Sodexho Announces a Strong Start to Fiscal 2008 with First Quarter Organic Revenue Growth of + 10.9%
Regulatory News:
-0-
*T
-- Food and Facilities Management services:
-- Success of 2007 Rugby World Cup Corporate Hospitality contract
-- Acceleration of organic growth in Continental Europe
-- Solid performance in North America
-- Service Vouchers and Cards: high level of growth maintained in
Europe and Latin America
-- Fiscal 2008 objectives confirmed
*T
SODEXHO ALLIANCE (PARIS:SW) (OTCBB:SDXAY), a leading global
provider of Food and Facilities Management services , today announced
consolidated revenues for first quarter Fiscal 2008, which ended
November 30, 2007.
Revenue by activity
-0-
*T
In millions 1st 1st
of euro quarter quarter Organic Currency Acquisitions,
Fiscal Fiscal growth(1) impact(2) net(3)
2007 2008 % change
----------------------------------------------------------------------
Food and
Facilities
Management
Services:
-- North
America 1,541 1,486 6.5% -10.3% 0.3% -3.6%
--
Continental
Europe 1,151 1,240 7.4% 0.3% - 7.7%
-- United
Kingdom and
Ireland 366 500 41.1% -4.5% - 36.6%
-- Rest of
the World 397 416 9.1% -3.3% -0.8% 4.9%
3,455 3,642 10.8% -5.4% - 5.4%
----------------------------------------------------------------------
Service
Vouchers and
Cards 98 123 13.9% - 1.2% 12.2% 24.9%
----------------------------------------------------------------------
Elimination
of
intragroup
revenues - 2 - 2
----------------------------------------------------------------------
TOTAL 3,551 3,763 10.9% - 5.3% 0.4% 6.0%
----------------------------------------------------------------------
*T
1) Organic growth: increase in revenues at constant scope of
consolidation and exchange rates.
2) The currency impact is a negative 5.3%. However, Sodexho
subsidiaries´ income and expenses are expressed in the same currency;
hence, contrary to exporting companies, currency variations carry no
operating risk.
3) Acquisitions concern primarily the concierge services company,
Circles, in North America, Vivaboxes and Tir Groupe in the Services
Vouchers and Cards activity and the divestiture of AIMS, a
correctional services business in Australia.
Commenting on first-quarter revenues, Sodexho CEO Michel Landel
said: "As expected, the strong organic growth of the first quarter
reflects the success of the 2007 Rugby World Cup Corporate Hospitality
contract, the strength of our geographic positioning and the diversity
of our client segments. In this regard, it is important to note that
with nearly two thirds of our consolidated revenue coming from the
Healthcare, Education, Defense and Correctional Services segments, and
even more in North America, where over three-quarters of our business
is in these segments, we are less sensitive to economic downturns. We
have leadership positions in these high potential markets with a
significant portion generated through Facilities Management services.
Our Service Voucher and Cards activity also is a driver of growth in
which we are differentiating ourselves through a high level of
innovation in a strong global market.
Fiscal 2008 is therefore beginning on an encouraging note, fully
in line with our strategy and continuing to demonstrate our ability to
control inflation in food costs. We reiterate our objective for annual
organic revenue growth exceeding 7% and an operating profit increase
of around 12% at constant exchange rates for this year. I am confident
that this fiscal year will mark another step in our progress toward
achieving our Ambition 2015."
Organic revenue growth analysis
(See table in Annex 2 and a selection of new clients in Annex 3)
Food and Facilities Management Services
-- North America: + 6.5% led by consistent performance of
Healthcare and Seniors and new growth in Business and Industry
-- Continental Europe: excellent progress (+ 7.4%), resulting
from an acceleration in revenues in France and development of
Facilities Management activities in the Netherlands and, to a
lesser extent, in Sweden
-- United Kingdom and Ireland: + 41.1%: strong impact from the
2007 Rugby World Cup Hospitality Contract
-- Rest of the World (+ 9.1%): continued rapid growth mainly in
Latin America and the Middle East
In North America, as previously noted, Fiscal 2008 first quarter
follows a Fiscal 2007 fourth quarter that included a 53rd week of
activity consistent with industry practice.
