Sodexo: another year of solid performance; positive outlook
(Thomson Reuters ONE) -
* Revenues up +2.2%, and organic growth[1] of +2.5%
* On-site organic growth at +2.4% despite a tough economic environment in
Remote Sites and a difficult situation in France.
* Resilient Benefits & Rewards Services activity at +4.7%.
* Excluding the impact of the Remote Sites activity, underlying growth was
strong at +4%;
* +30 basis points improvement in operating margin excluding currency effect
and before exceptional expenses[2].
* Segmentation is enhancing new business opportunities highlighted by a major
integrated services contract signed with Rio Tinto in Australia.
* Net profit +5.2% before non-recurring items[3] and currency effect.
* Proposed dividend[4] of 2.4 euros representing an increase of +9.1% and a
?300 million share repurchase program (around 1.9% of capital) for
cancellation purposes.
* Fiscal 2017 guidance of around 3% revenue organic growth and an 8% to 9%
operating profit growth (excluding currency effect and exceptional expenses
linked to the Adaptation and Simplification program).
* Medium-term objectives confirmed.
Issy-les-Moulineaux, November 17, 2016 - Sodexo (NYSE Euronext Paris FR
0000121220-OTC: SDXAY). At the Board of Directors meeting held on November 15,
2016 and chaired by Sophie Bellon, the Board closed the Consolidated and Company
accounts.
Sodexo's Chief Executive Officer Michel Landel presented the Group's performance
for the fiscal year ended August 31, 2016.
Financial performance for Fiscal 2016:
+------------------------------------------------------
| Fiscal 2016 Fiscal 2015
| Change
|(ended August (ended August excluding currency
(in millions of euro) | 31, 2016) 31, 2015) Change effect[5]
|
Revenue | 20,245 19,815 +2.2% +2.6%
------------------------+------------------------------------------------------
Organic growth[6] +2.5% +2.5%
------------------------- -----------------------------------------
Operating profit before
exceptional expenses[7] 1,203 1,143 +5.2% +8.2%
-------------------------------------------------------------------------------
Operating margin before
exceptional expenses7 5.9% 5.8% +10bps +30bps
-------------------------------------------------------------------------------
Exceptional expenses7 (108) -
------------------------- -----------------------------------------
Operating profit 1,095 1,143 -4.2% -1.3%
------------------------- -----------------------------------------
Net financial expense (111) (107)
------------------------- -----------------------------------------
Effective tax rate 33.7% 31.1%
------------------------- -----------------------------------------
Profit attributable to
equity holders
before non-recurring
items[8], net of tax 721 700 +3.0% +5.2%
-------------------------------------------------------------------------------
Profit attributable to
equity holders of the
parent 637 700 -9.0% -6.8%
-------------------------------------------------------------------------------
Earnings per share
-basic- (in euro) 4.21 4.60 -8.5%
------------------------- -----------------------------------------
Proposed dividend per
share (in euro) 2.40[9] 2.20 +9.1%
------------------------- -----------------------------------------
Net cash provided by
operating activities 945 1,017
------------------------- -----------------------------------------
Gearing[10] (%) 11% 9%
------------------------- -----------------------------------------
Debt Ratio[11] 0.3 0.2
-------------------------------------------------------------------------------
Commenting on these figures, Sodexo CEO Michel Landel said:
"Sodexo continues to grow as a result of solid growth in North America, the UK
(On-site Services) and Benefits and Rewards Services. We achieved this growth
despite a tough environment in the commodities markets affecting the Remote
Sites business and the impact of a difficult situation in France. Underlying
organic growth excluding Remote Sites is 4%. The Group has also delivered
another strong performance on operating profit before exceptional costs, up
+8.2%, and +30 bps on the margin, excluding currencies, in line with our annual
guidance.
The Adaptation and Simplification program is on track to deliver 200 million
euro of annual savings in Fiscal 2018.
The first successes of the new organization by global segment were visible this
year with the signature of the landmark Rio Tinto contract in March, followed by
global agreements signed with Shell and Seadrill, as well as the further
extension to global contracts with Pfizer or Unilever. We are proud of these
major partnership agreements. This is both the result of the investments we have
made over the past 10 years to build our integrated services offer, and the
recognition of our technical expertise. It reflects our objective of improving
the quality of life of the women and men we serve.
We are confident in the future, and for Fiscal 2017 aim for around 3% organic
revenue growth and between 8% and 9% growth in operating profit, excluding the
currency effect and exceptional expenses of the Adaptation and Simplification
program."
Highlights of the period
* Fiscal 2016 Revenues amounted to 20.2 billion euro, up +2.2% on Fiscal 2015
and organic growth of +2.5%.
* Organic growth for the On-site Services activity was +2.4%, reflecting:
* North America up +3.8% with growth accelerating in both the Health Care
and Seniors and Corporate, in which growth reached +7.1% as a result of
new contracts such as Pfizer and United Airlines.
* A strong United Kingdom growth, up +11.3% benefitting from the
contribution of the Rugby World Cup and the ramp-up of several large
Justice and Corporate contracts signed in the previous year, as well as
strong new business in Education.
* Continental Europe up +1.0%, due to some recovery in Corporate in most
of the mature economies of the region, sustained growth in Germany,
Russia and Eastern Europe. This performance was impacted by a difficult
situation in France during the year but particularly in the fourth
quarter, due to strikes, flooding and terrorism.
* The Rest of the World, down -3.2%, was impacted by a -16% decline in the
Remote Sites activity, resulting from the difficulties of the mining and
petroleum industries, and the regions dependent upon those industries,
but with signs of stabilization in the second half. Excluding Remote
Sites, organic growth was +7.0%, with signs of a pickup in Brazil in the
last quarter of the fiscal year.
