Sodexo: Solid results for Fiscal 2014
(Thomson Reuters ONE) -
* Financial objectives for the year achieved:
* Organic growth in revenues of +2.3%
* Operating income up by +10.7% excluding currency effects and exceptional
costs; operating margin improving 0.5% to 5.7% excluding currency
effects
* Program to improve operational efficiency and reduce costs delivers
results;
* Improved profitability in On-site Services in Europe and in the Rest
of the World
* Double digit growth in Benefits and Rewards Services
* Group net income up by +11.6% and +20.3% excluding currency effects
* Robust cash-generating financial model
* Sodexo's targets for 2015: organic growth in revenues of around +3% and an
increase in operating profit of +10 % (excluding currency effects)
Issy-les-Moulineaux, November 13, 2014 - Sodexo (NYSE Euronext Paris FR
0000121220-OTC: SDXAY): At the November 10, 2014 Board of Directors Meeting
chaired by Pierre Bellon, Michel Landel, Chief Executive Officer, presented the
performance for the year ended August 31, 2014.
Fiscal 2014 financial performance:
+-----------------------+----------------+----------------+
| Year ended August 31 | Change at| Change at|
+-----------+-----------+current exchange| constant|
Millions of euro |Fiscal 2014|Fiscal 2013| rates| exchange rates|
+--------------------+-----------+-----------+----------------+----------------+
|Revenues | 18,016| 18,397| -2.1%| +2.6%|
+--------------------+-----------+-----------+----------------+----------------+
|Organic growth | 2.3%| 1.1%| | |
+--------------------+-----------+-----------+----------------+----------------+
|Operating profit | | | | |
|before exceptional | | | | |
|costs[1] | 966| 964| +0.2%| +10.7%|
+--------------------+-----------+-----------+----------------+----------------+
|Operating margin | | | | |
|before exceptional | | | | |
|costs[1] | | | | |
|excluding currency | | | | |
|exchange rates | 5.7%| 5.2%| | |
+--------------------+-----------+-----------+----------------+----------------+
|Exceptional costs[1]| (27)| (139)| | |
+--------------------+-----------+-----------+----------------+----------------+
|Reported operating | | | | |
|profit | 939| 825| +13.8%| +25.9%|
+--------------------+-----------+-----------+----------------+----------------+
|Financial result | (173)| (136)| | |
+--------------------+-----------+-----------+----------------+----------------+
|Effective tax rate | 34.8%| 34.3%| | |
| | | | | |
|REPORTED GROUP NET | | | | |
|INCOME | 490| 439| +11.6%| +20.3%|
| | | | | |
|Net debt ratio (as | | | | |
|of August | | | | |
|31, 2014)[2] | 12%| 16%| | |
+--------------------+-----------+-----------+----------------+----------------+
|Dividend per share | | | | |
|(in euro) | 1.80[3]| 1.62| +11.1%| |
+--------------------+-----------+-----------+----------------+----------------+
[1] Operating profit and margin before costs recognized in connection with the
program to improve operational efficiency and reduce costs in Fiscal 2013 and
Fiscal 2014, and after share of profit of companies consolidated by the equity
method that directly contribute to the Group's business.
[2] Ratio of net financial debt to shareholders' equity and non-controlling
interests.
[3] Dividend subject to approval at the January 19, 2015 shareholders' meeting.
Commenting on these figures,
Michel Landel, Sodexo CEO said:
« Sodexo has met its objectives for 2014 and improved its profitability, in
particular in On-site Services. We can also note strong momentum in Benefits and
Rewards Services. Lastly, the share of facilities management services continues
to increase, now representing 28% of our revenues, reflecting the increasing
demand by our clients for integrated services. I would like to thank all of our
teams for the ever stronger commitment demonstrated this year. This involvement
and the progress we have made allow us to remain confident that we will yet
again increase profitability in Fiscal 2015. »
Revenues
Sodexo's consolidated revenues for Fiscal 2014 were 18 billion euro. Organic
growth was 2.3%.
On-site Services
Organic growth for the On-site Services activity was +1.8%. In a sluggish global
economy, this increase reflects stronger demand for Sodexo's integrated Quality
of Life Services offers in most regions. These well-configured offers, which
include a significant facilities management component, helped to offset the
decline in foodservices volumes, particularly in Europe, that resulted from
client downsizing plans.
By client segment and on the same basis of comparison, organic revenue growth
was as follows:
* +2.2% in Corporate, reflecting three contrasting trends:
* on the one hand, sustained demand in North America, Europe and in
emerging countries for multi-services contracts with a significant
technical maintenance component;
* on the other hand:
* declining foodservices volumes in several countries, particularly in
Europe. Clients continued to seek additional cost savings and to
downsize their workforces, while reduced spending by consumers
continued to have an impact, particularly in France, the
Netherlands, Italy and Spain.
* a sharp (-4.5%) decline in Remote Sites activity, in particular in
the mining sector worldwide and specifically in Africa, the Middle
East, Australia and Latin America.
Excluding Remote Sites, Corporate segment organic growth was around +4%.
* +1.1% in Health Care and Seniors, reflecting moderate growth in On-site
existing sites in both North America and Europe. In addition, the ramp-up of
a new integrated multi-services contracts in North America was voluntarily
slower than originally expected.
* +1.4% in Education, with a modest increase in the number of consumers
(universities and schools) in North America, and solid growth in emerging
countries that benefit from Sodexo's expertise in this segment.
