Sodexo Announces 9.2% Organic Revenue Growth for First-Half Fiscal 2008

02/04/2008 - 11:15

Regulatory News:

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-- Food and Facilities Management Services:
-- Robust performance in North America
-- Organic growth accelerating in Continental Europe
-- Strong contribution from 2007 Rugby World Cup corporate
hospitality contract
-- Increased growth momentum in Asia, Latin America and Remote
Sites
-- Service Vouchers and Cards: continued strong growth
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SODEXO (PARIS:SW) (OTCBB:SDXAY), a world leader in Food and
Facilities Management Services, today announced consolidated revenue
for the first half of Fiscal 2008, ended February 29, 2008.

Revenue by activity

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(in millions of First First Organic Currency
euro) Half Half growth impact Acquisitions Total
Fiscal Fiscal (1) (2) change
2007 2008
----------------------------------------------------------------------
Food and
Facilities
Management
Services:

-- North America 2,890 2,759 5.8 % -10.9 % +0.6 % -4.5 %
-- Continental
Europe 2,236 2,416 8.0 % +0.1 % -0.1% +8.0 %
-- UK and Ireland 720 827 22.3 % -7.4 % - +14.9%
-- Rest of the
World 766 816 11.2 % - 3.6 % - 1.0 % +6.6%
6,612 6,818 9.0 % -6.0 % +0.1% +3.1 %
----------------------------------------------------------------------
Service Vouchers
and Cards 211 267 17.3 % - 1.6 % +10.5 % +26.2%
----------------------------------------------------------------------
Intra-group
eliminations -4 -5
----------------------------------------------------------------------
TOTAL 6 ,819 7, 080 9.2 % - 5.8 % +0.4 % +3.8 %
----------------------------------------------------------------------
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1) Organic growth: revenue growth, at constant scope of
consolidation and exchange rates.

2) The currency impact was a negative -5.8%, but contrary to
exporting companies, the revenues and expenses of Sodexo subsidiaries
are denominated in the same currency. Consequently, foreign exchange
variations do not result in operating risks.

Commenting on revenues for the first half of Fiscal 2008, Sodexo´s
CEO Michel Landel said:

"Sodexo´s organic growth continued to gather pace, reaching 9%
compared with 8.2% for the first-half of last year. This renewed
performance is a clear illustration of our solid position permitting
us to expand in high potential markets that are less subject to
cyclical swings: we accelerated our penetration of growth markets such
as healthcare and education, bolstering our worldwide position in
Facilities Management and Service Vouchers and Cards and benefited
from significant growth drivers around the world.

Let me remind you Sodexo does business locally and unlike
exporting companies, revenues and operating expenses of our
subsidiaries are in the same currency. Negative exchange rate
variations recorded in this first half (-5.8%) only reflect a
translation impact on our financial statements and therefore do not
represent any operational risk.

The strong performance of our teams in this first half gives us
confidence that we will achieve our objectives for the current fiscal
year of annual organic revenue growth of more than 7%, and around 12%
for operating profit, at constant exchange rates, despite existing
uncertainties in the current economic environment."

Analysis of organic revenue growth

See table in appendix 2 and selected new customer wins in appendix
3.

Food and Facilities Management Services

-- North America (+5.8%): continuing strong performance in
Healthcare and Seniors and good growth in Business & Industry

-- Continental Europe (+8%): further demonstration of Sodexo´s
leadership in high growth potential Healthcare and Education
segments

-- United Kingdom and Ireland (+22.3%): strong impact of 2007
Rugby World Cup corporate hospitality contract

-- Rest of the World (+11.2%): accelerating activity in Latin
America, Asia and Middle East, and in Remote Sites

In North America satisfactory growth in the Business & Industry
(+4.5%) was achieved through improved client retention during the
previous year and a number of new contracts won in fiscal 2007,
including USAA, Pfizer and Sanofi. Activity levels in Leisure were
also strong with increased attendance at many sites.

New business development was encouraging, including the contract
won with the Dallas Museum of Art.

The 8.5% organic growth in the Healthcare and Seniors segments
mainly reflects increased comparable unit growth as a result of an
offering carefully adapted to clients´ and patients´ needs, and also
the ramping up of contracts that began in fiscal 2007. New clients
that have chosen Sodexo include Asbury Methodist Village
(Gaithersburg, Maryland), Acute Care Hospitals (Minneapolis-Saint
Paul, Minnesota) and Marin General Hospital (Greenbrae, California).

Education grew by 4.4% as rising student enrollment generated
healthy comparable unit growth on university campuses. Growth in
Facilities Management Services was more moderate in comparison to the
first half of Fiscal 2007 that had included reconstruction projects
following the Louisiana hurricanes. Application of revenue recognition
criteria on certain contracts also weighed on the growth rate.

Sodexo won several distinctions in North America, including:

-- In the US, Sodexo was named "One of the Top 200 Intern
Employers" for 2008 and "One of the Top 50 Entry Level
Employers", as identified by CollegeGrad.com in recognition of
its efforts in favour of development and training programs
designed to create a professional path in the company.