* Organic revenue growth in the Benefits and Rewards Services activity was
+4.7%, impacted by severe competitive pressures in Brazil and record low
interest rates in Europe. Issue volume was up +6.9% organically, reflecting
a resilient performance in all regions, with strong face value growth in
Brazil, and particularly strong development in Mexico, Chile and Turkey.
* Operating profit before exceptional expenses rose to 1,203 million euro, up
+8.2% excluding the currency effect, due to a combination of increased
productivity, SG&A control and the first results of the Adaptation and
Simplification program which delivered 32 million euro of savings in its
first year.
* Operating margin before exceptional expenses was up +10 basis points to
5.9%, and up +30 basis points excluding the currency effect.
* Exceptional expenses related to the adaptation and simplification measures
amounted to 108 million euro in Fiscal 2016. The program is being
implemented over the period from September 2015 to February 2017 at a total
cost of around 200 million euro, with 100% annual payback in Fiscal 2018.
* Net profit before non-recurring items (net of taxes) totaled 721 million
euro, up +5.2% excluding the currency effect. After deducting exceptional
expenses and exceptional indemnities on the debt restructuring, net of
taxes, reported net profit was 637 million euro, down -9.0%.
* Free cash flow generation more than compensated investments and the share
buy-backs during the year, and the Group's financial position remained
strong, with net debt[12] at 407 million euro, gearing at 11% and the net
debt ratio at 0.3.
* In March, Sodexo joined the CAC 40 index, thus confirming the regularity of
its performance.
* The Group's corporate responsibility engagement is recognized both
internally, with employee engagement up 9 points compared to 2014 at 68% in
the latest engagement survey. Added to this, Sodexo was named global
Industry Leader for the 12(th) consecutive year in the Dow Jones
Sustainability index.
* Governance changes:
On January 26, 2016 after the Annual General meeting, Ms. Sophie Bellon became
Chairwoman of the Board of directors, taking over from the Group's founder, Mr.
Pierre Bellon, who has in turn, become Chairman Emeritus.
Mr. Emmanuel Babeau, Deputy Chief Executive Officer of Schneider Electric, in
charge of Finance and Legal Affairs, was appointed to the Board by shareholders
at the Annual General Meeting of January 26, 2016.
As part of the resolutions at the AGM on January 24, 2017 the Board will propose
to shareholders the renewal as Directors of Ms. Patricia Bellinger and Mr.
Michel Landel.
Mr. Paul Jeanbart, whose mandate ends after the AGM on January 24, 2017, has
taken the decision not to seek reelection. The Board warmly thanks him for the
quality of his contribution over many years to the Group's development.
Finally, the Board will propose the appointment as Director of Ms. Cécile
Tandeau de Marsac, who currently holds the position of General Manager of Human
Resources at Solvay. She will bring to the Board her Human Resources experience
in large international Groups.
With these changes, the percentage of women on Sodexo's Board increases to 50%.
Outlook
The Board and Executive Committee are confident in the Group's capacity to grow
the business. In Fiscal 2017, the stabilization of commodity markets which we
have seen in the last quarters should provide the basis for the stabilization of
the Remote sites activity, US Education will benefit from schools' new business
and the comparative base in France is easier. The Adaptation and Simplification
program is on track. The Brazilian real seems to be recovering. The management
team is focused on accelerating growth and improving margins.
Despite challenging revenues comparable in the first half, the Group is
confident in achieving the following Fiscal 2017 objectives:
* Organic revenue growth of around 3%;
* 8% to 9% growth in operating profit excluding the currency effect and
exceptional expenses related to the Adaptation and Simplification program.
Confident in the future, the Group confirms its medium-term objectives of:
* Average annual revenue growth, excluding currency effect, of between 4% and
7%;
* Average annual growth in operating profit, excluding currency effect, of
between 8% and 10%.
Conference call
Sodexo will hold a conference call (in English) today at 9:00 a.m. (Paris time),
to comment on its results for Fiscal 2016. The presentation can be followed via
live webcast on the Group website, www.sodexo.com.
The press release, presentation and webcast will be available on the Group
website www.sodexo.com in both the "Latest News" section and the "Finance -
Financial Results" section. A recording of the conference call will be available
until November 23, 2016 by dialing + 44 (0) 20 3427 0598, followed by the
passcode 9302765.
Financial calendar
1(st) quarter revenues - Fiscal 2017 and Presentation of new
Segment reporting January 12, 2017
-------------------------------------------------------------------------------
Annual Shareholders' Meeting January 24, 2017
-------------------------------------------------------------------------------
Dividend Ex-date February 6, 2017
-------------------------------------------------------------------------------
Dividend Record date February 7, 2017
-------------------------------------------------------------------------------
Dividend payment date February 8, 2017
-------------------------------------------------------------------------------
1(st) half results - Fiscal 2017 April 13, 2017
-------------------------------------------------------------------------------
Nine month revenues, Fiscal 2017 July 6, 2017
-------------------------------------------------------------------------------
Annual results, Fiscal 2017 November 16, 2017
-------------------------------------------------------------------------------
Annual Shareholders' Meeting 2018 January 23, 2018
-------------------------------------------------------------------------------
About Sodexo
Founded in Marseille 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 50
years of experience: from foodservices, reception, maintenance and cleaning, to
facilities and equipment management; from Meal Pass, Gift Pass and Mobility Pass
benefits for employees to in-home assistance, child care centers 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 425,000 employees throughout the world.
