Fiscal 2006: Sodexho's Overall Growth Accelerates + 9.4 % and Organic Growth Increases to + 6.4 % from + 4.3 % in Fiscal 2005
Sodexho Alliance (NYSE:SDX) (PARIS:SW):
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-- Confirmed leadership in Food and Facilities Management Services:
-- Strong acceleration of organic growth in North America
(+ 5.0 %) and Continental Europe (+ 5.2 %) driven, in
particular, by Healthcare and Seniors
-- Return to growth in United Kingdom and Ireland: + 4.8 %
-- High activity levels in the Rest of the World: + 16.1 %
(Remote Sites, Latin America and Asia-Australia)
-- Continuing rapid development in Service Vouchers & Cards: + 15.9%
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SODEXHO ALLIANCE (NYSE:SDX) (PARIS:SW), the leading global
provider of food and facilities management services, today announced
consolidated revenues for Fiscal 2006, up 9.4 %. Group organic growth
accelerated from + 4.3% in Fiscal 2005 to + 6.4 % in Fiscal 2006.
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Revenue by activity and geography
In millions Fiscal Fiscal Organic Currency Total
of euro 2005 2006 growth impact(2) Acquisitions change
(in IFRS) (1)
----------------------------------------------------------------------
Food and
Facilities
Management : 11,394 12,431 6.2 % 2.7 % 0.2 % 9.1 %
-- North
America 5,004 5,479 5.0 % 4.5 % - 9.5 %
-- Continental
Europe 3,922 4,148 5.2 % - 0.6 % 5.8 %
-- United
Kingdom and
Ireland 1,302 1,370 4.8 % 0.4 % - 5.2 %
-- Rest of the
World 1,166 1,434 16.1 % 6.9 % - 23.0%
----------------------------------------------------------------------
Service
Vouchers and
Cards 305 373 15.9 % 6.0 % 0.6 % 22.5%
----------------------------------------------------------------------
Elimination of
intragroup
revenues -6 -6
----------------------------------------------------------------------
TOTAL 11,693 12,798 6.4 % 2.8 % 0.2 % 9.4 %
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(1) Organic growth: increase in revenues at constant consolidation
scope and exchange rates.
(2) Currency impact is calculated by applying the average exchange
rate for the prior year to the current fiscal year figures
Acceleration of organic revenue growth during the fiscal year
resulted primarily from:
-- Development in Healthcare and Seniors (+ 8.1 %),
-- Progress in Business & Industry (+ 6.4 %), and
-- Strong growth in Service Vouchers and Cards (+ 15.9%).
In Education, the modest growth reflects the Group's selectivity
in public sector markets (+ 3.7 %).
Michel Landel, Chief Executive Officer of Sodexho, said: "During
Fiscal 2006, we have continued to implement our strategy. Our client
retention rate continued to improve, reaching 93.9%. Comparable unit
sales growth on existing sites exceeded 3% and our development rate of
new contracts awarded during the fiscal year was above 9%.
The Group is currently closing and auditing its accounts for
Fiscal 2006 in IFRS. These accounts will be published on November 16.
Growth in our operating profit should be consistent with, if not
slightly above, our objective of + 6%.
This performance gives us confidence in our medium term objective
to achieve average annual organic revenue growth of 7%."
Organic growth revenue analysis
(See table in Annex 2 and a selection of new clients in Annex 3)
-- Food and Facilities Management Services
In North America, revenue reached 5.5 billion euros, with organic
growth gaining 0.6 % to reach 5.0 % for the full fiscal year.
Revenue in Business & Industry increased for the first time in
three years. The 2.4 % growth resulted, in particular, from improved
client retention and from the development of sales on existing sites,
including in leisure activities, such as the Houston Space Center, and
also from increased demand for catering services.
The solid growth in Healthcare and Seniors (+ 7.2 %) was driven
by:
-- The ramp-up of significant contracts signed last year, notably
those concluded with New York City and with the Hermann
Memorial (Texas),
-- New contracts in Facilities Management, representing two
thirds of the sales development over the year. Included among
Sodexho's new clients are the Mount Clemens General Hospital
(Michigan) and the North East Medical Center (Texas),
-- Robust development of sales on existing sites.