The strong increase in Business and Industry revenue of + 7.3%
resulted from improved client retention during Fiscal 2007,
development in the Leisure segment (including zoos, aquariums, museums
and amusement parks, etc.), Canada and Facilities Management
activities with clients such as Pfizer and Sanofi.
With organic growth still around 8% (+ 8.4%), Health Care and
Seniors continue to post strong results, in particular from:
-- A broader portfolio of services to patients, staff and
visitors, contributing to strong and consistent growth in
comparable unit sales;
-- Continued progress in new contracts signed in earlier
reporting periods.
Education reported growth of + 4.8%, a result of further increases
in the number of students on campuses and in schools. At the same
time, growth in Facilities Management services was moderated by the
comparison to the prior year period which benefited from a number of
reconstruction projects following the Louisiana hurricanes and also as
a result of IFRS revenue recognition criteria applied on certain
current project and construction work.
During the quarter, North American teams received the following
recognitions:
-- Sodexho was named by Hispanic Business magazine as a
"Diversity Elite 60" company.
-- Sodexho was recently honored by the U.S. Department of Defense
as a recipient of the 2007 Secretary of Defense Employer
Support Freedom Award for supporting employees in the National
Guard and Reserve.
-- Maryland Governor Martin O´Malley recognized Sodexho, Inc.´s
commitment to corporate social responsibility - most notably
its efforts through its philanthropic arm, the Sodexho Stop
Hunger Foundation, for leading the fight against hunger in the
United States.
-- Sodexho has been designated by Atlanta Tribune: The Magazine
as one of the 2007 "Best Places for Minorities to Work."
Sodexho was selected for its commitment to workforce
diversity.
In Continental Europe, the + 6.6% revenue growth in Business and
Industry reflects in particular:
-- accelerated growth in France both in Corporate clients and in
Leisure services, and
-- the contribution of the KLM Facilities Management services
contract in the Netherlands.
In Healthcare and Seniors, revenue rose by + 4.6%, a result of the
permanent increase in scope of service offerings. The first quarter of
Fiscal 2008 result compares well against a very high prior-year
comparative following the start-up of a large number of contracts in
France. In addition, Sodexho has reinforced its selectivity criteria
in the public sector in Southern Europe.
Growth in Education was especially robust (+ 13.7%) for the
beginning of the year, with the launch of a number of important new
contracts in Italy (public schools in Rome) and Germany.
Recognitions earned by Sodexho teams in Continental Europe during
the quarter included:
-- In Germany, Sodexho was recognized Caterer of the year 2007 by
Catering Inside magazine and given a special award for
business performance
-- In Hungary, Sodexho was honored by Papai Pariz National
Association of Health and Education for outstanding efforts in
communicating on health and nutrition
In the United Kingdom and Ireland, the strong progress in Business
and Industry is explained by the 2007 Rugby World Cup hospitality
contract. This contract included both the sale of corporate
hospitality and travel packages. In addition, Sodexho provided
Foodservices at several Rugby World Cup sites.
Healthcare had a particularly strong Fiscal 2007 first quarter, a
result of the mobilization and ramp up on several previously-won large
contracts, which remain fully operational in the current quarter.
Sodexho also withdrew from some operations no longer meeting the
Group´s profitability criteria.
The Education segment returned to growth (+ 6.2%) thanks to
strengthened developments and new contract awards in universities and
the success of school offerings such as "Club Joules", a format
providing balanced nutritional menus with a program of physical
exercise.
Additionally in the UK and Ireland during the quarter, Sodexho won
the Premises and Facilities Management award for Partners in Expert
Services 2007, in partnership with GlaxoSmithKline Research and
Development.
In the Rest of the World, growth in Food and Facilities Management
services was + 9.1%.
In Remote Sites, the strong raw material prices continued to have
a positive impact on development, but the effect of the completion of
a number of major infrastructure construction projects in Africa and
the Far East weighed slightly on revenue growth during the current
quarter.