Sodexo is included in the CAC 40 and DJSI indices.
Key figures (as of August 31, 2016)
20.2 billion euro in consolidated revenues
425,000 employees
19(th) largest employer worldwide
80 countries
75 million consumers served daily
15.2 billion euro in market capitalization (as of November 16, 2016)
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 |
| |
| Virginia Jeanson Laura Schalk |
| Tel: +33 1 57 75 80 56 Tel: +33 1 57 75 85 69 |
| virginia.jeanson(at)sodexo.com laura.schalk(at)sodexo.com |
+-------------------------------------------------------+
FISCAL 2016 ACTIVITY REPORT
FISCAL 2016 YEAR HIGHLIGHTS
A solid performance
In Fiscal 2016 all activities contributed to the +2.5% organic growth[13] in
revenue except for the Remote Sites activity, which was down by -16%, affected
by a severe decline in the mining and oil and gas industries. Excluding the
Remote Sites activity, the underlying growth was +4%, benefiting for about
+0.5% from the success of the Rugby World Cup event in the United Kingdom in the
first quarter and a solid performance from Benefits and Rewards.
Geographically, there was an improvement in growth in North America, strong
growth in the United Kingdom and Ireland, and Continental Europe was up +1.0%
with some recovery in Corporate in mature economies and sustained growth in
Germany and Russia, offset by a difficult situation in France, especially in the
fourth quarter.
Operating profit excluding the currency effect and before exceptional
expenses[14], was up +8.2% in line with the objective set at the beginning of
the year. The operating margin improved by +30 basis points, excluding currency
effect and exceptional expenses, benefiting from productivity initiatives and
the first results of the Adaptation and Simplification program launched at the
beginning of the fiscal year. A total of 108 million euros of exceptional
expenses were incurred during the year on this program. Net financial expense
increased slightly due to 21 million euros of exceptional indemnities resulting
from the early reimbursement of some US private placement debt as part of a debt
restructuring program to extend maturities and reduce financing rates. The tax
charge was also up slightly at 33.7% against an exceptionally low tax rate of
31.1% last year. As a result, Group net profit declined by -9%. Net profit
before these non-recurring items[15] and excluding currency fluctuations, was up
+5.2%.
Confident in the outlook for the Group, the Board has decided to propose a
dividend of 2.40 euro per share, up +9.1%. This implies a 57% pay-out ratio
while maintaining circa 50% pay-out ratio on net profit before non-recurring
items.
Fiscal 2016 Free cash flow amounted to 595 million euro, after unusually high
capex linked to the start-up of the Rio Tinto contract and Rugby World Cup
timing impact. Net debt was up slightly at 407 million euro, and the balance
sheet remained strong with gearing at 11% and a net debt ratio of 0.3.
Segmentation enhancing business opportunities
Clients seeking productivity and global footprint in Energy and Resources:
In March, Sodexo was awarded a ten-year contract with leading global mining
company Rio Tinto, estimated at 2.5 billion Australian dollars (approximately
1.8 billion euro) over 10 years, to deliver integrated facilities management
services in the company's extensive operations in Australia's Pilbara region.
This is the largest contract of its kind for Sodexo. Rio Tinto's assets in this
region comprise ports, towns, aerodromes, operational sites, accommodation
sites, commercial buildings and residential properties. The Group was
successfully awarded the contract after demonstrating a number of strengths in
key areas such as consistency and quality in services, alignment with improving
quality in village life and strong engagement with local communities. The Sodexo
teams will provide project management and integration, building and grounds
maintenance, accommodation and catering, village and town services, cleaning,
aerodrome management, transport and property management. The different start-up
phases are progressing in line with expectations and the contract should be
fully ramped-up during the course of fiscal 2017. The capacity of the global
Energy and Resources segment team to mobilize more than 100 experts around the
Group was key to winning this exceptionally large contract.
The crisis in the energy and resources sector has helped clients to recognize
the advantages of global agreements with their service-providers. As a result,
in September, the Group signed contract extensions with Seadrill, leading
offshore drilling contractor, and Shell. The Seadrill contract spans
5 years, 90% of the company's global fleet and a total value of 200 million
euro. The Shell contract represents 135 million euro over five regions
worldwide. These wins are driven by Sodexo's commitment to safety and
performance, a world-class service culture, technical expertise in the segment
and a holistic approach to Quality of Life.
Further contract extensions in Facilities Management for existing Corporate
clients:
Relationships with existing worldwide clients are also continuing to develop.
Integrated facilities management contracts have been signed with Danone and
Unilever in Indonesia, Huawei in Romania, Colombia and Malaysia and Pfizer in
12 countries in Asia. The global airport lounge offer for clients is attracting
names such as United Airlines. In all these examples the key has been the
interest for the client of a global standardized integrated services offer,
adapted to the local environment.
Driving segment development in white spaces:
The Group signed its first contract in the Australian justice market for a five-
year term, and two five-year extension options, with the Western Australian
Government to manage and operate the new 254 bed women's Melaleuca Remand and
Reintegration Facility. As part of the contract, which starts up in December
2016, Sodexo will be developing partnerships with non-government organizations
to provide culturally appropriate rehabilitation and reintegration services and
programs to help inmates successfully reintegrate the community and reduce
reoffending risk. The Group's long and successful track record of managing and
operating more than 120 facilities in the justice sector internationally was key
to winning this contract. The 20 year UK experience of managing custodial and
through-the-gate services for women offenders was an essential element of the
bid.