Education was up 4.7 % compared to the prior year, despite:
-- the negative impact of hurricanes during the first months of
the fiscal year, and
-- the effect of contracts that were not renewed with certain
public schools at the end of Fiscal 2005, a result of
Sodexho's non-acceptance of price reductions to a level that
would have prevented the Group from maintaining its quality
standards.
In Universities, the revenue growth on existing sites benefitted
from good summer camp activity in the last months of the fiscal year
as well as from continued development in Facilities Management, such
as Ohio Northern University where the foodservice contract was
extended to facilities management.
In Continental Europe, revenue reached 4.1 billion euros and
internal growth improved to 5.2 % compared to 4.0 % in Fiscal 2005.
In Business & Industry, the revenue increase (+ 5.3 %) resulted
from three main factors:
-- new contract awards across the continent,
-- positive development of leisure activities in France, as
highlighted by the signature of a master agreement with the
Pierre & Vacances Group, and by the foodservice concession at
the chateau of Vaux-le-Vicomte in the fourth quarter,
-- the progressive start-up of services in two new correctional
facilities under public-private partnership arrangements in
France.
In Healthcare and Seniors, robust organic growth (+7.7 %) resulted
from the highly effective Fiscal 2005 new sales efforts and from
continuing extension of the Group's service offerings. Recent new
contracts awarded to Sodexho include both a hospital and the public
schools of Saint-Malo.
Slower growth in Education (+1.4 %) reflects Sodexho's continued
selective approach, particularly in public sector markets.
In the United Kingdom and Ireland, revenue rose to 1.4 billion
euros. For the first time in three years, and in line with the Group's
plans, Sodexho returned to growth, recording an increase of +4.8%
compared to -2.6% in Fiscal 2005.
This progress results primarily from new contracts won in
Healthcare, Correctional Facilities and Defense, segments where
revenues include a significant facilities management component. The
summer months were strong in leisure and hospitality, for example at
the Chelsea Flower Show and the Ascot races.
Action plans are in place to continue to further improve client
retention rates.
In the Rest of the World, revenue was 1.4 billion euros. Organic
growth of 16.1%, was primarily driven by:
-- double-digit development in Latin America, in Asia and in
Australia,
-- a robust level of activity in Remote Sites, given the strength
of raw material prices,
-- the start-up of operations in Correctional Facilities in
Chile.
The Group also continued to rapidly expand its activities in
mainland China and in India.
Service Vouchers and Cards
Revenues increased to 373 million euros, with organic growth
improving from 13.2% to 15.9%. The issue volume (or face value
multiplied by the number of service vouchers and cards issued) was 6.3
billion euros, up 13.8% (at constant consolidation scope and exchange
rates).
Demand for traditional services (Restaurant Pass and Food Pass)
remained very strong in Latin America where growth exceeded 20% over
the past 12 months.
During Fiscal 2006, the Group increased its penetration in Europe
with the launch of new services such as Childcare Pass in the United
Kingdom, the Sport and Culture Pass in Belgium or the Childcare Pass
in Spain.
Conference call
SODEXHO ALLIANCE will hold a conference call today to discuss
revenues for Fiscal 2006. The call will begin at 8:30 am (Paris time).
The call-in access number is + 33 1 72 26 01 65. A slideshow
presentation will be available by clicking on the link
www.sodexho.com, under the "latest news" section, beginning at 7:00
a.m. To access the replay of the conference call, please dial + 33 1
72 28 01 49, code: 186238#.
Financial communications calendar
-- Fiscal 2006 results
The press release for Fiscal 2006 results will be published on
November 16. 2006. A presentation for analysts and journalists will be
held the same day, at Etoile-St-Honore, 23, rue Balzac, 75008 Paris.
-- First quarter revenue for Fiscal 2007
January 10, 2007 conference call.
-- Annual General Meeting of Shareholders for Fiscal 2006
January 30, 2007 at 16 :30 (Paris time). The meeting will take
place at the Palais des Congres (Porte Maillot, Paris).
The above dates are provided for information only and are subject
to change.
