Sodexo raises full-year organic revenue growth forecast on strong quarter
Strong Third-Quarter Performance Drives Upgraded Forecast
July 2 (Reuters) - French food caterer Sodexo raised its full-year organic revenue growth forecast on Thursday, citing stronger-than-expected third-quarter performance.
Shares in Sodexo rose more than 8% in early Paris trading.
Upgraded Revenue Projections
The company now expects organic revenue growth of 1.2% to 1.5%, up from its previous projection of 0.5% to 1%.
Sodexo's revenue rose 2% to 6.17 billion euros ($7.03 billion) in the third quarter, surpassing the 6.04 billion euros expected in a company-compiled consensus.
Analyst and Management Perspectives
Jefferies analysts called the outlook conservative considering the strong third-quarter performance.
"We see some uncertainty in the macroeconomics, in the geopolitical environment and we believe that it's appropriate to remain prudent for the remaining part of the year," finance chief Sébastien de Tramasure said in a call.
Previous Forecast and Risk Mitigation
The company had lowered its sales forecast in April from expected organic revenue growth of 1.5%-2.5% at the start of the fiscal year.
"We were able to mitigate a number of risks by capturing opportunities across the portfolio, particularly at Sodexo Live! North America," CEO Thierry Delaporte said in a statement.
Division Performance and Strategic Initiatives
Its division specialising in sport, leisure, hospitality and events benefited from high activity levels across stadiums, conference centres and airport lounges, supported by high attendance.
"Beyond attendance, we also saw higher spend per guest, reflecting the success of our offerings, innovative concepts, and brand partnerships across the portfolio," de Tramasure said.
Impact of Currency and Acquisitions
That helped mitigate the impact of prior contract losses in its education business and a 2.5% negative currency impact, primarily driven by the depreciation of the U.S. dollar.
De Tramasure added that targeted bolt-on acquisitions in food should help the company gain more scale, back-office synergies and supply chain leverage.
Additional Information
($1 = 0.8783 euros)
(Reporting by Lucie Barbier and Mathias de Rozario; Editing by Sonia Cheema, Rashmi Aich and Matt Scuffham)