Transfer of expertise into new markets:
Sodexo has installed and is now operating, as part of its Clinical Technology
Solutions, a Lithotripter (medical ultrasound equipment for kidney treatments)
for the Makati Medical Center, one of the top hospitals in the Philippines. This
is a 5-year contract in which Sodexo has recommended the equipment, procured the
device, trained the personnel and is now providing the Lithotripsy and
associated services. Without the segment expertise and the sharing of
experience, this contract would not have been possible.
The Group's corporate responsibility engagement is confirmed and recognized both
internally and externally:
Employee engagement up +9 points since 2014 to 68%. The latest employee
engagement survey was proposed for the first time, to all employees around the
world with more than six months within the Group. With a response rate of 57%
and a nine-point increase in the engagement rate to 68%, the digital survey was
a success. The external benchmark of 60% and the Group's internal objective of
65% have been exceeded. Other learnings from the survey are that 80% of
employees consider Sodexo to be a socially and environmentally responsible
company and 88% prefer working for Sodexo than for a competitor.
In terms of the financial community, the Dow Jones Sustainability index has
confirmed Sodexo as industry leader for the 12th consecutive year. Sodexo was
one of only eight companies worldwide that achieved all three top ranks in the
2016 Robeco SAM yearbook: Gold Class, Industry Leader and Industry Mover. The
Group is also confirmed as a component of the STOXX® Global ESG Leaders index
and the Ethibel Sustainability Index (ESI) Excellence Europe.
At the United Nations Women's Empowerment Principles awards, Michel Landel, CEO,
and Janet Awad, regional Chair of Latin America were awarded the CEO Leadership
Award which recognizes a company for its demonstrated commitment to and
implementation of policies that advance and empower women in the workplace,
market place and community. In particular, the United Nations acknowledged the
Sodexo Women's International Forum for Talent (SWIFt), which underpins Sodexo's
strategy for improving the Group's gender balance.
The World Wildlife Fund (WWF) awarded the maximum score to Sodexo on its Palm
Oil Buyers Scorecard this year, reflecting the very active and long-term
approach that Sodexo has taken to progressively increasing use of responsible
palm oil.
Sodexo joined forces with Ardo, McCain, PepsiCo, SCA, Unilever Food Solutions
and the WWF to launch the International Food Waste Coalition in 2015, in order
to combat food waste throughout the food services value chain.
The Group also made a commitment to purchase exclusively sustainable fish and
seafood in the 80 countries where the Group operates and to reduce CO(2)
emissions by 34% by 2020, especially in the supply chain and by contributing to
its clients' emissions reduction initiatives.
Sodexo and the WWF have worked together to design and deploy best practices to
lessen the environmental impact of the Group's services at its client sites,
including through a program to reduce food waste and the adoption of
technologies that will cut energy use by 12% to 45%.
FISCAL 2016 PERFORMANCE
Consolidated income statement
Year ended
August 31
Change at constant
(millions of euro) 2016 2015 Change exchange rates*
Revenues 20,245 19,815 +2.2% +2.6%
----------------------------------------------------------------------
Organic growth 2.5% 2.5%
----------------------- -------------------------------------
Operating profit
before exceptional
expenses ((1)) 1,203 1,143 +5.2% +8.2%
----------------------------------------------------------------------
Operating margin
before exceptional
expenses ((1)) 5.9% 5.8% +10 bps +30 bps
----------------------- -------------------------------------
Exceptional expenses
((1)) (108) (0)
----------------------- -------------------------------------
Operating profit
(reported) 1,095 1,143
----------------------- -------------------------------------
Interest income 34 65
----------------------- -------------------------------------
Financial Expense (145) (172)
----------------------- -------------------------------------
Net Financial Expense (111) (107)
----------------------- -------------------------------------
Share of profit of
other companies
consolidated
by the equity method 7 7
----------------------- -------------------------------------
Profit before tax 991 1,043 -5.0%
----------------------- -------------------------------------
Income tax expense (330) (320)
----------------------- -------------------------------------
Effective tax rate 33.7% 31.1%
----------------------- -------------------------------------
Profit for the period 661 723
----------------------------------------------------------------------
Profit attributable
to non-controlling
interests 24 23
----------------------- -------------------------------------
group Profit
attributable
to equity holders
of the parent,
before non-recurring
items (()(2)), net of
tax 721 700 +3.0% +5.2%
----------------------------------------------------------------------
GROUP NET Profit
attributable to
equity holders of the
parent (reported) 637 700 -9.0% -6.8%
----------------------------------------------------------------------
Earnings per share
(in euro) 4.21 4.60 -8.5%
----------------------------------------------------------------------
Dividend per share
(in euro) 2.40 ((3)) 2.20 +9.1%
-------------------------------------------------------------------------------
* Change excluding currency effect calculated converting Fiscal 2016 figures
at Fiscal 2015 rates, except for Venezuelan Bolivar.
All Fiscal 2016 and Fiscal 2015 figures in VEF have been converted at the
exchange rate of USD 1 = VEF 645 vs. VEF 199 for Fiscal 2015.
(1) Exceptional expenses are the costs of implementation of the Adaptation and
simplification program in Fiscal 2016 (108 million euro)
(2) Non-recurring items: 108 million euro of exceptional expenses and 21
million euro of early debt reimbursement indemnity, both net of
taxes (respectively 71 million euro and 13 million euro).
(3) Subject to approval at the Annual Shareholders' Meeting on January 24,
2017
Currency effect
Sodexo operates in 80 countries. The percentage of total revenues and operating
profit denominated in the main currencies are as follows:
Operating profit
Revenues before exceptional costs
U.S. dollar 41% 45%
---------------------
Euro 26% 14%
---------------------
UK pound sterling 10% 10%
---------------------
Brazilian real 4% 15%
----------------------------------------------------------
The currency effect is determined by applying the previous year's average
exchange rates to the current year figures except for Benefits & Rewards in
Venezuelan Bolivar. All Fiscal 2016 and Fiscal 2015 figures in VEF have been
converted at the exchange rate of USD 1= VEF 645 vs. VEF 199 for Fiscal 2015.