Benefits and Rewards Services
Organic growth in Benefits and Rewards Services revenues was +13%. The
significant acceleration compared with Fiscal 2013 reflected the sustained
growth dynamic in Latin America and healthy expansion in Asia, led by India and
China.
Key Growth Indicators
The Group's key growth indicators were as follows:
* a 93.4% client retention rate. This represented a sharp improvement compared
to the prior year, and was achieved despite decisions taken by Sodexo to
terminate certain under-performing contracts and also the completion of
certain Remote Site projects. The rate was particularly high in the United
Kingdom and Ireland (at close to 97%) and it also improved in Continental
Europe and Latin America, as well as for the Remote Sites activity;
* +2.5% growth at existing sites, compared to +2.1% for the prior year. The
increase was mainly attributable to improvements by Sodexo teams in passing
through the effects of inflation in pricing both in Europe and in Latin
America, which offset continued decreases in volumes in foodservices in
Europe and the slowdown in economic growth in certain emerging countries;
* a +7.1 % business development rate (new contract wins). The overall decline
compared to +7.8% in Fiscal 2013 masked improvements in Continental Europe
and China, as well as for the Remote Sites activity, thanks to the many new
integrated services contracts sold during the year. The amount of new
contracts won during the fiscal year was 1.3 billion euro in annual
revenues.
In addition, in human resources, Sodexo conducted a new international employee
engagement survey among 130,000 employees in 60 countries. The engagement rate,
which measures employees' satisfaction and commitment, is a key performance
indicator for the Group.
The results of this engagement survey show that significant advances have been
made:
* The employee engagement rate improved for the third time running with a
total increase of 11 percentage points since 2008;
* The main take-aways from the survey are that Sodexo offers a stable,
sustainable and fulfilling work environment, with 86% of respondents stating
that they would rather work for Sodexo than for any of its competitors. 80%
of respondents are aware of the career development opportunities available
to them and 88% consider that their working environment is appropriate for
the types of tasks they perform each day.
Operating profit
Group operating profit before exceptional items[1] was 966 million euro, an
increase of +10.7% excluding currency effects and +0.2% at current currency
exchange rates over the prior year.
This overall performance included some notable growth in operating profit:
* +20.5% in the On-site Services activity in the Rest of the World[2];
* +17.7% in the On-site Services activity in Continental Europe; and
* Nearly +12% in Benefits and Rewards Services.
At the same time, however, operating profit in On-site Services in North America
and in the United Kingdom and Ireland remained at levels broadly similar to the
prior year, as a result of significant costs related to the ramp-up of large
contracts.
Consolidated operating margin (excluding currency effects) therefore improved by
0.5%, rising from 5.2% in Fiscal 2013 to 5.7% in Fiscal 2014. Including currency
effects, consolidated operating margin was 5.4% at current rates.
At the beginning of Fiscal 2013, Group senior management launched a program to
improve operational efficiency and reduce costs. The objective of the program
was to reduce On-site operating costs and achieve sustained administrative cost
savings, with annual savings increasingly affecting operating profit in Fiscal
2014 and Fiscal 2015.
Exceptional expenses related to the program to improve operational efficiency
and reduce costs amounted to 27 million euro in Fiscal 2014. They included:
* exceptional expenses which reduced gross margin: 12 million euro related to
asset impairments and the cost of terminating certain under-performing
contracts or activities;
* exceptional expenses recognized in administrative costs: 15 million euro
related in particular to various cost-reduction measures taken.
The total costs incurred under the program to improve operational efficiency and
reduce costs during the 18-month period from September 2012 to February 2014
amounted to 166 million euro. Sodexo benefited from the initial favorable impact
of this program in Fiscal 2014, when 100 million euro of cost savings were
achieved. The program is expected to generate annual savings of 160 million euro
in Fiscal 2015, representing a 100% payback.
As part of the plan, Sodexo decided to terminate under-performing contracts and
activities representing annual revenues of around 450 million euro.
Reported operating profit amounted to 939 million euro, an increase of +13.8% at
current currency exchange rates and +25.9% excluding currency effects.
[1] Costs recognized in Fiscal 2013 and Fiscal 2014 in connection with the
program to improve operational efficiency and reduce costs.
[2] Rest of the World includes Sodexo's activities in Latin America, Asia,
Africa and the Middle East as well as Remote Sites management worldwide.
Group net income
Group net income was 490 million euro compared to 439 million euro in Fiscal
2013, an increase of +11.6% or +20.1% excluding currency effects. During Fiscal
2014, the Brazilian real declined (-12.4%) against the euro. The U.S. dollar
lost 3.9% and the UK pound sterling gained +1.6%. In addition, continuing the
method used since 2010 to translate amounts in Venezuelan bolivars into euro and
present performance for the year, the consolidated financial statements were
prepared using an average exchange rate of 51.06 bolivars = 1 U.S. dollar
(equivalent to 67.34 bolivars = 1 euro). This new rate used to translate income
statement items represented an 80% decline in the bolivar against the euro in
Fiscal 2014.
It should nonetheless be noted that these exchange rate fluctuations do not
create operational risk, because each subsidiary bills its revenues and incurs
its expenses in the same currency.
Earnings per share was 3.23 euro compared to 2.91 euro for the prior year, an
increase of +11% or +19.6% excluding currency effects.
The costs incurred in connection with the program to improve operational
efficiency and reduce costs had an after-tax negative impact on Group net income
of 18 million euro in Fiscal 2014 compared to 91 million euro in Fiscal 2013.
