UPDATE 1-Sodexo cautious on Q4 as Europe weak
* Nine-month sales 14.219 bln eur, up 2.3 pct like-for-like
* Full-year sales growth probably at low end of 1-2 pct range
* Strong Q3 in Latin America in rewards and benefits business (Adds details, CEO comments, shares)
By Dominique Vidalon
PARIS, July 10 (Reuters) - Catering-to-vouchers group Sodexo cautioned that full-year revenue growth would likely be at the low end of its 1-2 percent target range as the economic climate remained difficult in Europe and poor weather hit its French leisure business.
The world's No.2 catering services company after Britain's Compass Group said growth slightly accelerated in the third quarter, however, driven by solid demand in Latin America, and it kept its forecast for flat operating profit for the year.
"Organic sales growth will probably be at the low end of the range, given the time it takes to ramp up some contracts in Europe and a weak leisure business," Chief Executive Michel Landel said on a conference call on Wednesday.
The company, which manages canteens and facilities for office workers, the armed forces, schools, hospitals and prisons, also sells vouchers for meals and gifts. Its clients range from the Royal Ascot Racecourse to the U.S. Marine Corps.
Sodexo, whose Bateaux Parisiens and Yachts de Paris units offer cruises on the River Seine in the French capital, was hit by poor weather in June. And the fourth quarter will suffer from an unfavourable comparison with a year-ago period that included the London Olympics.
Sodexo said sales reached 14.22 billion euros ($18.18 billion) in the nine months to May 31, a like-for-like rise of 2.3 percent and faster than the 2.1 percent in the first half.
Its shares were up 1.3 percent at 0918 GMT, outperforming a 0.3 percent drop on the French SBF 120 index. The stock has gained 5 percent this year, giving the group a market value of 10.6 billion euros.
Oddo analyst Guillaume Rascoussier pointed to an acceleration in demand at the vouchers division in Latin America, whose sales grew 20 percent in the third quarter.
He said the trend should benefit rival Edenred, which posts quarterly sales on July 24 and makes some 40 percent of operating profit in Brazil against 14 percent for Sodexo.
Nine-month sales at Sodexo's on-site services solutions unit rose 1.4 percent in North America, and 7 percent in Asia and Latin America, but only 0.8 percent in continental Europe.
As it faces tougher times in Europe, Sodexo has been focusing more on services outside its core catering business and betting on emerging markets to drive growth.
Sodexo unveiled a plan in November to lower costs and cut jobs to help meet its goals of a 6.3 percent operating margin by the end of 2014/15, up from 5.4 percent in 2011/12, and average annual revenue growth of 7 percent.
Sodexo said on Tuesday the plan would notably entail 217 voluntary departures in France out of a domestic workforce of 38,000. It employs 420,000 people worldwide.
Sodexo trades at 18.47 times estimated earnings against 17.43 times for Compass, a premium some analysts tie to hopes the cost-cutting plan will lead to higher operating leverage. ($1 = 0.7821 euros) (Additional reporting by Noelle Mennella; Editing by Miral Fahmy and James Regan)
- U.S. nurse defies Maine's Ebola quarantine, takes bike ride |
- Clashes erupt as Israeli police kill Palestinian suspected of shooting Jewish far-rightist
- SoftBank's humanoid robot lands job as Nescafe salesman
- Ukraine gas supplies in doubt as Russia seeks EU payment deal
- Dollar surges as Fed ends QE on hawkish note