Impact (in millions of euro)
Change vs. Change vs.
the euro the euro Operating
(in %, (in %, profit before
Impact of exchange average closing exceptional
rates rate) rate) Revenues costs Net profit
Euro/U.S. dollar +4.8% +0.7% 381 25 10
--------------------
Euro/Brazilian
real -18.9% +12.9% (211) (42) (25)
--------------------
Euro/UK pound
sterling -2.7% -14.2% (57) (4) (3)
-------------------------------------------------------------------------------
During Fiscal 2016, the U.S. dollar stabilized, resulting in a much less
significant year on year impact than in the preceding year. However, the
Brazilian real declined significantly from July 2015, resulting in an average
decline in Fiscal 2016 of -18.9%. Nevertheless, the Brazilian real picked up
significantly from March 2016, and the balance sheet closing rate for Fiscal
2016 actually increased by +12.9% relative to the closing rate for Fiscal 2015.
The trends were the opposite in the UK, with the Pound Sterling falling
considerably against the euro from June 2016, after the Brexit referendum.
In terms of the Venezuelan Bolivar, the Group considers that the best estimate
of the exchange rate at which funds from its activities in Venezuela could be
repatriated is the DICOM rate. The exchange rate used for the year ended August
31, 2016 is therefore 1 U.S. dollar = 645 bolivars (1 euro = 718 bolivars)
relative to the Fiscal 2015 rate of 1 U.S. dollar = 199 bolivars. The effect of
this depreciation is not material at Group level, as the Group's operations in
Venezuela now represent just 0.1% of consolidated revenues and less than 0.4% of
consolidated operating profit.
Revenues
Fiscal 2016 consolidated revenues totaled 20.2 billion euro, increasing +2.2%
year-on-year. Organic revenue growth was +2.5%. The currency effect was negative
at -0.4%, slightly offset by a +0.1% contribution from acquisitions and
disposals of subsidiaries.
Revenues by activity
(in millions of Organic
euro) Fiscal 2016 Fiscal 2015 growth[16] Reported change
On-site Services
North America 8,629 7,972 +3.8% +8.2%
---------------------- ------------- ----------------
Continental Europe 5,690 5,686 +1.0% +0.1%
---------------------- ------------- ----------------
United Kingdom
and Ireland 2,008 1,832 +11.3% +9.6%
---------------------- ------------- ----------------
Rest of the World 3,143 3,504 -3.2% -10.3%
---------------------- ------------- ----------------
Total On-site
Services 19,470 18,994 +2.4% +2.5%
---------------------- ------------- ----------------
Benefits and Rewards
Services 780 827 +4.7% -5.7%
---------------------- ------------- ----------------
Intragroup
eliminations (5) (6)
Consolidated Total 20,245 19,815 +2.5% +2.2%
1. On-site Services
On-site Services organic revenue growth was +2.4%, reflecting:
* in the United Kingdom, the contribution of the Rugby World Cup contract in
the first quarter and the ramp-up of the many new contracts signed in Fiscal
2015,
* solid momentum in North America, with a return to growth in the Health Care
segment and acceleration in Corporate,
* a modest upturn in activity in the Corporate segment in Continental Europe
except in France, which was affected by the terrorism, flooding and strikes,
particularly in the last quarter,
* a -16% decline in the Remote Sites activity in the Rest of the World due to
the difficulties in the energy and resources sectors.
Breakdown by segment:
| (in millions of euro) Fiscal 2016 Fiscal 2015 Organic growth |
| | | | |
Corporate | 9,995 | 9,989 | +2.4% |
--------------------------+ +-------------+ |
Health Care and Seniors | 5,074 | 4,786 | +3.4% |
--------------------------+ +-------------+ |
Education | 4,401 | 4,219 | +1.2% |
| | | |
TOTAL 19,470 18,994 +2.4%
The breakdown in the +2.4% organic growth in On-site Services can be analyzed in
several different ways, by type of service or by the combination of retention
and development.
At +4.5%, facilities management services organic growth was significantly better
than the +1.5% increase recorded for foodservices. Non-food services now
represent 30% of On-site Services sales.
In Fiscal 2016, client retention was stable at 93.1%. This stability masks an
improvement in North America and the UK resulting from larger and larger
contracts which are renewed less regularly and a decline in retention in the
Rest of the World, particularly in Latin America. The development rate of new
business at 7.2% was down 30 basis points: significant new business in the Rest
of the World (including the Rio Tinto contract) was offset by slow new business
particularly in Universities in North America, and in the United Kingdom and
Ireland due to the focus on the Fiscal 2015 start-ups. Elsewhere, new business
was relatively stable. Comparable unit growth was +2.1%, similar to the +2.2% in
Fiscal 2015. The significant volume decline in Remote Sites was compensated by
more contract extensions in integrated facilities management services to
existing clients in all other segments.