Dividend
At the Annual Shareholders' Meeting to be held on January 19, 2015, the Board of
Directors will recommend paying a dividend of 1.8 euro per share for Fiscal
2014, an increase of nearly +11.1% over the prior year. This proposal is in line
with Sodexo's policy of allowing shareholders to benefit from the growth in
Group net income; it also reflects the Board's great confidence in the Group's
future and takes into consideration Sodexo's solid cash-generating financial
model.
The proposed dividend represents a payout ratio of 56% of Group net income (54%
of Group net income before exceptional expenses related to the program to
improve operational efficiency and reduce costs).
Shares held in registered form for more than four years as of August 31, 2014
and still held when the dividend becomes payable, will qualify for a 10%
dividend premium (rounded down to the nearest cent), provided that they do not
represent over 0.5% of the capital per shareholder.
Net cash flows: a solid cash-generating financial model
Net cash provided by operating activities amounted to 825 million euro,
representing 200 million euro more than in Fiscal 2013. Two factors explain the
increase:
* the 119 million euro rise in operating profit, due notably to a low basis of
comparison in Fiscal 2013 when operating profit was reduced by higher
expenses related to the cost of implementing the program to improve
operating efficiency and reduce costs;
* a sharp improvement in working capital requirement, due mainly to an
improvement in the timing of client payments.
Refinancing, debt reimbursement and debt ratio
During the year, Sodexo carried out two major debt refinancing transactions:
* a private placement with U.S. investors in March 2014 for 1.1 billion U.S.
dollars, with maturities ranging from five to 15 years and an average
interest rate of 3.8%; and
* a 1.1 billion euro bond issuance in June 2014, comprising a 7.5-year tranche
and a 12-year tranche, at an average interest rate of 2.1%.
These two transactions will enable Sodexo to refinance borrowings maturing in
2014 and 2015 at more favorable conditions, significantly extend the average
maturity of its debt and gradually reduce its average annual borrowing cost.
Net debt at August 31, 2014 was 371 million euro, representing 12% of
consolidated equity compared to 16% at August 31, 2013. Gross debt repayment
capacity as of the same date represented 5.4 years of operating cash flow
compared to 3.4 years as of the prior year-end.
Subsequent events
On September 12, 2014, Sodexo's Benefits and Rewards Services subsidiary in the
United Kingdom announced that it had signed an agreement for the acquisition of
Motivcom plc. The acquisition should be completed before the end of the calendar
year.
Awards
In Fiscal 2014, Sodexo won several major awards recognizing its commitment to
economic, social and environmental responsibility:
* Included in the DJSI World and DJSI STOXX indices since 2005, for the tenth
consecutive year Sodexo was named "Global Sustainability Industry leader" by
the Dow Jones Sustainability Indices (DJSI). The Group earned a perfect
(100%) score for the positive local impact of its business operations around
the world, and earned the highest score in its industry in the social
pillar. Sodexo was also named "Sector Leader" in the Consumer Services
category.
* Sodexo topped the French Ministry of Women's Rights' league table of SBF
120 companies for gender balance within its leadership team. This award
recognizes that 43% of Sodexo's Executive Committee and 38% of its Board of
Directors are women, the strong women's networks throughout the global
organization and a commitment to gender equality at the heart of the Group's
strategy and performance.
* Sodexo was once again included in Fortune magazine's "Most Admired
Companies" list, ranking among the "Diversified Outsourcing Services"
category and number one for Innovation, Social Responsibility, Financial
Soundness, Long-term Investment and Global Competitiveness.
Outlook
At the November 10, 2014 Board of Directors meeting, Chief Executive Officer
Michel Landel highlighted the effectiveness of the Group's long-term strategy,
based on a unique range of integrated Quality of Life Services, an unparalleled
global network in its activities, and undisputed leadership in emerging
countries.
Michel Landel summarized three priorities for the Group going forward in the
coming years:
* To demonstrate the value of Sodexo's offer in a rapidly changing world,
thanks to unique and differentiated Quality of Life Services offerings in
its three activities, and by showing how these services improve the daily
life of its customers and the performance of its clients;
* To deliver the best of Sodexo across its international network spanning 80
countries, using the Group's deep-seated understanding of clients'
businesses, in each client segment and sub-segment, and its unique knowledge
of the needs of the 75 million consumers that it serves daily;
* To strengthen Sodexo's competitiveness, efficiency and profitability, while
continuing to deploy enhanced standards, processes, innovation and best
practices.
In the context of a global economy shaped currently by low inflation and an
uncertain macro-economic and political environment in certain emerging countries
in the short-term, Fiscal 2015 commences with three favorable trends for Sodexo:
* Increasing demand for integrated services confirming the relevance of the
Group's offer;
* Continued sustained momentum and double-digit growth in the Benefits and
Rewards Services activity in Latin America and Asia;
* A strong development rate (new contract wins) in Remote Sites that should
lead to a return to growth in this activity in the first half of the fiscal
year.
Nevertheless, ramp-up of some of the more comprehensive integrated service
contracts is proving to take longer than in the past.
However, Michel Landel also reaffirmed his confidence in the Group's ability to
achieve further operating leverage and profitability improvement during Fiscal
2015, thanks to the structured action plans implemented at all levels of the
organization; a program to improve operational efficiency that is already
delivering results; and, finally, the full engagement of all Sodexo teams around
initiatives to improve competitiveness.
