Consumer services

Caterer Sodexo to revamp its main unit to boost sales

The logo of French catering services and facilities management group Sodexo is seen at the company’s headquarters in Issy-les-Moulineaux near Paris, France, November 30, 2018. REUTERS/Gonzalo Fuentes

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July 1 (Reuters) – French catering and catering group Sodexo (EXHO.PA) announced on Friday a reorganization of its main on-site services business to improve efficiency and said it expects revenue and margin return to pre-pandemic levels in 2023 .

Reporting better-than-expected third-quarter revenue, helped by price increases and post-Omicron volume recovery, the group said business had returned to 97% of pre-COVID levels, as events and venues retail stores were restarting and more people were returning to offices.

“In 2023, we’ll be back to pre-pandemic revenue and margin,” CEO Sophie Bellon said on a call with reporters.

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Sodexo shares rose more than 4% before equalizing gains, with analysts at Bernstein describing the reorganization as the “biggest news”.

“The reorganization of the activity, suggested for a long time, towards geographical segments (North America, Europe, Rest of the world) corresponds [rival] Compass and should simplify business,” they said in a note.

They added that they see this quarter as the start of management regaining investor confidence and accelerating growth.

After being hit by COVID-19 shutdowns, caterers are now renegotiating rates and agreements with suppliers as the sector grapples with soaring energy and food prices triggered by the coronavirus invasion. Ukraine by Russia, two major wheat exporters.

Chief Financial Officer Marc Rolland said Sodexo’s third-quarter rates rose more than 5% year-on-year as it managed to pass on more inflation to its clients. He added that the group expects a tariff increase of 4 to 5% by the end of the year.

“We can’t avoid passing inflation on to customers, it’s part of our expertise,” Bellon said.

Sodexo, which in May abandoned the option of opening the capital of its checks business to an outside investor, indicated that it would present its strategy for the division and the on-site services unit as well as its medium-term objectives. November 2 on its Capital Markets Day.

As of 0848 GMT, its shares were up 2.8%, after rising 4.2% earlier, while rival Elior (ELIOR.PA) was up 5.3%.

Group revenue rose 18.3% to 5.52 billion euros ($5.77 billion) in the quarter ended May 31, from an average estimate of 5.33 billion. euros from analysts polled by the company, and confirmed the full-year outlook it had lowered in April. Read more

($1 = 0.9573 euros)

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Reporting by Federica Mileo and Diana Mandiá; Editing by Milla Nissi and Emelia Sithole-Matarise

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