1.1 North America
Revenues
------------------------------------------------------------------+
(in millions Fiscal Fiscal Organic Currency Total|
of euro) 2016 2015 growth Acquisitions effect growth|
| | | | |
Corporate | 2,264| 2,040| +7.1%|
-------------+ +---------+ +-----------------------------------
Health Care | | | |
and Seniors | 3,171| 2,889| +4.9%|
-------------+ +---------+ +-----------------------------------
Education | 3,194| 3,043| +0.4%|
| | | |
TOTAL 8,629 7,972 +3.8% +0.1% +4.3% +8.2%
Fiscal 2016 On-site Services revenues in North America totaled 8.6 billion euro,
an increase of +8.2% over the prior year period. Organic growth for the period
was +3.8%, with improved growth in the Health Care and Seniors as well as
Corporate compared with Fiscal 2015.
In the Corporate segment, organic growth was +7.1%, reflecting sustained demand
for integrated service offers among existing and new Corporate clients, as well
as solid same site growth in the Defense segment.
Health Care and Seniors organic growth improved steadily during Fiscal 2016. The
+4.9% increase for Fiscal 2016 reflected new contracts won in Fiscal 2015 and
Fiscal 2016 as well as strong comparable unit sales growth.
In Education, organic revenue growth was +0.4%. The increase reflected the
combination of solid same site growth in demand in the Universities but modest
sales activity. The schools selling season and business development has improved
in fiscal 2016.
1.2 Continental Europe
Revenues
------------------------------------------------------------------+
(in millions Fiscal Fiscal Organic Acquisitions Currency Total|
of euro) 2016 2015 growth effect growth|
| | | | |
Corporate | 3,477| 3,463| +1.7%|
-------------+ +---------+ +-----------------------------------
Health Care | 1,301| 1,327| -1.3%|
and Seniors | | | |
-------------+ +---------+ +-----------------------------------
Education | 912| 896| +1.8%|
| | | |
TOTAL 5,690 5,686 +1.0% -0.4% -0.5% +0.1%
In Continental Europe, revenues amounted to 5.7 billion euro, stable on the
previous year. Organic growth was +1.0%, reflecting some recovery in Corporate
activity in most other mature countries in the region, and a strong growth in
Germany, Russia and in the developing economies. This performance was partially
compensated by a difficult situation in France, and more particularly in the
fourth quarter due to strikes, flooding and terrorism.
In the Corporate segment, organic growth of +1.7% was attributable to modest
growth in revenues at existing sites in Southern Europe and the Nordic
countries; and continued robust growth in developing economies, in particular in
Russia and Turkey, supported by the continued success of the integrated services
offer. In France, the Justice activities were impacted by the loss of a prison
contract, and Sports and Leisure, in particular the boats on the Seine, was
significantly impacted by the disappointing Summer tourist season in Paris
resulting from the flooding in June and the terrorist attacks in November 2015
and July 2016.
The -1.3% contraction in Health Care and Seniors revenues was mainly due to weak
growth at existing sites and a selective approach to new contracts, especially
in France impacted by severe cost cutting and a lack of new development
opportunities in the public hospitals segment. The Korian contract in Seniors,
won last year, is ramping up successfully. Good results were achieved in the
Nordic countries, with the start-up of a contract to provide medical equipment
to individuals for the province of Östergötland in Sweden.
Education revenues rose by +1.8%, led by higher volumes in France and Germany.
1.3 United Kingdom and Ireland
Revenues
----------- -----------------------------------+
(in millions Fiscal Fiscal Organic Currency Total|
of euro) 2016 2015 growth Acquisitions effect growth|
| | | | |
Corporate | 1,483| 1,332| +14.2%|
-------------+ +---------+ +-----------------------------------
Health Care | | | |
and Seniors | 366| 359| -0.9%|
-------------+ +---------+ +-----------------------------------
Education | 159| 141| +15.1%|
| | | |
TOTAL 2,008 1,832 +11.3% +1.1% -2.8% +9.6%
Revenues in the United Kingdom and Ireland increased +9.6% to reach 2.0 billion
euro. Organic growth of +11.3% was in part due to the significant contribution
of the Rugby World Cup contract in the first quarter of the year. However, even
without the Rugby World Cup effect, the organic growth trend was a solid +5.3%
due to the ramp-up of the many new contracts won in Fiscal 2015 and strong
retention during the year. The result of the Brexit referendum has not had an
impact on activity although it may have slowed down some public sector decision-
making in some of the bids.
In the Corporate segment, organic revenue growth was +14.2%. This very strong
performance was largely attributable to the services provided in connection with
the Rugby World Cup in the first quarter, which contributed 131 million euro to
revenues, or +8.3% of the organic growth. However, even without the Rugby World
Cup, organic growth was a solid +5.9% due to the progressive start-up of major
contracts signed in Fiscal 2015 (Transforming Rehabilitation, Diageo.) and
contract extensions with existing clients for a wider scope of facilities
management services. Business development has been more modest in Fiscal 2016
because of the heavy commitment of resources to previous year start-ups.
Health Care and Seniors showed an organic decline of -0.9%. The ramp-up of
Imperial College Hospitals in London had a significant contribution to growth
over the last two years. There was no start-up this year in the absence of
attractive development opportunities. Same site sales have been solid but not
enough to compensate the losses during the year.
In Education, organic growth of +15.1% reflected solid new business with, in
particular, the start-up of York St John and Northumbria universities and
several new school contracts.