At the same time, Latin America, driven by Brazil, Chile and Peru,
the Middle East sustained by major construction projects, and Asia
(India and China) continue to experience double-digit growth. Sodexho
won two major Facilities Management contracts in India, one for Nokia
and the other for Tata, the leading Indian conglomerate.
Among other recent significant contracts in these regions were
Leiv Eriksson and West Phoenix in Norway, Henry Goodrich /Transocean
in the United States, HRG in Australia, and Petrobras and Novartis in
Brazil.
In addition, Sodexho teams received the following recognitions:
-- In Australia, Sodexho was recognized for its Equal Opportunity
for Women in the Workplace Report.
-- Sodexho was honored with the Safety Award from Rio Tinto at
the Hope Downs site in Australia.
-- In Beijing, Sodexho security teams won the title of "Safety
Controller" from its client RF Micro Devices (RFMD), a
U.S.-based client specializing in wireless technology
Service Vouchers and Cards
Organic growth: + 13.9%
As previously reported, exceptional orders related to the
presidential elections both in Mexico and in Venezuela contributed
approximately four percentage points to the remarkable organic issue
volume growth achieved during the first quarter of Fiscal 2007.
Despite this very high prior year comparative, issue volume
increased 12.3% (at constant scope of consolidation and exchange
rates), to 2.1 billion euro for the first quarter of Fiscal 2008. This
good performance reflects the strength and innovation of this activity
both in Europe and in Latin America.
Sodexho won two very significant contracts at the end of calendar
year 2007:
-- An exclusive partnership with the Belgian government
Employment Office (ONEM) for its vouchers for home services
programs for five years, beginning January 1, 2008,
representing issue volume of over 800 million euro.
-- Management of a major childcare voucher program for the UK´s
Ministry of Defence. This contract is an example of the unique
commercial synergies that Sodexho is able to provide through
its Service Vouchers and Cards and Food and Facilities
Management services for the same client.
Group acquisitions
On October 2, 2007, Sodexho acquired the gift voucher activity of
Tir Groupe in France. For the first quarter of Fiscal 2008, resulting
in a contribution to consolidated revenues of 1.4 million euro during
the period.
On October 31, 2007, the Group acquired 100% of Circles, a
concierge services company in the United States.
In addition, in September 2007, Sodexho announced an agreement for
the acquisition of the Service Vouchers and Cards activity of Grupo VR
in Brazil; this transaction remains subject to local regulatory
approvals and should be completed during Fiscal 2008. This acquisition
should allow Sodexho to become the leader in the Service Vouchers and
Cards activity in Brazil, the most significant global market.
As previously announced, although these acquisitions will not have
a significant effect on the Group´s level of debt, the two
acquisitions in the Service Vouchers and Cards activity will
temporarily weigh on the operating margin of Service Vouchers and
Cards for the current fiscal year as a function both of the closing
calendar and the timing subsequently required to reconstitute the
businesses´ operational cash float. Given the synergies from these
companies, the Group reinforces its confidence in achieving its medium
term objective for operating margin improvement for the Service
Vouchers and Cards activity.
Other major events
During the first quarter of Fiscal 2008:
-- Sodexho was selected as an index component for the Dow Jones
Sustainability indices for the World (DJSI World) and Europe
(DJSI STOXX). In addition, Sodexho was named for the third
year in a row, as supersector worldwide leader in its industry
category, "Travel and Leisure." Sodexho is the only France
headquartered company listed in the DJSI as a supersector
leader.
-- The FIAF (French Institute - Alliance Francaise) honored
Pierre Bellon, Sodexho Chairman and Founder with the 2007
Pilier d´Or for outstanding contributions to the French
American community.
Confirmation of Fiscal 2008 Objectives
The start of Fiscal 2008 benefits from progress in the prior year,
notably, improved client retention (93.9%), comparable unit growth of
above 5% and new business development of more than 9%.
