Sodexo reports 3.1% revenue growth in H1 FY25, reaching USUS$13.5B

GLOBAL – Leading food service company Sodexo has reported a 3.1% rise in revenue for the first half of fiscal 2025, bringing in €12.5bn (US$13.5bn), compared to €12.1bn (US$13bn) during the same period the previous year.

Sodexo’s first half (H1) of fiscal year 2025, ended on February 29, 2025.

The company experienced a 6.4% increase in underlying operating profit, reaching €651 million (US$711 million) from €612 million (US$668 million) in H1 FY2024.

This improvement raised the underlying operating profit margin slightly to 5.2%, up from 5.1% in the previous year.

Despite these gains, Sodexo’s operating profit declined by 9.7%, falling to €580 million (US$633 million) from €642 million (US$700 million) in H1 FY2024.

Net profit from continuing operations also decreased by 12.5%, dropping to €434 million (US$474 million) from €496 million (US$541 million) in the same period last year.

However, underlying net profit from continuing operations grew by 5.4%, reaching €450 million (US$492 million) compared to €427 million (US$467 million) previously.

In response to these mixed results, Sodexo has revised its full-year revenue growth forecast to between 3% and 4%, down from the initial estimate of 5.5% to 6.5%.

The anticipated improvement in the underlying operating margin has also been adjusted to an increase of 10 to 20 basis points, reduced from the previously expected 30 to 40 basis points.

The downward revision in organic revenue growth is primarily attributed to weaker-than-expected volume trends in the education sector during H1, which are projected to persist.

Additionally, in North America, delays in the commencement of certain healthcare contracts and softer-than-expected commercial performance in H1 have influenced expectations for net new contributions in the second half of the fiscal year.

Sophie Bellon, Sodexo’s Chairwoman and CEO, acknowledged these challenges, noting that while industry fundamentals remain strong, the continued soft trend in education volumes and slower-than-expected net new ramp-up in healthcare in North America have impacted the company’s ability to meet initial expectations.

She emphasized Sodexo’s commitment to strengthening execution in key areas and continuing investments in future growth opportunities.

Analysts have reassessed their positions on Sodexo, with Morgan Stanley downgrading the company’s rating and lowering its price target to €68 (US$74) from €89 (US$97), citing weaker-than-expected growth and contract losses.

Despite these challenges, Sodexo remains focused on addressing sector-specific hurdles and executing its strategic plans for long-term growth.

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