+------------------------------------------------------------------------------+
|Brexit: |
|In June 2016, the United Kingdom voted to leave the European Union. Sodexo has|
|been present in the United Kingdom since 1988 and has around 35,000 employees |
|there today. The Group's business should not be impacted materially by the |
|United Kingdom leaving the European Union. The Group is a local player, |
|working with local suppliers and employees, and very often for Government |
|authorities and Government services. Of course, growth in activity will depend|
|upon growth in GDP and employment in the country. |
+------------------------------------------------------------------------------+
1.4 Rest of the World
(Latin America, Africa, Middle East, Asia, Australia and Remote sites)
Revenues
+------------------------------------------------------------------------------
|(in millions Fiscal Fiscal Organic Currency Total
|of euro) 2016 2015 growth Acquisitions effect growth
| | | | |
Corporate | 2,771| 3,154| -4.9%|
-------------+ +---------+ +----------------------------------
Health Care | | | |
and Seniors | 236| 211| +19.4%|
-------------+ +---------+ +----------------------------------
Education | 136| 139| +0.3%|
| | | |
TOTAL 3,143 3,504 -3.2% +0.3% -7.4% -10.3%
In the Rest of the World region (Latin America, Africa, Middle East, Asia,
Australia and Remote Sites), Fiscal 2016 revenues amounted to 3.1 billion euro,
down -10.3%. In terms of organic change compared with the previous year,
activity was down -3.2%. The region was severely affected by the decline in
Remote Site revenues of -16%. Excluding Remote Sites, organic growth from the
region remained strong at +7.0%.
Corporate revenues fell by -4.9% organically due to:
* In Remote Sites, severe reductions in oil and commodity prices forced
clients operating in these industries to revise down their production levels
which in turn led to a corresponding reduction in required service levels.
In Chile, several mining clients sought to diversify their suppliers in a
strained economic and social environment. As a result of these issues,
Remote Site revenues in the Rest of the World region were down -16%
organically. Activity stabilized in the third quarter relative to the
previous quarter and, from the fourth quarter, the comparable base has
become less challenging. The Rio Tinto contract signed in March contributed
to the activity in July and August. The contract will have a more
significant impact in fiscal 2017, as will the Seadrill and Shell contract
extensions signed in September 2016.
* The underlying activity of the rest of the On-site activity in the region is
solid with some strong business development and cross-selling in the Asia-
Pacific region and more modestly in the Middle East and Africa. In the last
quarter, some improvement in activity in Brazil compensated the slower
demand in the Middle East and Africa, where economies are beginning to feel
the impact of the sustained weakness in the oil price.
In Health Care and Seniors, organic growth of +19.4% was attributable to some
contract wins and same site sales growth, especially in Latin America and Asia.
Education revenues were stable relative to Fiscal 2015. Solid growth in Asia was
offset by a contract exit in Africa.
2. Benefits and Rewards Services
Benefits and Rewards Services revenues were 780 million euro, down -5.7% due to
a sharp decline particularly in the Brazilian real. Issue volume was up +6.9%
organically, reflecting a relatively resilient performance in all regions, with
strong face value growth in Brazil, solid growth in Europe and particularly
strong development in Mexico, Chile and Turkey. On the other hand, organic
revenue growth was more modest at +4.7%, impacted by severe pricing
competitiveness in Brazil, particularly from the smaller players, and record low
interest rates in Europe.
Issue volume[17]
----------- |
(in |
millions of Fiscal Fiscal Organic Currency |
euro) 2016 2015 growth[18] Acquisitions effect(17) Change|
| | | | |
Latin | | | |
America | 6,678| 7,526| +7.8%|
------------+ +---------+ +---------------------------------
Europe and | | | |
Asia | 9,593| 8,894| +6.2%|
| | | |
TOTAL 16,271 16,420 +6.9% +1.7% -9.5% -0.9%
Revenues
-----------
(in
millions of Fiscal Fiscal Organic Currency
euro) 2016 2015 Growth(18) Acquisitions effect(17) Change
| | | |
Latin | | | |
America | 376| 431| +6.1%|
------------+ +---------+ +--------------------------------
Europe and | | | |
Asia | 404| 396| +3.1%|
| | | |
TOTAL 780 827 +4.7% +0.2% -10.6% -5.7%
In Latin America organic growth was solid, with an increase of +7.8% in issue
volume and +6.1% in revenues.
Higher face values were an important growth driver in the region. In Brazil, the
progressive rise in unemployment led to a decline in the number of beneficiaries
at existing clients. As a result, the environment became more and more
competitive throughout the year as the smaller players, in particular, were
aggressively seeking new business. Face values rose by close to inflation which
more than compensated the decline in the number of beneficiaries.
Growth in Mexico and Chile was particularly strong, with face value increases,
strong new business and an increase in penetration in both markets.
Organic growth is calculated converting Fiscal 2016 figures at Fiscal 2015
rates, except for Venezuelan Bolivar. Fiscal 2016 and Fiscal 2015 figures in VEF
have been converted at the exchange rate of USD 1 = VEF 645 vs. VEF 199 for
Fiscal 2015.
In Europe and Asia, issue volume organic growth was a strong +6.2%. Organic
growth in revenues was more modest at +3.1%. Lowest-ever interest rates in
mature Europe have helped to create a gap between issue volume and revenue
growth. However, demand continued to be strong for existing and new products in
all markets, market penetration continued to develop in Asia and momentum
remained strong in Turkey.
Operating profit
Fiscal 2016 operating profit before exceptional expenses amounted to
1,203 million euro, up +8.2% excluding the currency effect and in line with the
Group's objective for the year. The operating margin before exceptional expenses
was 5.9%, up +10 basis points relative to the previous year. Excluding the
currency effect of in particular, the weakness of the Brazilian real, the margin
increased +30 basis points.
This strong improvement in margins reflects the ongoing efficiency initiatives
and is helped by the Adaptation and Simplification program launched in November
2015. The first savings of the plan amounted to 32 million euro and were
delivered in the second half of Fiscal 2016.
After deducting 108 million euro in exceptional expenses related to these
adaptation and simplification measures, operating profit amounted to 1,095
million euro against 1,143 million euro in Fiscal 2015.
