UPDATE 1-Sodexo eyes modest growth in 2012/13, cost cuts

Thu Nov 8, 2012 5:39am EST

* Keeps medium-term goals

* To cut 700 jobs from 420,000 staff

* Rugby World Cup, Olympics boost 2011/12 earnings

* Proposes raising dividend by 8.9 pct to 1.59 eur/shr (Adds detail, background, share price)

PARIS, Nov 8 (Reuters) - French catering and vouchers group Sodexo forecast "modest growth" in full-year revenue and profit as Europe suffers, unveiling fresh plans to lower costs and cut jobs to help it meet its mid-term targets.

The world's second-biggest catering services company after Britain's Compass Group is targeting savings of 130-150 million euros from 2014/15 and plans to trim close to 700 posts, it said on Thursday.

That would amount to less than 0.2 percent of its 420,000-strong global workforce.

"The current economic environment is weighing on profitability, particularly in Europe," Sodexo said, adding that it nonetheless saw growing demand for its services from international companies and a solid pipeline in North America.

Sodexo manages canteens and facilities for office workers, the armed forces, schools and prisons, and provides vouchers for meals and gifts. The group is expanding in emerging markets, which now represent a fifth of sales, and estimates the global market for its services at 800 billion euros.

For the year ended on Aug. 31, in which Sodexo benefited from contracts linked to the Rugby World Cup and the Olympic Games, the group posted a 13.6 percent rise in revenue to 18.24 billion euros ($23.27 billion).

Operating profit rose 15.4 percent to 984 million euros, the group said in a statement. This beat Thomson Reuters I/B/E/S average estimates for revenue of 18.034 billion and for profit of 967 million.

Sodexo unveiled fresh plans to cut operating costs by 0.6 percent of revenue and overhead costs by 0.4 percent of revenue. The moves would lead to exceptional costs of 130-150 million euros over the next 18 months.

The group has already reduced expenses by 150 million euros over the past three years.

Chief Executive Michel Landel declined to give specific forecasts for Sodexo's current financial year, pledging to provide more details in April when it publishes first-half results.

Landel stuck to the group's medium-term goals, however, which include an operating margin of 6.3 percent by the end of 2014/15, compared with 5.4 percent for fiscal 2012, and average annual revenue growth of 7 percent.

Shares in Sodexo were 1 percent higher at 60.98 euros by 1022 GMT. The stock is up close to 10 percent this year. ($1 = 0.7840 euros) (Reporting by James Regan and Noelle Menella; Editing by Astrid Wendlandt and Christian Plumb)

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