021, second half

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July 1, 2021

Sodexo sales beat company expectations for both Q3 2021 and second half revenue, according to a Reuters report.

The Paris-based foodservice provider raised its second-half revenue and profit margin forecasts Thursday, based on the full reopening of U.S. schools.

The company expects an operating profit margin of 3.5% for the six months ended Aug. 31, compared with a 3.1% earlier forecast.

The company also expects its second half revenue to rise around 15% on a like-for-like basis, compared to its 10% to 15% outlook.

The company's Q3 2021 revenue rose 14.7% from 3.91 billion euros ($4.64 billion) in Q3 2020 to 4.48 billion euros ($5.31 billion) for Q3 2021, according to a company press release.

• On-site services organic revenue growth was 18.8% for Q3 2021, reflecting recovery compared to the first lockdowns in March 2020, with foodservice sales up 26%.
• Business and administration sales increased 10.1%, at 78% of fiscal 2019 levels.
• Corporate services recovery remains slow in North America and was impacted by the April lockdown in France. However, the performance elsewhere was solid, and well above fiscal 2019 in Asia and Latin America.
• Sports and leisure recovery is "very progressive" in North America, according to the press release, with airline lounges beginning to open up, but still very largely closed in Europe.
• Healthcare and senior services was up 9.2%, back up at 96% of fiscal 2019 levels. While hospitals are seeing more elective surgery in the quarter, visitors remain excluded in most hospitals and therefore the retail activity remains, in most cases, closed.
• Education was up 73.5%, at 79% of fiscal 2019 levels. Schools in Europe were fully open during the quarter, even though there were occasional class closures and a French lockdown in April. In North America, schools reopened, running at about 89% of fiscal 2019 levels.
• Benefits and rewards services organic revenue growth was 23.8%, and revenues at 96% of fiscal 2019 levels. In employee benefits, revenue was up 19.6%, with issue volume up 15.8% and reimbursement volumes up 22.5% as restaurants around Europe re-opened.

Shares traded at $87.30 Tuesday against a 52-week range of $63.25-$103.79.

"Third quarter growth in revenues is better than expected in all activities and segments driven notably by the significant recovery compared to the first lockdowns in March 2020, CEO Denis Machuel said in the release. "Since then, the rebound has been progressive despite the third quarter being impacted by the April lockdown in France and the emergence of new variants of the COVID-19 virus. For the fourth quarter, we expect the recovery to continue, particularly in the Americas."

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