This reinforces confidence and Sodexho´s confirmation of the
following objectives for Fiscal 2008:
-- annual organic revenue growth exceeding 7%
-- an operating profit increase of around 12% at constant
exchange rates
-- Conference call
SODEXHO ALLIANCE will hold a conference call today to discuss
first quarter Fiscal 2008 revenue. The call will begin at 8:30 am
(Paris time). The call-in access number is +33 (0)1 72 26 06 12. The
press release and the slideshow will be available on the internet by
clicking on the link www.sodexho.com, under the "Latest News" section,
beginning at 7:00 am. To access the rebroadcast of the conference
call, please dial +33 (0)1 72 28 01 49 and enter the code: 211944#
-- Financial communications calendar
-- General Shareholders Meeting
Tuesday, January 22, 2008 at 4:30 p.m. (Paris time) at the Espace
Grande Arche (Parvis de la Defense, Paris).
-- First half Fiscal 2008 Revenues
Wednesday, April 2, 2008. The announcement will be followed by a
conference call.
-- First half Fiscal 2008 Results
Thursday, April 17, 2008.
The above dates are provided for information only and are subject
to change.
-- About Sodexho Alliance
SODEXHO ALLIANCE, founded in 1966 by Pierre Bellon, a world leader
in Food and Facilities Management services in most markets, with more
than 342,000 employees on 29,000 sites in 80 countries. For Fiscal
2007, which closed August 31, 2007, SODEXHO ALLIANCE had revenues of
13.4 billion euro. Listed on Euronext Paris, the Group´s current
market capitalization today was more than 6.0 billion euro.
This press release contains statements that may be considered as
forward-looking statements and as such may not relate strictly to
historical or current facts. These statements represent management´s
views as of the date they are made and we assume no obligation to
update them. You are cautioned not to place undue reliance on our
forward looking statements.
Annex 1
Comparison of Consolidated Revenues
-0-
*T
Fiscal Fiscal % Variations
2007 2008
-------------------------------------
FIRST QUARTER at at
(Sept to Nov) current constant
exchange exchange
rates rates
Food and Facilities Management
services
- North America 1,541,151 1,486,082 - 3.6% 6.8%
- Continental Europe 1,151,281 1,240,430 7.7% 7.5%
- United Kingdom and Ireland 365,713 499,606 36.6% 41.1%
- Rest of World 396,810 416,220 4.9% 8.2%
. Service Vouchers and Cards 98,321 122,754 24.9% 26.1%
. Elimination of intragroup
Revenues - 1,765 - 2,231
-------------------------------------
3,551,511 3,762,861 6.0% 11.2%
-------------------------------------
*T
-0-
*T
Growth breakdown:
- Organic growth 10.9%
- Net acquisitions 0.4%
- Currency effect - 5.3%
*T
Annex 2: Food and Facilities Management services revenue by
segment
Consolidated Group
-0-
*T
In millions of euro 3 months Fiscal 3 months Organic growth
2007 Fiscal 2008 (1)
----------------------------------------------------------------------
-- Business & Industry 1,632 1,825 15.2%
-- Healthcare 836 837 6.8%
-- Education 987 980 7.0%
----------------------------------------------------------------------
TOTAL 3,455 3,642 10.8%
----------------------------------------------------------------------
*T
North America
-0-
*T
In millions of euro 3 months Fiscal 3 months Organic growth
2007 Fiscal 2008 (1)
----------------------------------------------------------------------
-- Business & Industry 334 330 7.3%
-- Healthcare 496 485 8.4%
-- Education 711 671 4.8%
----------------------------------------------------------------------
TOTAL 1,541 1,486 6.5%
----------------------------------------------------------------------
*T
Continental Europe
-0-
*T
In millions of euro 3 months Fiscal 3 months Organic growth
2007 Fiscal 2008 (1)
----------------------------------------------------------------------
-- Business & Industry 672 719 6.6%
-- Healthcare 265 279 4.6%
-- Education 214 242 13.7%
----------------------------------------------------------------------
TOTAL 1,151 1,240 7.4%
----------------------------------------------------------------------
*T
United Kingdom and Ireland
-0-
*T
In millions of euro 3 months Fiscal 3 months Organic growth
2007 Fiscal 2008 (1)
----------------------------------------------------------------------
-- Business & Industry 265 399 55.9%
-- Healthcare 59 58 - 0.3%
-- Education 42 43 6.2%
----------------------------------------------------------------------
TOTAL 366 500 41.1%
----------------------------------------------------------------------
*T
Rest of the World
-0-
*T
In millions of euro 3 months Fiscal 3 months Organic growth
2007 Fiscal 2008 (1)
----------------------------------------------------------------------
-- Business & Industry 361 377 8.6%
-- Healthcare and Seniors 15 16 11.5%
-- Education 21 23 15.8%
----------------------------------------------------------------------
TOTAL 397 416 9.1%
----------------------------------------------------------------------
*T
(1) Organic growth: increase in revenues at constant consolidation
scope and exchange rates.
