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Sodexo's Q1 FY25: A Soft Start, But Strong Commercial Momentum

AInvestTuesday, Jan 7, 2025 1:12 am ET
1min read



Sodexo, the world leader in food and facilities management services, kicked off its fiscal year 2025 with a soft start, as expected. The company reported organic revenue growth of +4.6% in the first quarter, with Food services leading the way at +5.7%. While the overall growth was slightly lower than the +7.9% achieved in the previous fiscal year, Sodexo's strong commercial momentum and net new business contributions suggest a promising outlook for the remainder of the year.

Sodexo's Chairwoman and CEO, Sophie Bellon, emphasized the company's solid performance in Food services, which offset softer activity in FM services. The strong commercial momentum at the start of the year, marked by major contract wins and renewals, bodes well for Sodexo's growth trajectory. Bellon also reiterated the company's commitment to delivering on its fiscal 2025 guidance, aligning with expectations of modest growth in the first half and an acceleration in the second half, driven by the timing of net new business contributions.

The company's organic growth was fueled by pricing, which trended around 3% for the quarter, as well as net new business contribution and some volume growth. Food services' solid performance was driven by specific segments such as Sodexo Live! and Corporate services, which contributed significantly to the overall growth. In North America, Sodexo Live! fueled by new business, strong activity in airline lounges, convention centers, and stadiums, and Corporate services supported by higher attendance and new site openings, all played a crucial role in the company's success.

However, FM services growth was impacted by reduced activity at existing sites and lower volumes in project works, particularly in Europe. This underperformance, compared to the Food services segment, highlights the need for Sodexo to address these challenges and improve its regional performance, particularly in Continental Europe.

Sodexo's commitment to sustainability, as demonstrated by its various initiatives such as the Sustainable Food Barometer and the Sustainable Chef Challenge, continues to drive growth and positive impact on stakeholders. The company's ability to adapt to changing market conditions and maintain a strong focus on its strategic objectives, despite the soft start to the year, positions it well for future success.

In conclusion, Sodexo's Q1 FY25 revenues marked a soft start to the year, as expected, but the company's strong commercial momentum and net new business contributions suggest a promising outlook for the remainder of the year. With a focus on improving regional performance and maintaining its commitment to sustainability, Sodexo is well-positioned to deliver on its fiscal 2025 guidance and continue its growth trajectory.

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