Sodexo cuts annual forecasts on slower growth in North America

By Dimitri Rhodes

(Reuters) – French food caterer Sodexo lowered its yearly outlook on Thursday, bringing it below analysts’ estimates, saying organic revenue growth in North America was slower than it had initially expected.

“We are facing more challenges in Education, with volumes remaining low, and in Healthcare with postponements in the opening of new contracts,” CEO and Chairwoman Sophie Bellon said about the North American market during a wire call.

The group sees organic revenue growth of between 3% and 4% in the fiscal 2024/25, compared with a previously guided range of 5.5% to 6.5%. Analysts polled by LSEG had forecast 5.45% growth on average.

It also expects its underlying operating margin to rise by 10 to 20 basis points, down from the previously expected rise of 30 to 40 bps.

“Today’s warning will drag the overall catering space down today,” J.P.Morgan analysts said in a note to clients.

“However, we see today’s warning as more company specific, with the weaknesses seen in Education in North America more specific to Sodexo’s own exposure,” they added.

Late last year, the group completed the acquisition of CRH Catering to strengthen its position in the fast-growing U.S. convenience segment.

Sodexo, which spun off its voucher business Pluxee in 2024, reported a net profit of 434 million euros ($472.63 million) for the first half of the financial year ending on Aug. 31.

($1 = 0.9183 euros)

(Reporting by Dimitri Rhodes in Gdansk; editing by Milla Nissi)