Accordingly, Sodexo has set the following objectives for Fiscal 2015:
* organic growth in revenues of around +3%;
* an increase in operating profit of around +10% (excluding currency effects);
i.e. representing an overall improvement in operating margin of +0.8% over the
two year period from Fiscal 2013 to Fiscal 2015 excluding currency effects, in
line with the objectives fixed in November 2013.
In the medium-term (i.e. over the next 3 to 5 years), Sodexo is convinced that
it can capture an even greater share of its markets' considerable potential that
is almost 50 times greater than the Group's current revenues, and also achieve
lasting improvement in profitability.
Further, Michel Landel noted that his Group Executive Committee has been given
the task of defining, over the coming fiscal year, the necessary steps to
progressively move from an organization by country to an organization by global
client segment. This organizational transformation will make it easier for
Sodexo to give its international and local clients the benefit of its expertise
and consumer insights in each of its markets.
He explained that by accelerating investment in intangible assets, in
particular, by developing the Group's Human Resources and strengthening
technical and innovation capabilities throughout the world, Sodexo is continuing
to focus its teams on the sustained drive to improve competitiveness.
Hence, the Group's medium-term ambition (i.e. over the next 3 to 5 years) is to
achieve:
* an annual average revenue growth rate excluding currency effects of between
4% and 7%;
* an annual average growth in operating profit excluding currency effects of
between 8% and 10%; and
* an average annual cash conversion ratio of around 100%, allowing the Group
to comfortably self-finance its development.
In conclusion to this meeting, the Board of Directors reaffirmed its strong
confidence in Sodexo's future and reiterated its core strengths:
* the Group's independence;
* a largely untapped potential market estimated at nearly 50 times Sodexo's
current revenue;
* a unique range of Quality of Life Services particularly well aligned with
evolving client demand;
* an unparalleled global network in our services spanning 80 countries;
* an unchallenged leadership in emerging countries;
* a robust financial model that allows Sodexo to self-finance its development;
* a strong culture and engaged teams.
The Board of Directors thanks Sodexo's clients for their loyalty, the Group's
shareholders for their confidence and Sodexo's 419,000 employees for their
efforts in Fiscal 2014 and for their daily commitment to improving the quality
of life of our clients and consumers.
Analyst briefing
Sodexo will hold a briefing today at 9:00 a.m. at the Capital 8 Conference
Center (32, rue Monceau, 75008 Paris) to discuss the Fiscal 2014 results.
The briefing may also be viewed via webcast on www.sodexo.com or via conference
call at + 44 (0) 20 3427 1905 followed by the code 98 58 177 (in French) or
68 12 163 (in English).
The press release, presentation and webcast will be available on the Group's
website www.sodexo.com, under the tab "Latest news" as well as in the section
"Finance - Financial results." A recording of the conference call will be
available at + 44 (0) 20 3427 1905 followed by the code 68 12 163, until
November 27, 2014.
Financial communications schedule
First quarter revenues - Fiscal 2015 January 9, 2015
--------------------------------------------------------------
Annual Shareholders' Meeting January 19, 2015
--------------------------------------------------------------
Dividend ex-date January 29, 2015
--------------------------------------------------------------
Dividend record date January 30, 2015
--------------------------------------------------------------
Payment of the Fiscal 2014 dividend February 2, 2015
--------------------------------------------------------------
Half-year interim results - Fiscal 2015 April 16, 2015
--------------------------------------------------------------
Nine months revenues - Fiscal 2015 July 8, 2015
--------------------------------------------------------------
Annual results, Fiscal 2015 November 12, 2015
--------------------------------------------------------------
About Sodexo
Founded in 1966 by Pierre Bellon, Sodexo is the global leader in services that
improve Quality of Life, an essential factor in individual and organizational
performance. Operating in 80 countries, Sodexo serves 75 million consumers each
day through its unique combination of On-site Services, Benefits and Rewards
Services and Personal and Home Services. Through its more than 100 services,
Sodexo provides clients an integrated offering developed over more than 45 years
of experience: from reception, safety, maintenance and cleaning, to foodservices
and facilities and equipment management; from Meal Pass, Gift Pass and Mobility
Pass benefits for employees to in-home assistance and concierge services.
Sodexo's success and performance are founded on its independence, its
sustainable business model and its ability to continuously develop and engage
its 419,000 employees throughout the world.
| Key figures (as of August 31, 2014)
| 18 billion euro consolidated revenues
| 419 000 employees
| 18(th) largest employer worldwide
| 80 countries
| 32 700 sites
| 75 million consumers served daily
| 12.3 billion euro in market capitalization (as of November 12, 2014)
Forward-looking statements
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
Sodexo assumes no obligation to update them. The reader is cautioned not to
place undue reliance on these forward-looking statements.
