Shares of Sodexo S.A. (SDXAY.PK) declined around 8 percent in the morning trade in Paris as the French catering and vouchers company trimmed its operating profit forecast for fiscal 2013 after reporting lower profit in its first half, despite revenue growth.
Sodexo CEO Michel Landel said, "In a more difficult economic environment, Sodexo is showing good resilience. Our clients are increasingly interested in our wide range of integrated services. Our leading position in emerging markets is also a driver of future growth. The operational efficiency improvement and cost reduction program, already underway, will be further enlarged. We are confident in the future and are maintaining our objectives for Fiscal 2015."
In its first half, the company's net income declined 20.5 percent to 236 million euros from 297 million euros in the prior year. The latest results included the impact of exceptional expenses generated by the operational efficiency improvement program as well as the effects of new fiscal measures, particularly in France.
Operating profit declined 14.5 percent, while operating profit before exceptional items was stable.
Revenues in the period grew 4.3 percent to 9.463 billion euros from last year's 9.069 billion euros. This included 0.7 percent growth from acquisitions and changes in scope and 1.5 percent from currency impacts.
On an organic basis, revenues increased 2.1 percent, or 2.7 percent excluding the positive impact from the Rugby World Cup, driven by development of facilities management services. Organic growth for On-site Services was 2 percent.
The company noted that revenues facilities management services, which accounted for over one quarter of consolidated revenue, are continuing to grow three times faster than foodservices revenues, providing renewed confirmation of the relevance of the firm's strategic positioning.
Organic growth in Benefits and Rewards Services was 4.3 percent, reflecting continued dynamism in Latin America, and slightly higher performance than in the second half of fiscal 2012.
Looking ahead for fiscal 2013, Sodexo now estimates organic revenue growth between 1 percent and 2 percent and stable operating profit compared with fiscal 2012. While announcing its first-quarter results in January, the company had said that it continues to see modest growth in revenues and operating profit.
The company said its latest outlook is based on first-half performance and current trends in the economic environment.
In addition, Sodexo confirmed its confidence in achieving its objective of a consolidated operating margin of 6.3 percent by the end of fiscal 2015.
The Group also maintained its medium-term objective of 7 percent average annual consolidated revenue growth.
In January, the company said it continues to see modest growth in revenues and operating profit for fiscal 2013, compared to the previous year that benefited from the Rugby World Cup, the Olympics and a 53rd week in North America.
In Paris, Sodexo shares are currently trading at 65.07 euros, down 5.72 euros or 8.08 percent.
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