All operating profit amounts in the rest of this report are stated excluding
exceptional expenses([19]).
Operating profit by activity[19]
+------------------------------------------------------------------------------
| Change Change
| in in
| Operating operating
| Operating Operating profit Operating margin
| profit profit (excluding Change in margin (excluding
|(in millions Fiscal Fiscal currency Operating Fiscal currency
|of euro) 2016 2015 effect) profit 2016 effect[20])
|
On-site
Services 1,082 992 +7.6% +9.1% 5.6% +30 bps
--------------- ------------------------------------------------------
North America 568 499 +9.3% +13.8% 6.6% +30 bps
--------------- ------------------------------------------------------
Continental
Europe 281 238 +18.4% +18.1% 4.9% +70 bps
--------------- ------------------------------------------------------
United
Kingdom
and Ireland 137 94 +50.4% +45.7% 6.8% +170 bps
--------------- ------------------------------------------------------
Rest of the
World 96 161 -38.6% -40.4% 3.1% -170 bps
--------------- ------------------------------------------------------
Benefits
and Rewards
Services 262 285 +8.8% -8.1% 33.6% +110 bps
--------------- ------------------------------------------------------
Corporate
expenses (136) (128)
--------------- ------------------------------------------------------
Intragroup
eliminations (5) (6)
+------------------------------------------------------------------------------
|OPERATING
|PROFIT BEFORE
|EXCEPTIONAL
|EXPENSES 1,203 1,143 +8.2% +5.2% 5.9% +30 bps
+-------------- ------------------------------------------------------
On-site Services margins continued to grow steadily led by productivity gains,
enhanced operating efficiency and the first contribution from the Adaptation and
Simplification program. The performance by region is as follows:
* In North America operating profit increased by +9.3% excluding the currency
effect and operating margin rose by +30 basis points, reflecting a
significant reduction in SG&A costs and strong contract management.
* In Continental Europe the +18.4% growth in operating profit and +70 basis
points increase in operating margin, excluding currency effect, were
attributable to improved On-site productivity and efficient management of
food purchasing costs as well as the ongoing effect of a more selective
approach to contract bidding.
* In the United Kingdom and Ireland, operating profit rose by +50.4% excluding
the currency effect, compared to a low comparative base in Fiscal 2015
impacted by significant mobilization costs of new contracts. The margin
increased +170 basis points. This strong performance was due to a focus on
overheads and operational profitability as well as the contribution of a
successful Rugby World Cup event.
* The Operating profit declined in the Rest of the World region by -38.6%
excluding currency effects, reflecting the difficult economic environment in
the mining and oil and gas industries and contract exit costs in Latin
America. The effective alignment of operating expenses in the Remote Sites
activity was not enough to offset the sharp decline in volumes. In the
second half, a small underlying improvement in margins in the Remote Sites
business, as volumes stabilized and cost management caught up, was offset by
the mobilization costs of the new Rio Tinto contract as well as an
investment in the Asian technical platform.
In Benefits and Rewards Services, operating profit and margin were adversely
affected by the -18.9% decline in the Brazilian real relative to the euro.
Excluding the negative currency effect, the operating profit rose by +8.8% and
margin by +110 basis points. This strong performance was attributable to tight
control of overheads and continued optimization of processing costs.
Group net profit
The Operating Profit after exceptional expenses of 108 million euros was 1,095
million euros down -4.2%.
Net financing costs increased by 4 million euro. Net borrowing costs fell
substantially by 41 million euro due to a lower average debt during the year and
lower rates, with the average cost of debt down from 3.8% in Fiscal 2015 to
3.2% in Fiscal 2016. However, other financial charges included a 21million euro
exceptional indemnity for the early redemption of 208 million dollars of US
private placement debt, at high interest rates, as part of an ongoing debt
restructuring program, to increase maturities and lower interest rates. This
will be more than offset over future years by the reduction in future interest
expenses.
The effective tax rate increased to 33.7% from an exceptionally low rate in
Fiscal 2015 due in particular to the use of previously unrecognized tax loss
carry-forwards.
The share of profit of other companies consolidated by the equity method was
stable at 7 million euro. Profit attributed to non-controlling interests were
also stable at 24 million euro.
As a result, Group net profit was 637 million euro, down -9%. Group net profit
before non-recurring items (net of taxes) amounted to 721 million euro, an
increase of +3.0% at current rates or +5.2% excluding the currency effect. Non-
recurring items were exceptional expenses of 108 million euro and debt
reimbursement indemnity of 21 million euro, respectively 71 and 13 million-euro
net of tax.
Earnings per share
Earnings per share before non-recurring items amounted to 4.77 euro, up +3.7%,
and after non-recurring items to 4.21 euro, down -8.5%. The small accretion
relative to change in net profit (-9%) is due to the effect of the 300 million
euro share buy-back during the year, net of the lower number of treasury shares
carried resulting in a lower weighted average number of shares.
Proposed dividend
At the annual Shareholder's Meeting to be held on January 24, 2017, the Board of
Directors will recommend paying a dividend of 2.40 euro per share for Fiscal
2016 and increase of +9.1% over the prior year. This proposal reflects Sodexo's
policy of maintaining regular growth in dividend in line with underlying profits
growth. The proposed dividend implies a 57% pay-out ra
Unternehmensinformation / Kurzprofil:
Datum: 17.11.2016 - 07:01 Uhr
Sprache: Deutsch
News-ID 507643
Anzahl Zeichen: 65576
contact information:
Town:
Issy-les-Moulineaux
Kategorie:
Business News
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