Sodexo (SW) Q1 2025 TU earnings summary

Executive summary

• Q1 FY25 revenue reached €6.4 billion, up 1.9% year-over-year, with organic growth of 4.6% (4.9% adjusted for major sporting events); food services organic growth was 5.7%.

• Strong commercial momentum with over €500 million in new signings and major contract wins, including Rio Tinto in Australia and exclusive Rugby World Cup hospitality.

• Pricing contributed about 3% to organic growth, with the remainder from net new business and volume increases.

• Negative currency impact of -2% due to depreciation of the Brazilian real and U.S. dollar; scope impact of -0.8% from home care business disposal.

• Major contract wins and renewals supported expectations for accelerated growth in the second half of the year.

Financial highlights

• North America revenue: €3.1 billion, up 5.9% organically; Europe: €2.2 billion, up 2% organically; Rest of World: €1.1 billion, up 6.4% organically.

• Food service organic growth was 5.7%; facility management 2.4% (3.5% excluding last year's Rugby World Cup ticketing).

• North America organic growth driven by Sodexo Live! (+24.8%), Business & Administrations (+9.0%), and Healthcare & Seniors (+4.3%), while Education declined.

• Europe organic growth was 2.0% (2.7% excluding sporting events), with Healthcare & Seniors up 7.4% and Education up 3.0%.

• Rest of the World organic growth was 6.4%, led by India, Brazil, and Australia; Education segment grew 10.8%.

Outlook and guidance

• Full-year guidance maintained: organic revenue growth of 5.5%-6.5% and underlying operating profit margin improvement of 30-40 basis points at constant rates.

• Q2 organic growth expected to be similar to Q1, with North America temporarily slowing and Europe improving.

• Organic growth projected to accelerate in H2, driven by ramp-up of new business.

• Underlying trend projected at 6% to 7% excluding Olympics, Rugby World Cup, and leap year effects.

• Net new contribution confirmed at 2% for FY25, with a strong step-up in H2.