This press release contains 'forward-looking statements' within
the meaning of the United States Private Securities Litigation Reform
Act of 1995. These include, but are not limited to, statements
regarding anticipated future events and financial performance with
respect to our operations. Forward-looking statements can be
identified by the fact that they do not relate strictly to historical
or current facts. They often include words like 'believe,' 'expect,'
'anticipate,' 'estimated' , 'project ' , 'plan' 'pro forma,' and
'intend' or future or conditional verbs such as 'will,' 'would,' or
'may.' Factors that could cause actual results to differ materially
from expected results include, but are not limited to, those set forth
in our Registration Statement on Form 20-F, as filed with the
Securities and Exchange Commission (SEC), the competitive environment
in which we operate, changes in general economic conditions and
changes in the French, American and/or global financial and/or capital
markets. Forward-looking statements represent management's views as of
the date they are made, and we assume no obligation to update any
forward-looking statements for actual events occurring after that
date. You are cautioned not to place undue reliance on our
forward-looking statements.
About Sodexho Alliance
SODEXHO ALLIANCE, founded in 1966 by Pierre Bellon, is the leading
global provider of Food and Facilities Management services, with more
than 324,000 employees on 26,700 sites in 76 countries. Listed on
Euronext Paris and on the New York Stock Exchange, the Group's current
market capitalization is 6.9 billion euro.
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Annex 1 : Comparison of Consolidated Revenues In thousands of euro
Fiscal 2005 Fiscal 2005
As IFRS
published standards Fiscal 2006
new
presentation
-----------------------------------------------------------
FIRST QUARTER (Sept to Nov)
Food and Facilities
Management
-- North America 1,403,189 1,403,189 1,527,658
-- Continental Europe 1,018,804 1,019,724 1,076,643
-- United Kingdom and
Ireland 324,287 324,287 332,971
-- Rest of the World 278,114 280,223 340,191
Service Vouchers and
Cards 61,123 64,492 82,525
Elimination of intra
group Revenues 0 -1,344 -1,758
3,085,517 3,090,571 3,358,230
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SECOND QUARTER (Dec. to Feb.)
Food and Facilities
Management
-- North America 1,182,564 1,182,564 1,390,868
-- Continental Europe 962,463 963,923 1,034,727
-- United Kingdom and
Ireland 315,760 315,760 330,433
-- Rest of the World 274,258 274,542 337,770
Service Vouchers and
Cards 70,193 75,722 95,812
Elimination of intra
group Revenues -1,385 -1,524
2,805,238 2,811,126 3,188,086
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THIRD QUARTER (March to May)
Food and Facilities
Management
-- North America 1,304,920 1,304,920 1,441,063
-- Continental Europe 1,020,959 1,021,406 1,082,213
-- United Kingdom and
Ireland 320,428 320,428 332,960
-- Rest of the World 290,756 293,826 377,757
Service Vouchers and
Cards 71,622 75,955 94,505
Elimination of intra
group Revenues -1,386 -1,780
3 008,685 3,015,149 3,326,718
-----------------------------------------------------------
FOURTH QUARTER (June to August)
Food and Facilities
Management
-- North America 1,115,723 1,113,074 1,119,871
-- Continental Europe 917,083 917,008 954,624
-- United Kingdom and
Ireland 341,999 341,999 373,371
-- Rest of the World 321,039 317,388 378,429
Service Vouchers and
Cards 77,121 88,497 100,360
Elimination of intra
group Revenues -1,526 -1,333
2,772,965 2,776,440 2,925,322
----------------------------------------------------------------------
% Var.
TOTAL FISCAL YEAR at at
cur. con.
Food and Facilities ex. ex.
