Sodexo warned on Tuesday that its fourth-quarter and half-year sales will fall more sharply than previously expected as the coronavirus pandemic remains strong in North America, Latin America and India. The French firm, which provides catering for businesses, industrial sites, the military, government agencies, hospitals, schools and sports events, said it expects sales for the fourth quarter ending on Aug. 31 to fall 27%.
It forecast a 28% slump of around 3 billion euros ($3.4 billion) in the second half of its fiscal year. The Paris-based firm in April had forecast a 15% slump in the fourth quarter and a 25% fall for the second half. Sodexo's third-quarter sales fell a better-than-expected 29.9% to 3.9 billion euros versus an anticipated 33% fall, with its education and sports and leisure businesses the hardest hit.
With clients ranging from England's Royal Ascot Racecourse to the U.S. Marine Corps, Sodexo said that sports and leisure sites had been forced to close while corporate services were hit by lockdowns and work-from-home policies. In its education segment, down 53.9%, Sodexo said that with most schools and universities closing from mid-March, sales were limited to meals provided by local authorities to families in need.
"I hope we have touched the bottom, but there is still a lot of uncertainty," CEO Denis Machuel said on a call, adding that the group would be better placed to make predictions when it publishes its next earnings in October, after schools and offices reopen. "Facilities management has held up well, notably the cleaning and disinfection services, which saw good growth, and will continue to in the coming weeks and months," Machuel said. The division also provides security, maintenance and reception services.
Sodexo also mitigated the loss of hospital retail sales from the lack of visitors by selling groceries to medical staff, he added. At the end of May, Sodexo had nearly 5 billion euros in liquidity. By 0711 GMT Sodexo shares were down 1.14% at 63.7 euros.
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