In Continental Europe several countries and activities contributed
to the 6.6% growth in Business & Industry, almost twice the pace
registered in the first half of the previous fiscal year. This
performance was driven notably by:

-- the KLM contract in the Netherlands, in Facilities Management
Services,

-- sales wins in Central Europe, notably in Poland, in Spain, and
in Scandinavia, in both Business & Industry and in Defense,

-- a very good performance within Leisure activities in France,
with the Paris Lido, Bateaux Parisiens and the Eiffel Tower.

Recent contracts won include Gillette Deutschland GmbH in Germany,
Telenor in Norway, GE Healthcare in Sweden, Continental in France and
Moscow City Block C in Russia.

The 9.3% growth in the Healthcare and Seniors segments reflects
the previous year´s sales successes, especially in France, Spain, and
Sweden. Recent wins include the Albert Schweitzer Hospital in
Dordrecht (Netherlands) and the Centre Hospitalier Sud-Francilien (a
major hospital in the Paris region) in France and Hospital San Juan de
Dios in Spain.

The growth in Education (+11%) reflects improved client retention
and sales made in fiscal 2007, especially in Italy, the Netherlands
and Germany. New clients include UT Twente Enchede (Netherlands) and
the schools managed by Sete Town Council (France).

Distinctions received by Sodexo´s Continental European teams
included in Poland, Sodexo´s ranking for the second year in a row as
the first company in Facilities Management and Foodservices categories
in the "Book of Lists 2008" published by the Warsaw Business Journal.

In the United Kingdom and Ireland Business & Industry registered
29.3% growth as a result of the corporate hospitality contract for the
2007 Rugby World Cup in the first quarter. This contract was for the
sale of hospitality programs for corporate clients and travel
services. Sodexo also provided Foodservices at several stadiums in
connection with the World Cup.

While the Business & Industry segment was not as dynamic, there
was significant growth in Defense with the ramping up of the Sovereign
Base contract in Cyprus and growth in Correctional Services
activities. Recent contract gains include a contract extension with
Glaxo Smith Kline South, Newcastle Building Society in Newcastle and
the Scottish Courts.

In the Healthcare segment, revenues mostly come from large
Public-Private Partnerships (PPP) where growth is less linear.

The growth in Education (+6.2%) reflects both recent contract wins
in universities and the success of offerings in schools and confirms
the return to growth. New contracts won include the Prior Pursglove
College in Guisborough and the London School of Pharmacy.

Distinctions won by Sodexo in the United Kingdom and Ireland
include:

-- Sodexo has been selected as an official partner for nutrition
for the Year of Food and Farming campaign that aims to explain
children the importance of a balanced diet and quality of
countryside food.

-- Sodexo Ireland was awarded the prestigious Hotel and Catering
Review Gold Medal Award in the Industrial Catering category
for 2007. Hotel & Catering Review is one of Ireland´s leading
magazines for the hospitality sector

-- Business and Industry teams in Scotland received the
´Hospitality Assured Award´ for the second year running.

In the Rest of the World Food and Facilities Management Services
registered 11.2% revenue growth.

In Remote Sites and in Latin America, the continuing strength of
raw materials prices boosted ongoing growth. The impact of
construction project completions in Africa and the Far East which
slowed growth in the first months of the fiscal year is now starting
to fade, as forecast, resulting in an acceleration of revenue growth.

Sodexo won several significant contracts; for example with
Seadrill, which has made Sodexo its partner for services aimed at
improving living conditions on its numerous barges across the world.
Other new contracts were signed with Woodside Petroleum and Pilbara
Iron Company in Australia as well as mining companies Antofagasta
Minerals, Los Pelambres and Esperanza as well as BHP Billiton
Escondida in Chile.

Sodexo continued its rapid expansion in Asia, particularly in
China and India where the company continued to achieve a high level of
growth. New contract awards include HSBC Tseung Kwan O and SVA
Fujifilm Opto-Electronic Materials Co. Ltd in China and Unilever and
Tata Consultancy Services in India.

Finally, Sodexo received a number of recognitions, including:

-- In Brazil, Sodexo received for the third consecutive year the
"Top Hospitalar 2007" Award in the Outsourcing Company
category, the highest national recognition in the hospital
sector.

-- As recognition to its business contribution to Peruvian
educational and cultural development, Sodexo was awarded the
Luis Hochschild Plaut prize, Medium-size Company category.

-- In China, Sodexo won the "Award of Best Partnership" from its
client Sinopec Qingdao Refining & Chemical Co. Ltd.

-- Sodexo has been awarded with several recognitions in the field
of safety:

-- In Madagascar, Sodexo has been recognized by its client
Rio Tinto for its contribution to achieving 1,000,000
hours worked with no lost time injuries.

-- In Chile, Sodexo has been recognized by ACHS (Safety
Chilean Association) for reaching the significant
milestone of 4 years without accident.

-- In Colombia, Sodexo was recognized for 1 year without
accidents on the Argos site.