Management ratesRates
-- North America 5,006,396 5,003,747 5,479,460 9.5% 5.0%
-- Continental Europe 3,919,309 3,922,061 4,148,207 5.8% 5.8%
-- United Kingdom and
Ireland 1,302,474 1,302,474 1,369,735 5.2% 4.8%
-- Rest of the World 1,164,167 1,165,979 1,434,147 23.0%16.1%
Service Vouchers and
Cards 280,059 304,666 373,202 22.5%16.5%
Elimination of intra
group Revenues 0 -5,641 -6,395
TOTAL 11,672,405 11,693,286 12,798,356 9.4% 6.6%
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Growth breakdown:
-- Organic growth 6.4%
-- Acquisitions (*) 0.2%
-- Currency effect (**) 2.8%
(*) net of divestitures
(**) currency impact is calculated by applying the average
exchange rate for the prior year to the current fiscal year figures
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Annex 2 : Food & Facilities Management Services revenues by segment
Group
In millions of euro Fiscal 2005 Fiscal 2006 Organic growth (1)
----------------------------------------------------------------------
-- Business & Industry 5,634 6,147 6.4 %
-- Healthcare 2,932 3,261 8.1 %
-- Education 2,828 3,023 3.7 %
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TOTAL 11,394 12,431 6.2 %
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North America
In millions of euro Fiscal 2005 Fiscal 2006 Organic growth (1)
----------------------------------------------------------------------
-- Business & Industry 1,278 1,367 2.4 %
-- Healthcare 1,785 1,995 7.2 %
-- Education 1,941 2,117 4.7 %
----------------------------------------------------------------------
TOTAL 5,004 5,479 5.0 %
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Continental Europe
In millions of euro Fiscal 2005 Fiscal 2006 Organic growth (1)
----------------------------------------------------------------------
-- Business & Industry 2,326 2,469 5.3 %
-- Healthcare 910 986 7.7 %
-- Education 686 694 1.4 %
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TOTAL 3,922 4,149 5.2 %
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UK & Ireland
In millions of euro Fiscal 2005 Fiscal 2006 Organic Growth (1)
----------------------------------------------------------------------
-- Business & Industry 961 1,001 3.9 %
-- Healthcare 185 219 1.,8 %
-- Education 156 149 -4.8 %
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TOTAL 1,302 1,369 4.8 %
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(1) Organic Growth : increase in revenue at constant scope and
exchange rates.
-- Annex 3 : A selection of new clients
Foodservices & Facilities Management
North America
Business & Industry
Novartis, 6 sites (5,500 employees, foodservices and facilities
management) ; Seattle Aquarium, (foodservices) ; Walt Disney Company,
California (2,800 employees, foodservices) ; GE Nuclear, Wilmington,
North Carolina, (1,900 employees, foodservices) ; NASA White Sands,
New Mexico (900 customers, foodservices); US Navy MWR, Florida (15,000
customers, foodservices)
Healthcare and Seniors
Baptist Hospital, Tennessee (530 beds, foodservices); DePaul
Health Center, Missouri (530 beds, foodservices and facilities
management); Northeast Medical Center, Texas (160 beds, foodservices
and facilities management); Westminster-Canterbury, Virginia, (420
beds, foodservices); Covenant Village of Florida, (390 beds,
foodservices); Morris View Nursing Home, New Jersey (430 beds,
facilities management); Mount Clemens General Hospital, Michigan, (250
beds, foodservices and facilities management);
Education
Francis Howell School District, Missouri (18 schools, 18,200
students, foodservices); Springfield Public Schools, Massachusetts,
(27,500 students, foodservices); Wayne Township School District, New
Jersey (14 schools, 9,000 students, foodservices)
Continental Europe
Business & Industry
Finnair, Finland (1,000 employees, foodservices); Deutsche Post -
Posttower, Germany (3,000 employees, foodservices); DESY, Germany
(1,400 employees, foodservices) ; RIE Saint Georges Chateaudun
Laffitte, France (foodservices) ; RIE Cristallin, France,
(foodservices); Akzo Nobel, Sweden, (facilities management) ; If
Insurance Espoo, Finland, (650 employees, foodservices) ; ACERGY,