Contacts
+---------------------------------------------------------------------+
| Analysts and Investors Press |
| |
| Pierre BENAICH Laura SCHALK |
| Tel. & Fax : +33 1 57 75 80 56 Tel. & Fax : +33 1 57 75 85 69 |
| E-mail: pierre.benaich(at)sodexo.com E-mail: laura.schalk(at)sodexo.com |
+---------------------------------------------------------------------+
APPENDIX 1
Comments by activity and geography
Revenues by activity
Change| Change|
(at current|(at constant|
(in millions of Fiscal Fiscal Internal exchange| exchange|
euro) 2014 2013 Growth rates)| rates)|
+-----------------+----------+----------+------------+------------+------------+
|On-site Services | | | | | |
+-----------------+----------+----------+------------+------------+------------+
|North America | 6,759| 6,821| +3.7%| -0.9%| +3.6%|
+-----------------+----------+----------+------------+------------+------------+
|Continental | | | | | |
|Europe | 5,702| 5,716| -0.2%| -0.2%| +0.7%|
+-----------------+----------+----------+------------+------------+------------+
|Rest of the World| 3,327| 3,683| +0.2%| -9.7%| +0.4%|
+-----------------+----------+----------+------------+------------+------------+
|United Kingdom | | | | | |
|and Ireland | 1,483| 1,397| +4.7%| +6.2%| +4.6%|
+-----------------+----------+----------+------------+------------+------------+
|Total On-site | | | | | |
|Services | 17,271| 17,617| +1.8%| -2.0%| +2.1%|
+-----------------+----------+----------+------------+------------+------------+
|Benefits and | | | | | |
|Rewards Services | 751| 790| +13.0%| -4.9%| +13.7%|
+-----------------+----------+----------+------------+------------+------------+
|Intragroup | | | | | |
|eliminations | (6)| (10)| | | |
+-----------------+----------+----------+------------+------------+------------+
|Total Group | 18,016| 18,397| +2.3%| -2.1%| +2.6%|
+-----------------+----------+----------+------------+------------+------------+
Operating profit by activity[1]
| Change| Change|
| (at current| (at constant|
(in millions of euro) Fiscal 2014 Fiscal 2013|exchange rates)|exchange rates)|
+----------------------+-----------+-----------+---------------+---------------+
|On-site Services | | | | |
+----------------------+-----------+-----------+---------------+---------------+
|North America | 358| 372| -3.8%| +0.5%|
+----------------------+-----------+-----------+---------------+---------------+
|Continental Europe | 231| 198| +16.7%| +17.7%|
+----------------------+-----------+-----------+---------------+---------------+
|Rest of the World | 140| 127| +10.2%| +20.5%|
+----------------------+-----------+-----------+---------------+---------------+
|United Kingdom and | | | | |
|Ireland | 66| 67| -1.5%| -3.0%|
+----------------------+-----------+-----------+---------------+---------------+
|Total On-site Services| 795| 764| +4.1%| +8.0%|
+----------------------+-----------+-----------+---------------+---------------+
|Benefits and Rewards | | | | |
|Services | 268| 304| -11.8%| +11.8%|
+----------------------+-----------+-----------+---------------+---------------+
|Corporate expenses | (91)| (94)| | |
+----------------------+-----------+-----------+---------------+---------------+
|Intragroup | | | | |
|eliminations | (6)| (10)| | |
+----------------------+-----------+-----------+---------------+---------------+
|TOTAL GROUP | | | | |
| | 966| 964| +0.2%| +10.7%|
[1] Excluding exceptional costs recorded in Fiscal 2013 and Fiscal 2014 in
connection with the program to improve operational efficiency and reduce costs.
All of the information related to operating profit in the remainder of this
document is presented excluding exceptional items.
North America
Revenues
+-------------------+----------+------------+-----------+---------+
(in millions| Fiscal Fiscal| Organic| | Currency| Total|
of euro) | 2014 2013| growth|Acquisitions| effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Corporate | 1,704| 1,647| +8.9%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Health Care | | | | | | |
|and Seniors | 2,439| 2,521| +1.1%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Education | 2,616| 2,653| +2.8%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Total | 6,759| 6,821| +3.7%| +0.0%| -4.6%| -0.9%|
+------------+---------+---------+----------+------------+-----------+---------+
On-site Services revenues in North America were 6.8 billion euro. Organic growth
for the year of +3.7% significantly exceeded the 0.6% recorded in Fiscal 2013.
At +8.9%, organic growth in the Corporate segment was at its highest level since
2007, reflecting the success of facilities management services offers for such
clients as Unilever, OneMain Financial/Citi Financial and The Boeing Company, as
well as the development of several major Remote Sites in Canada, such as Suncor
Fort Hills and La Romaine 3.
Sodexo won many new contracts during the fiscal year, notably with Bloomberg and
Dow Jones & Company.
In Health Care and Seniors, the +1.1% revenue growth was modest due to the
slower-than-expected ramp-up of major contracts won in Fiscal 2013 and the sale
of certain under-performing laundry activities. In addition, following a change
in the client's strategy, in the last quarter of Fiscal 2014 Sodexo decided not
to pursue the ramp-up of the expanded contract for the ManorCare national
retirement home network and to revert to the original contract scope consisting
of services provided for many years in the Northeastern United States.
Contract wins during the year included Covenant Care (Alberta) in Canada, and
USC Kenneth Norris Jr Cancer Hospital (California) and Wheaton Franciscan
Hospital (Wisconsin) in the United States.
Organic growth in Education was +2.8%. The growth dynamic was maintained thanks
to a high client retention rate and improved growth in On-site existing site
revenues in the Schools and Universities segments linked to increases in student
spending and in the number of meals served.
New contracts signed during the year included Chicago Public Schools, Jackson
State University (Mississippi) and William Rainer Harper College (Illinois).
Operating profit
On-site Services operating profit in North America totaled 358 million euro, an
increase of 0.5% over the prior year excluding currency effects.
