Sodexo Cuts 2026 Guidance After Review of Contracts and Assets

Sodexo cuts 2026 targets as new CEO gears to tackle longstanding issues

Sodexo Revises Financial Outlook Amid Leadership Changes

April 10 (Reuters) - French food caterer Sodexo slashed its annual sales and profitability targets on Friday, citing execution challenges and its management's review of contracts and assets, which sent its shares falling 16%.

Lowered Revenue and Profitability Targets

The group sees organic revenue growth of between 0.5% and 1% this year, down from the previously expected 1.5% to 2.5%. It expects its underlying operating margin to be clearly lower at between 3.2% and 3.4%, having earlier guided for a slight decline from last year's 4.7%.

Market Reaction and Analyst Commentary

"Shares should react negatively given a bigger-than-expected earnings reset and deteriorating commercial performance in H1," Jefferies analysts said in their first take on the half-year report.

Performance Versus Competitors

Sodexo’s shares have lost around 40% of their value in the past two years, clearly underperforming key food services rivals Compass and Aramark, an issue its new CEO Thierry Delaporte highlighted in his statement.

CEO Thierry Delaporte’s Assessment

"We have consistently underperformed compared to the market and our competitors," Delaporte told journalists. "The causes are deep-rooted and long-standing."

Identified Internal Challenges

Delaporte, who replaced Sophie Bellon in November, said the company had underinvested in key skills and lacked consistency in its performance and forecasts.

He also pointed to issues in commercial intensity, priority management and an overly cumbersome decision-making structure, all of which he aims to tackle.

Financial Results and Analyst Expectations

On a reported basis, Sodexo's revenue fell 3.7% to 12.02 billion euros ($14.05 billion) in the first half of its 2026 financial year, weighed down by the effects of converting U.S. dollars into euros. Analysts polled by Sodexo were expecting slightly higher revenue of 12.08 billion euros.

Organic Growth and Pricing Strategy

Organic growth, which excludes currency exchange effects and contributions from bought and sold assets, met analyst expectations at 1.7%, supported by higher pricing.

Sodexo said in October that pricing would be the main driver of organic growth in 2026, after it saw a 10.5% drop in revenue from new contract signings in the previous fiscal year.

Exchange Rate Information

($1 = 0.8552 euros)

Reporting Credits

(Reporting by Dimitri Rhodes in Gdansk, editing by Milla Nissi-Prussak)