July 8, 2015 / 5:45 AM / 4 years ago

UPDATE 2-Sodexo cuts sales goal on tougher Latam, Europe

* 9-month sales 15.14 bln euros, up 2.2 pct

* Sees FY sales growth of 2.5 pct vs old goal 3 pct

* Keeps FY operating profit growth goal of 10 pct, mid-term goals (Adds CEO comments, forecasts from call, shares, analysts)

By Dominique Vidalon

PARIS, July 8 (Reuters) - French catering group Sodexo cut its annual sales goal on Wednesday, blaming tougher economic conditions in Brazil, Chile and Europe but maintained its profit growth target.

The world’s second-biggest catering services company after Britain’s Compass Group, Sodexo also said it was confident it could deliver on its mid-term goals after reporting like-for-like sales growth of 2.2 percent to 15.14 billion euros ($16.7 billion) in the nine months to May 31.

The performance, which lagged market expectations of 2.5 percent growth, matched growth in the first half.

It reflected strong demand for facilities management services in North America and Britain, but tougher economic conditions in Brazil and Chile. It was also influenced by a decline in catering services sales in France, Italy, the Netherlands and Finland where clients continued to cut costs.

Chief Executive Michel Landel told analysts he did not expect the situation to improve this year in Brazil where the economic slowdown was forcing clients to delay investments and where Sodexo was now working on cutting its own costs.

Prospects were no better in Chile where Sodexo had lost several contracts as clients were diversifying suppliers due to regulatory changes in local taxes and social benefits.

Sodexo manages canteens and facilities for office workers, armed forces, schools, hospitals and prisons and also sells vouchers for meals and gifts. Its clients range from the Royal Ascot Racecourse in England to the U.S. Marine Corps.

Sodexo said it now expected a rise of around 2.5 percent in comparable full-year sales, having previously forecast growth of around 3 percent. Its fiscal year ends on Aug. 31.

It still expects a rise of around 10 percent in operating profit this year, at constant exchange rates and excluding exceptional items.

By 0940 GMT, Sodexo shares were off 1.1 percent, recovering from opening losses of nearly 4 percent.

Raymond James analysts said they were cutting their estimates for the 2014-15 financial year and cutting their price target to 83 euros from 90 euros.

Over the medium-term — the next 3 to 5 years — Sodexo has forecast average annual revenue growth excluding currency effects of between 4 percent and 7 percent and growth in operating profit excluding currency effects of between 8 percent and 10 percent. Landel said he was confident Sodexo could deliver on these targets. ($1 = 0.9083 euros) (Reporting by Dominique Vidalon; Editing by Leila Abboud and Keith Weir)

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