Many productivity improvement initiatives were launched as part of a structured
program, leading in particular to further advances in menu standardization and
improved management of overheads. However, these gains were partially masked by
the significant start-up costs incurred notably for the ManorCare contract, and
by a one-off increase in provisions for impairment of certain trade receivables.
Operating margin was 5.3% compared to 5.5% in Fiscal 2013.
Continental Europe
Revenues
----------+----------+------------+-----------+---------+
(in millions Fiscal Fiscal| Organic| | Currency| Total|
of euro) 2014 2013| growth|Acquisitions| effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Corporate | 3,404| 3,407| +1.1%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Health Care | | | | | | |
|and Seniors | 1,380| 1,404| -1.2%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Education | 918| 905| -3.6%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|TOTAL 5,702 5,716 -0.2% +0.9% -0.9% -0.2%|
In Continental Europe, revenues totaled 5.7 billion euro, with organic growth
representing a negative (-0.2%).
Performances were mixed, depending on the country. Sodexo continued to expand in
Central Europe and improved its growth in Germany and Belgium, but experienced a
further decline in foodservices volumes, particularly in France and the
Netherlands. In addition, growth in Russia slowed considerably in the second
half of the fiscal year, as a result of the geopolitical situation.
In Corporate, organic growth was +1.1%, reflecting the continued success of
integrated service offers with a significant facilities management component,
which were sold to many clients throughout Europe. These services enabled Sodexo
to maintain its growth momentum and to offset the decline in foodservices
volumes that was due, in particular, to client downsizing plans. Recent contract
wins included Carlsberg (for 35 sites in 10 countries, with a wide range of
services including cleaning, reception, grounds keeping, foodservices, and
technical maintenance of buildings and fire protection systems), and Johnson &
Johnson in Germany.
In Health Care and Seniors, organic revenue growth in Continental Europe was
-1.2%, reflecting both weak growth in On-site existing site revenues due in
particular to shorter patient stays and also erosion of the client retention
rate in Northern Europe over the twelve months of Fiscal 2014. Recent contract
wins included the Regional Hospital in Saint Omer and the Clinique Générale in
Annecy, in France, and the Istituto Fisioterapici Ospitalieri (IFO) in Italy.
In Education, the -3.6% decline in revenues was due to Sodexo's decision to
terminate or not renew certain under-performing contracts, notably in Southern
Europe, and to reductions in school budgets in several countries. Sodexo's teams
nevertheless signed several major contracts, for example with the public schools
in Asnières-sur-Seine in France and Taideyliopiston Sibelius Akatemia in
Finland.
Operating profit
Operating profit rose by 33 million euro (or nearly 18% excluding currency
effects) to 231 million euro, and operating margin improved significantly to
4.1% from 3.5% in Fiscal 2013. This performance was above all attributable to
effective management of overheads. It also reflected the positive effects of
several initiatives conducted as part of the program to improve operational
efficiency in several European countries. In France, the Crédit d'Impôt pour la
Compétitivité et l'Emploi (CICE) recognized in operating profit helped to offset
the increase in payroll taxes observed in recent years.
Rest of the World
(Latin America, Middle East, Asia, Africa, Australia and Remote Sites)
Revenues
----------+----------+------------+-----------+---------+
(in millions Fiscal Fiscal| Organic| | Currency| Total|
of euro) 2014 2013| growth|Acquisitions| effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Corporate | 3,030| 3,398| -1.3%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Health Care | | | | | | |
|and Seniors | 172| 171| +17.1%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Education | 125| 114| +17.4%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|TOTAL | 3,327| 3,683| +0.2%| +0.2%| -10.1%| -9.7%|
+------------+---------+---------+----------+------------+-----------+---------+
In the Rest of the World (Latin America, Africa, Middle East, Asia, Australia
and Remote Sites), Sodexo reaffirmed its leadership in high potential emerging
markets. Revenues for the fiscal year amounted to 3.3 billion euro. Unfavorable
exchange rates reduced reported revenues by 369 million euro.
Excluding currency effects, revenues in the Rest of the World region were
stable, edging up +0.4%.
* Remote Sites revenues (which accounted for 44% of the total for the region)
declined by more than 7%, due to client delays in investing in new projects,
implementation of cost reduction programs by mining sector clients and the
large number of projects completed over the past eighteen months. That said,
sales momentum by Sodexo's teams in the energy and infrastructure markets
should drive a return to growth in Fiscal 2015;
* Excluding Remote Sites, organic growth in the Rest of the World region was
+6.9%, with some regions such as India and Southeast Asia recording double-
digit increases.
Organic growth in the Corporate segment declined by -1.3% excluding currency
effects. Services to companies in the manufacturing and services sectors
(excluding Remote Sites) continued to grow at a satisfactory rate, with revenues
up +5.6% in emerging countries with strong medium-term potential.
Sodexo's strong sales dynamic led to major contract wins, such as BHP Billiton
Cerro Matoso and Unysis in Colombia, Heineken in Brazil, Enel in Chile, Groote
Eylandt Gemco (BHP Billiton) and Woodside Energy in Australia, Goodyear Tyres
and Tetra Pak India in India, the Knesset in Israel, Mondelez International in
Peru and Shanghai Mitsubishi Electric Ltd in China.
In Health Care and Seniors, organic revenue growth of +17.1% reflected solid
business development performance, particularly in Brazil and Asia, with new
contracts such as Mater Dei Hospital (Belo Horizonte) in Brazil, Clinica
Universitaria Boliviariana in Colombia, American Sino Medical Shanghai and the
Beijing Jishuitan Hospital in China. The sustained, steady pace of business
growth is the result of Sodexo's globally-recognized expertise in the health
care and seniors market.