Annex 3: Selection of new clients
Food & Facilities Management services
North America
Business and Industry
California Public Employees Retirement System- CalPERS,
Sacramento, California - 1,500 employees, Foodservices); EMC
Corporation, Hopkinton, Massachusetts (1,790 employees, Foodservices);
Novartis Pharmaceuticals Corporation, East Hanover, New Jersey (4,800
employees, Foodservices); Novartis Vaccines & Diagnostics, Emeryville,
California (2,200 employees, Company Store); Pioneer Hi-Bred
International Inc., Johnson, Iowa (1,400 employees, Food and
Facilities Management services); TCG Management Corp., Baltimore,
Maryland (4,000 employees, Foodservices); Fort Worth Museum of Science
& History, Fort Worth, Texas (2,750 visitors, Foodservices);
Starbucks, LeMoore (Foodservices); Starbucks, 32nd street
(Foodservices); Place du Centre, Canada (5,000 employees,
Foodservices); Thunder Bay Homes, Canada (Facilities Management
services)
Defense
Anniston Army Depot (Foodservices)
Health Care and Seniors
Brandywine Hospital, Coatsville, Pennsylvania (200 beds,
Foodservices); Crittenton Hospital Medical Center, Rochester, Michigan
(250 beds, Facilities Management services); H & H Total Care services,
Canada (170 beds, Food and Facilities Management services);
Abbostford, Canada (410 beds, Food and Facilities Management services)
Education
North East ISD (Facilities Management services); Anna Maria
College (Facilities Management services); Philadelphia School
Administration (Foodservices); Newman-Crows Landing, Newman, CA; Cafe
440/Philadelphia School Administration, Philadelphia, PA
Continental Europe
Business and Industry
Immeuble Centre d´affaires Paris Nord, France, (320 meals/day,
Foodservices); Siemens VDO Automative SA, France (650 meals/day,
Foodservices); Adidas Salomon AG World of Sport, Germany (4,000
people, Foodservices); Ministerie van Buitenlandse Zaken, Netherlands
(1,180 people, Foodservices); Mercedes, Turkey (3,000 people,
Foodservices); Gemeente Rotterdam - Europoint, Netherlands(1,070
people, Foodservices); 3M, Belgium (450 people, Foodservices)
Correctional Services
Etablissement Penitentiaire de Nantes, France (4,340 meals/day,
Foodservices) ; Etablissement Penitentiaire de Reau, France (1,600
meals/day, Foodservices) ; Etablissement Penitentiaire de Annoeulin,
France (1,400 meals/day, Foodservices)
Defense
Base aeronavale Landivisiau, France (510 meals/day, Foodservices)
Health Care and Seniors
Clinique Montplaisir, France (160 meals/day, Food and Facilities
Management services); Polyclinique Pasteur, France (120 meals/day,
Food and Facilities Management services); Polyclinique du Val de
Loire, France (230 meals/day, Foodservices); Centre medical
departemental Francois et Marie Mercier, France (410 meals/day,
Foodservices); Clinique Leopold Bellan, France (230 meals/day,
Foodservices); Maison retraite les Gabres, France (460 meals/day,
Foodservices); Residence Arc en Ciel, France (190 meals/day,
Foodservices); FAM les Iris, France (130 meals/day, Foodservices);
