Vending

Sodexo suffers Q1 2021 double digit sales drop

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January 8, 2021

Sodexo, the Paris based, global foodservice contractor, suffered a 27.1% revenue decline from 6.07 billion euros ($7.43 billion) in Q1 2020 to 4.43 billion euros ($5.42 billion) in Q1 2021, as losses related to the pandemic continued, according to an earnings release. The decline was 21.5% excluding the impact of the Rugby World Cup.

Shares traded at $18.67 today against a 52-week range of $10.80-$22.42, according to Seeking Alpha.

"The revenue trend has improved again this quarter, despite the start of the second wave in November in most of our geographies," Denis Machuel, CEO, said in the release. "All regions were better, even though the North American activities remain very impacted by the COVID-19 pandemic, especially in education, corporate services and sports and leisure."

The first quarter was been better than expected in terms of operating performance, Machuel said, and the underlying operating profit margin target is expected to be at least 2.5% for the first half of the fiscal year.

On-site services organic revenue declined of 23.3% in the quarter, 22.1% excluding the RWC effect, reflecting improvement in all segments compared to the previous quarter, which was down 25.4%.

The key quarter on quarter trend improvements were:

• A 2.1% improvement in business and administrations over the fourth quarter fiscal 2020, 4.2% excluding the RWC, is due to improvement in corporate services in Europe in September and October, somewhat offset by a weaker November impacted by the second pandemic wave, and continued strength in government and agencies and energy and resources (together up 5.5%), with particularly strong activity in the mining sector.
• Sports and leisure globally remained very weak, even though the trend, excluding the RWC effect, improved by 6% compared to Q4 last year.
• Healthcare and seniors improved 5.6%.
• Education improved 5.6% reflecting the reopening of schools in Europe, while activity remains weak in schools and universities in North America.
• Activity in North America was down 33.1%, while outside North America the trends improved with Europe down 19.8%, or 16.6% excluding the RWC, and the Asia-Pacific, Latam, Middle East and Africa region stabilizing at 1.4%, with China and Latin America compensating for the more difficult markets in Asia, Africa and the Middle East.

The company said uncertainty remains for the next quarter due to the pandemic and the possibility of further lockdowns. The company maintains its guidance for an organic decline of between 20% and 25% for the first half fiscal 2021, improving relative to the second half fiscal 2020.

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