France, (foodservices) ; RIE le Doublon, France (foodservices) ; BMW
Group Iberia, Spain (700 employees, foodservices) ; Microsoft,
Netherlands, (foodservices, facilities management) ; Groupe Mornay
Paris, France, (foodservices) ; KappAhl, Sweden, (facilities
management)
Healthcare and Seniors
Mutualites de L'Isere - Clinique les Eaux Claires, France (220
beds, foodservices and facilities management); Centre Hospitalier
Lucien Russel, France, (630 beds, foodservices)
Education
Thiais, France (foodservices) Mairie de Saint Malo, France
(foodservices for the schools and the hospital)
UK & Ireland
Business & Industry
Everton Football Club (foodservices)
Healthcare and Seniors
Salvation Army (2 sites, 450 employees, facilities management)
Education
West Sussex Secondary Schools (13 schools, 13 000 students,
foodservices)
Rest of the World
Business & Industry
GM Colombia , Colombia (foodservices); Veracel, Brazil
(foodservices); Pandrobras Rlan, Brazil (foodservices) ; Lenovo
Mobile, China (foodservices) ; Procter & Gamble, Brazil (550
employees, foodservices) ; Sony Huizhou, China (10 000 employees)
Healthcare and Seniors
ACHS (Chilean Safety Association) (23 sites)
Education
Foshan Country Garden School, China (3,100 students,
foodservices); Lecong Middle School (3,200 students, foodservices)
Service Vouchers and Cards
Latin America
-- Traditional service offerings :
Argentina : Grupo Penaflor (Food Pass, 1,186 beneficiaries);
Casino Magic Neuquen (Food Pass, 523 beneficiaries); Ecco (Food Pass,
235 beneficiaries) Brazil : Carioca Christiani Nielsen (Meal Pass, 400
beneficiaries); Samsung Electronics (Meal Pass, 340 beneficiaries);
Assistance Institute of the Municipality of Belem (Meal Pass, 895
beneficiaries); Citizens Institute of Curitiba (Food Pass,1,283
beneficiaries) Chile : Entel (Mobility Pass,1,000 beneficiaries)
Mexico : Technical and Engineering Services Assistance (Food Pass,
1,000 beneficiaries); Natural Resources Ministry ; Venezuela :
Manufacturas de Papel (Food Pass, 1,896 beneficiaries); Distributeur
Greacla (Food Pass, 714 beneficiaries);
-- Cross-selling :
Brazil : Municipal Business Development of Campinas (Food Pass,
1,522 beneficiaries); Patrimonial (Food Pass, 1,488 beneficiaries)
Colombia : Willis insurance (Work clothes) Chile : Altec(Mobility
Pass, 800 beneficiaries) ;
-- New services :
Venezuela : Independent Firefighters Institute (Food Pass, 414
beneficiaries); Texcoven (Food Pass, 657 beneficiaries)
Asia
-- Traditional service offerings :
India: Tata Consulting group (Meal Pass, 22,000 beneficiaries);
Blue Star Limited (Meal Pass, 1,521 beneficiaries); Tata Motors
limited (Gift Pass, 1,969 beneficiaries); National Thermal Power
Corporation (Meal Pass, 1,004 beneficiaries); Deutsche Bank (Meal
Pass, 650 beneficiaries); Business Objects (Meal Pass, 280
beneficiaries); BNP Paribas (Gift Pass, 204 beneficiaries)
Central Europe
-- Traditional service offerings :
Poland: Kopalnia Wegla Kamiennego Kazimierz-Juliusz(Gift Pass,
1,700 beneficiaries) Czech Republic : TRW-DAS (Meal Pass, 240
beneficiaries); GEHE Pharma Praha (Meal Pass, 167 beneficiaries)
-- Cross-selling :
Poland : Yellow Pages Polskie Ksiezki Telefoniczne (Education &
Leisure Pass, 540 beneficiaries) Bank Ochrony Srodowiska (Culture &
recreation Pass, 401 beneficiaries) Slovakia : Les brasseries Pivovar
Saris (Vital Pass, 530 beneficiaries)
-- New services :
Czech Republic : Deloitte (Flexi Pass); Lego (Relax Pass)
Slovakia: Slovak Telecom (Vital Pass); Tesco (Flexipass)
Western Europe
-- Traditional service offerings :
Belgium: Multipharma (Meal Pass, 1,200 beneficiaries); KBC bank
(Gift Pass, 2 000 beneficiaries) France : Mairie de Marseille (Meal
Pass, 9 500 beneficiaries) Germany : UBS (Meal Pass, 620
beneficiaries) Italy: BNL (Meal Pass, 4 200 beneficiaries); Banca
Popolare di Milano (Meal Pass, 1,200 beneficiaries) UK : Cummins
Limited(Education & Leisure Pass, 165 beneficiaries); Imperial Tobacco
(Education & Leisure Pass, 101 beneficiaries)
-- New services :
Belgium : Electrabel (Sport and culture, 1,400 beneficiaries)
Spain: Mairie de Madrid (Assistance)