Residence les Castalies, France (110 meals/day, Foodservices); EHPAD
la cle des ans, France (210 meals/day, Foodservices); Foyer George
Sand, France (160 meals/day, Foodservices)
Education
Noisiel, France (1,510 meals/day, Foodservices)
Remote Sites
West Phoenix, Norway (100 people, Foodservices);
UK & Ireland
Business and Industry
NFU Mutual Social Club, Stratford-upon-Avon, UK (450 people,
Foodservices); Carpetright Plc, Essex, UK (350 people, Foodservices
and Facilities Management) , Birches Conference Center, Kings Lynn, UK
(1,000 people, Foodservices); Heiton Buckley Limited, Dublin, Ireland
(180 people, Foodservices); APC-MGE, Galway, Ireland (320 people,
Foodservices)
Rest of the World
Business and Industry
Mobil Coomera (Shop & Fuel) (EXXON Mobil), Australia (ten sites,
Food and Facilities Management services); Total Access Communication,
Thailand (1,000 employees, Foodservices); AOC, Brazil (Foodservices);
Marfrig, Brazil (Foodservices); Novartis, Brazil (Foodservices);
Sofape, Brazil (Foodservices); Plantas Ariztia, Chile (Foodservices);
AGV Logistica, Brazil (Foodservices);
Remote Sites
Global Geophysical Services, Algeria (540 people, Food and
Facilities Management services); Minera Huayanca, Peru (Foodservices);
ROM, Chile (Foodservices)
Service Vouchers and Cards
CENTRAL EUROPE:
Bulgaria: DHL (Meal and Food Pass, 230 beneficiaries)
Poland: Bank BPH (Gift Pass, 8,900 beneficiaries); Poludniowy
Koncern Weglowy (Gift Pass, 5 200 beneficiaries); General Electric
(Gift Pass, 4,200 beneficiaries)
Romania: APT resources & services (Food Pass, 900 beneficiaries)
Slovakia: Yazaki (Gift Pass, 1,700 beneficiaries)
WESTERN EUROPE:
Belgium: City of Gent (Meal Pass, 6,000 beneficiaries); Estee
Lauder (Gift Pass, 900 beneficiaries)
France: Laboratoires Roche (CESU); City of Pau (CESU, 2,100
beneficiaries); Plastic Omnium (Meal Pass, 100 beneficiaries)
Germany: Fiat (Meal Pass, 190 beneficiaries)
Spain: Unidad Editorial (Meal Pass, 280 beneficiaries)
Tunisia: Tunisair (Meal Pass, 3,000 beneficiaries)
United Kingdom: Ministry of Defense (Childcare Pass, 9,000
beneficiaries)
LATIN AMERICA:
Brazil: Consorcio Propeno (Meal Pass, 1,100 beneficiaries),
Secretaria de Estado de Educacao (Food Pass, 1,000 beneficiaries)
Chile: Compania Nacional de Seguros Consorcio (Meal Pass, 2,500
beneficiaries)
Colombia: Colombia Movil (Food Pass, 190 beneficiaries); Ford
(Mobility Pass, 220 beneficiaries)
Mexico: Ferrocarril y Terminal del Valle de Mexico (Food Pass, 900
beneficiaries); Gobierno del Estado de Sonora (Mobility Pass)
Peru: Samsung (Food Pass, 150 beneficiaries)
Venezuela: Cativen - Casino Group (Food Pass, 3,500 beneficiaries)
ASIA:
China: Industrial and Commercial Bank of China ZhaBei (Gift Pass)
India: Electronics Corporation of India Limited (Gift Pass, 4,700
beneficiaries); Hindustan Aeronautics (Meal Pass, 14,000
beneficiaries); Philips (Meal Pass, 1,500 beneficiaries)
Philippines: Pag-IBIG Fund (Gift Pass, 2,200 beneficiaries);
Pfizer (Gift Pass, 290 beneficiaries)