UPDATE 3-Sodexo sees flat 2010, shares slide

* Sodexo confident of medium-term objectives, keeps div.

* 2010 outlook disappointing - analysts

* Shares fall 5.9 percent (adds details, analyst comments)

By Lionel Laurent

PARIS, Nov 10 (Reuters) - France's Sodexo (EXHO.PA) warned of flat sales in fiscal 2010 in the face of rising unemployment and cautious spending by clients, sending its shares down some six percent.

The world's second-biggest catering services company after Compass Group (CPG.L) nonetheless said on Tuesday it was on track to meet medium-term objectives after reporting fiscal 2009 results in line with its guidance.

Shares of Sodexo were down 5.88 percent, at 38.77 euros, at 0917 GMT. Analysts said the outlook was disappointing, despite its commitment to maintain the dividend at 1.27 euros per share.

"The flat organic growth (in 2010) is three to five percent below expectations," said Matthias Desmarais, an analyst with Exane BNP Paribas.

Sodexo Chief Executive Michel Landel said on a conference call the catering services and vouchers company was not yet out of the downturn, and added sales would slow in the first half of fiscal 2010 before recovering in the second half.

Sodexo reported 2009 annual sales of 14.7 billion euros ($22.01 billion), up 2.5 percent year-on-year on an like-for-like basis, and operating profit of 746 million euros, up 8.1 percent. Sodexo's own guidance was for like-for-like sales growth of 2 to 5 percent and operating profit between 730 and 760 million euros. Net profit came in at 393 million euros, up 4.5 percent.

CRISIS IMPACT

In a statement, Sodexo's Landel said he was "fully confident" of the company's ability to reach medium-term targets of annual average sales growth of 7 percent and an operating margin of 6 percent.

But he said that revenues in 2010 at constant exchange rates would likely stay at 2009 levels as a result of economic pressures. Sodexo sees the 2010 operating profit at between 750 and 770 million euros.

Sodexo said clients in the United States and Europe, which account for the bulk of catering revenues, had curbed discretionary spending and reduced staffing levels as a result of the downturn.

"The crisis has slowed our new business development and weighed on comparable unit growth on existing sites," said Landel.

An analyst who did not wish to be named said Sodexo was known as a prudent company when giving forecasts, but said it was also facing challenges because of rising unemployment.

Sodexo's Landel said the company aimed to save 60 million euros in costs for 2010, after achieving 50 million in 2009.

The company generated net cash of 577 million euros and Landel said the company was not planning to buy back shares.

He added acquisitions were not a priority, though the company would be "vigilant."

Sodexo made several acquisitions in 2009 including Radhakrishna Hospitality Services Group in India and Comfort Keepers in the United States, which provides in-home services for seniors and persons in need of support.

Sodexo has two business segments, food services and vouchers. The company said food services had seen stable organic growth in Europe in 2009 while markets outside North America and Europe enjoyed double-digit growth.

The voucher business, which accounts for one third of operating profit, saw organic growth of 14 percent.

Sodexo's fiscal year ended on Aug. 31.

Bigger rival Compass Group will report results for the fiscal year ending Sept. 30 2009 on Nov. 25. The British company expects like-for-like sales, together with net new business, to be flat over the year. (Additional reporting by Noelle Mennella; Editing by Marcel Michelson and Hans Peters) ($1=.6678 Euro)