In Education, Sodexo also continued to expand in emerging countries,
contributing its expertise and deep familiarity with the various market segments
to many clients, especially in Southeast Asia and India. Organic growth was
+17.4%. Contract wins by Sodexo's teams included Panyapiwat Institute of
Management in Thailand, Fundação Getulio Vargas in Brazil and Universidad Santo
Tomas in Chile.
Operating profit
Operating profit in the Rest of the World region increased by +20.5% excluding
currency effects to 140 million euro. During the year, the integration of Puras
in Brazil continued according to plan, allowing for the implementation of
additional operational synergies. Further, efficient cost management and
improved on-site productivity in all regions led to an increase in operating
margin to 4.2% from 3.4% in Fiscal 2013.
United Kingdom and Ireland
Revenues
----------+----------+------------+-----------+---------+
(in millions Fiscal Fiscal| Organic| | Currency| Total|
of euro) 2014 2013| growth|Acquisitions| effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Corporate | 1,070| 993| +6.3%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Health Care | | | | | | |
|and Seniors | 289| 274| +3.8%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Education | 124| 130| -6.1%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|TOTAL | 1,483| 1,397| +4.7%| -0.1%| +1.6%| +6.2%|
+------------+---------+---------+----------+------------+-----------+---------+
On-site Services revenues in the United Kingdom and Ireland totaled 1.5 billion
euro, reflecting organic growth of +4.7%.
In Corporate, revenues grew by a strong +6.3%, reflecting increased demand for
integrated services and the supply of additional services to clients such as
GSK, Unilever, Agusta Westland and AstraZeneca. Fiscal 2014 revenues also
include the start-up of a major service contract for the correctional facility
located in Northumberland in the Justice segment.
Organic growth in Health Care and Seniors remained strong, at +3.8%, reflecting
ongoing service extensions for several hospitals, including North Staffordshire
University Hospital and Romford Hospital.
In Education, Sodexo won a prestigious contract with University College London.
Other recent contract wins included The Lady Eleanor Holles School.
Operating profit
Operating profit amounted to 66 million euro, down -3% excluding currency
effects.
Despite progress made in On-site productivity programs during Fiscal 2014,
operating margin declined from 4.8% to 4.5% as Sodexo teams began preparing for
the 2015 Rugby World Cup, incurring marketing costs in connection with the
Group's contract to supply hospitality services. The bulk of revenues generated
by this event will be recognized in Fiscal 2016. In addition, start-up costs for
the new Justice contract weighed on growth in the operating margin in Fiscal
2014.
Benefits and Rewards Services
Issue volume
----------+----------+------------+-----------+---------+
(in millions Fiscal Fiscal| Organic| | Currency| Total|
of euro) 2014 2013| growth|Acquisitions| effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Latin | | | | | | |
|America | 7,323| 8,128| +17.2%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Europe and | | | | | | |
|Asia | 8,171| 7,908| +1.0%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Total | 15,494| 16,036| +10.7%| +0.8%| -14.9%| -3.4%|
+------------+---------+---------+----------+------------+-----------+---------+
Revenues
----------+----------+------------+-----------+---------+
(in millions Fiscal Fiscal| Organic| | Currency| Total|
of euro) 2014 2013| growth|Acquisitions| effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Latin | | | | | | |
|America | 410| 452| +20.8%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Europe and | | | | | | |
|Asia | 341| 338| +2.5%| | | |
+------------+---------+---------+----------+------------+-----------+---------+
|Total | 751| 790| +13.0%| +0.7%| -18.6%| -4.9%|
+------------+---------+---------+----------+------------+-----------+---------+
Benefits and Rewards Services issue volume (face value multiplied by the number
of vouchers and cards issued) totaled approximately 15.5 billion euro in Fiscal
2014 and revenues from the activity amounted to 751 million euro.
Very strong underlying performances by the operating teams, in terms of both
growth and margins, were masked by significant unfavorable currency effects;
particularly for Latin American currencies (see explanation at the beginning of
this section).
In Latin America, organic growth was very strong in Fiscal 2014, with issue
volume increasing by over 17% and revenues by more than 20%, in both cases
excluding currency effects. These impressive gains reflected the sustained sales
dynamic in Brazil, Chile and Venezuela, supported by innovations closely aligned
with client needs. Around two-thirds of growth was due to market penetration and
cross-selling, while the other third resulted from inflation in these countries.
In Europe and Asia, organic growth in issue volume and revenues was +4.1% and
+2.5% respectively, reflecting contract wins for Quality of Life services,
particularly in the United Kingdom with Money Boost, in Turkey with the offer
for Ferrero, and in Central Europe. Organic growth was also led by faster
development in Asia, particularly in India and China.
Recent contract wins included Santander in Brazil with 22,000 beneficiaries of
the Vale Cultura, Johnson Controls in Romania, the Konak District, part of the
Izmir municipality in Turkey, the General Directorate of Customs in the Czech
Republic, Alcatel Lucent in Mexico, Fundación Escolar Del Estado Lara in
Venezuela, Abbott Laboratories in Mexico and Petrobras in Brazil.
Operating profit
Benefits and Rewards Services operating profit increased by nearly +12%
(excluding currency effects) to 268 million euro in Fiscal 2014, representing
25% of the Group's consolidated operating profit.