Service Vouchers and Cards

Service Vouchers and Cards registered a strong increase in issue
volume which was close to 5 billion euros for the first half of fiscal
2008. It includes since January 2008 the contribution of the new
contract won with the Office pour l´Emploi en Belgique (Belgian Labor
Bureau) for Home Service Vouchers, and volumes from Tir Groupe, which
was acquired in October 2007.

On March 3, 2008, Sodexo completed the acquisition of Grupo VR´s
Service Vouchers and Cards activity in Brazil, making Sodexo the
leader in the Service Vouchers and Cards business in Brazil, the
world´s largest market in this activity. Sodexo´s total issue volume
in Brazil represents 2.3 billion euro. VR will be consolidated from
March 3rd, 2008.

Organic growth: + 17.3%

The following factors contributed to vigorous organic growth
during the period:

-- Increased numbers of beneficiaries in many countries such as
Venezuela,

-- Robust sales development based on innovative offerings in
Europe (gift passes, motivation and assistance passes).

Recently, a number of clients have put their confidence in Sodexo
Service Vouchers and Cards including Telekomunikacja Polska in Poland
(Gift Pass, 11,400 beneficiaries), Colruyt in Belgium (Meal Pass,
1,300 beneficiaries), AGIRC-ARRCO in France (CESU-Home services
voucher, 20,000 beneficiaries) and Shanghai Huizhong Automotive in
China (Gift Pass, 5,600 beneficiaries).

Other major events

The Group has been honoured with a triple distinction, in
Sustainable Asset Management´s (SAM) 2008 "Sustainability Yearbook,"
which identifies companies that combine economic performance with
sustainability, among the world´s 2,500 largest corporations. Sodexo
was named SAM Worldwide Supersector Leader 2008, SAM Gold Class 2008
and SAM Sector Mover 2008. Sodexo is the only France-based company
among the 10 global leaders.

Sodexo was included in the FTSE4Good index after the March 2008
review, confirming its commitment to meet social, ethical and
environmental criteria of the FTSE Group. Since the creation of the
FTSE4Good index in 2001, Sodexo has always been included.

First-half fiscal 2007-2008 results

Following approval by the Board of Directors, first-half results
will be published on April 17, 2008. Publication will be followed by a
conference call.

-- Telephone conference call

SODEXO will hold a conference call by telephone to comment on its
revenues for the first half of Fiscal 2008, at 8:30 am (French time)
today. Persons wishing to take part are invited to dial + 33 1 72 28
08 88. The press release and presentation of results will be available
for consultation on the Group website: www.sodexo.com, under "latest
news" beginning at 7:00 am. A recording of the conference call will be
available by dialing +33 1 72 28 01 49, code 217 729#.

-- About SODEXO

SODEXO was founded in Marseille by Pierre Bellon in 1966. It is
the world leader in most of its Food and Facilities Management
markets, employing more than 340,000 people on 29,300 sites in 80
countries. SODEXO reported revenues of 13.4 billion euros for fiscal
2006-2007, which closed August 31, 2007. The Group is listed on
Euronext Paris, with a current market capitalization of 6.21 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.

Appendix 1: Comparison of Consolidated Revenue

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--------- ---------

2006/2007 2007/2008

--------- ---------
FIRST QUARTER (Sept. to Nov.)
. Food and Facilities
Management
- North America 1,541,151 1,486,082
- Continental
Europe 1,151,281 1,240,430
- United Kingdom
and Ireland 365,713 499,606
- Rest of the World 396,810 416,220
. Service Vouchers and Cards 98,321 122,754
.Elimination of intragroup
Revenue (1,765) (2,231)
--------- ---------
3,551,511 3,762,861
--------- ---------

SECOND QUARTER (Dec. To Feb.)
. Food and Facilities
Management
- North America 1,348,714 1,273,319
- Continental
Europe 1,084,770 1,175,216
- United Kingdom
and Ireland 354,209 327,209
- Rest of the World 369,136 400,186
. Service Vouchers and Cards 112,899 143,876
.Elimination of intragroup
Revenue (2,106) (2,885)
--------- ---------
3,267,622 3,316,921
--------- --------- --------------------
% Variations
--------------------
at at
current constant
TOTAL HALF YEAR exchange exchange
rates rates
--------------------
. Food and Facilities
Management
- North America 2,889,865 2,759,401 -4.5% 6.4%
- Continental
Europe 2,236,051 2,415,646 8.0% 8.0%
- United Kingdom
and Ireland 719,922 826,815 14.9% 22.3%
- Rest of the World 765,946 816,406 6.6% 10.2%
. Service Vouchers and Cards 211,220 266,630 26.2% 27.8%
.Elimination of intragroup
Revenue (3,871) (5,116)
--------- --------- --------------------
TOTAL6,819,133 7,079,782 3.8% 9.6%
--------- --------- --------------------

This growth is made up as
follows :
- Organic growth 9.2%
- Acquisitions (*) 0.4%
- Currency effect -5.8%
(*) net of disposals
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Appendix 2: Food and Facilities Management services by segment

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Consolidated Group