The solid growth reflected the leverage provided by issue volume growth and the
cost efficiencies generated by tight management of operating expenses. Sodexo's
Benefits and Rewards Services solutions are now 63% digital, following a gradual
shift that has taken place over the past ten years in the various countries.
Sodexo is constantly adapting to changes in payment media, while continuing to
invest to improve its performance for its clients and better anticipate their
future needs.
Benefits and Rewards Services Fiscal 2014 operating margin was 35.7% at current
currency exchange rates and 37.9% excluding currency effects, compared to 38.5%
in the prior year. Margins were negatively affected in Fiscal 2014 by the sharp
decline in Latin American currencies (Venezuelan bolivar and Brazilian real).
APPENDIX 2
Financial statements for Fiscal 2014
Consolidated income statement
Change at Change at
current exchange constant
In millions of euro Fiscal 2014 Fiscal 2013 rates exchange rates
-------------------------------------------------------------------------------
Revenues 18,016 18,397 -2.1% +2.6%
-------------------------------------------------------------------------------
Operating profit
before exceptional
items 966 964 +0.2% +10.7%
-------------------------------------------------------------------------------
Exceptional items[1] (27) (139)
Operating profit 939 825 13.8% 25.9%
Financial income 20 53
Financial expenses (193) (189)
Share of profit of
associates 8 6
Profit before tax 774 695 11.4% 21.0%
-------------------------------------------------------------------------------
Income tax expense (265) (233)
Profit for the
period 509 462 10.2% 19.0%
-------------------------------------------------------------------------------
Non-controlling
interests 19 23
GROUP PROFIT FOR THE
PERIOD 490 439 11.6% 20.3%
-------------------------------------------------------------------------------
Earnings per share
(in euro) 3.23 2.91 +11% +19.6%
-------------------------------------------------------------------------------
Dividend per share
(in euro) 1.80[2] 1.62
-------------------------------------------------------------------------------
[1] Costs recorded in connection with the program to improve operational
efficiency and reduce costs in Fiscal 2014 and Fiscal 2013.
[2] Dividend subject to approval at the Annual Shareholders' meeting on January
19, 2015.
Consolidated balance sheet
ASSETS EQUITY AND LIABILITIES
(in millions August August (in millions of August August
of euro) 31, 2014 31, 2013 euro) 31, 2014 31, 2013
---------------- ---------------
SHAREHOLDERS'
EQUITY
Capital 628 628
Share premium 1,109 1,109
Consolidated
reserves and 1,452 1,213
retained
earnings
Total Group
shareholders' 3,189 2,950
equity
--------------------------------------
Non-controlling 32 37
interests
NON-CURRENT Total
ASSETS shareholders' 3,221 2,987
equity
---------------------------------------- --------------------------------------
Property,
plant and 555 540
equipment
Goodwill 4,971 4,803 NON-CURRENT
LIABILITIES
--------------------------------------
Other
intangible 524 528 Borrowings 2,895 1,895
assets
Client Derivative
investments 361 288 financial 1 1
instruments
Associates 60 78 Employee 449 376
benefits
Financial 122 118 Other 233 214
assets liabilities
Derivative
financial 17 69
instruments
Other non- 16 14 Provisions 104 99
current assets
Deferred tax 226 188 Deferred tax 148 153
assets liabilities
Total non- Total non-
current assets 6,852 6,626 current 3,830 2,738
liabilities
---------------------------------------- --------------------------------------
CURRENT ASSETS CURRENT
LIABILITIES
---------------------------------------- --------------------------------------
Financial 8 7 Bank overdrafts 61 40
assets
Derivative
financial 35 39 Borrowings 957 712
instruments
Derivative
Inventories 265 271 financial 15 19
instruments
Income taxes 185 119 Income tax 132 109
receivable payable
Trade and
other 3,627 3,466 Provisions 88 116
receivables
Restricted
cash and
financial
assets related Trade and other
to the 758 734 payables 3,592 3,347
Benefits and
Rewards
Services
activity
Cash and cash 2,748 1,347 Vouchers 2,582 2,541
equivalents payables
Total current 7,626 5,983 Total current 7,427 6,884
assets liabilities
---------------------------------------- --------------------------------------
TOTAL
LIABILITIES
TOTAL ASSETS 14,478 12,609 AND EQUITY 14,478 12,609
-------------------------------------------------------------------------------
Consolidated statement of cash flow
(in millions of euro) Fiscal 2014 Fiscal 2013
-------------------------------------------------------------------------------
Operating activities
-------------------------------------------------------------------------------
Operating profit before financing costs 933 814
-------------------------------------------------------------------------------
Non-cash items
-------------------------------------------------------------------------------
Depreciation 250 271
Provisions (21) 93
Losses (gains) on disposals and other, net of tax (30) (4)
Dividends received from associates 12 16
Change in working capital from operating activities 117 (129)
-------------------------------------------------------------------------------
Change in inventories 5 6
Change in client and other accounts receiva
Unternehmensinformation / Kurzprofil:
Datum: 13.11.2014 - 07:06 Uhr
Sprache: Deutsch
News-ID 352145
Anzahl Zeichen: 65606
contact information:
Town:
Issy-les-Moulineaux
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 190 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Sodexo: Solid results for Fiscal 2014"
steht unter der journalistisch-redaktionellen Verantwortung von
Sodexo (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
