Authorization

Robust Sodexo First Half Fiscal 2020 Results

Organic growth at +3.2%



Q2 organic growth better than expected



Flat Underlying operating profit margin,
in line with expectations



Mild H1 COVID-19 impact absorbed



COVID-19 volume decline will significantly impact H2 results

Issy-les-Moulineaux, April 9, 2020 - Sodexo (NYSE Euronext Paris FR 0000121220-OTC: SDXAY). At the Board of Directors meeting held on April 8, 2020 andA chaired by Sophie Bellon, the Board closed the Consolidated accounts for the First Half Fiscal 2020 ended FebruaryA 29, 2020.Financial performance for First Half Fiscal 2020,
(First time application of IFRS161)

(in millions of euro)



H1 FISCAL 2020



H1 FISCAL 2019



DIFFERENCE



DIFFERENCE CONSTANT RATES



REVENUE



11,692



11,045



+5.9%



+4.3%



Organic growth



+3.2%



+3.1%











UNDERLYING OPERATING PROFIT



685



647



+5.9%



+4.3%



UNDERLYING OPERATING PROFIT MARGIN



5.9%



5.9%



+ 0 bps



+ 0 bps



Other operating expenses (net)



(66)



(69)











OPERATING PROFIT



619



578



+7.2%



+5.5%



Net financial expense



(67)



(54)











Effective tax rate



29.3%



28.8%











GROUP NET PROFIT



378



364



+3.8%



+1.8%



EPS (in euro)



2.59



2.50



+3.7%







UNDERLYING NET PROFIT



424



413



+2.8%



+1.0%



UNDERLYING EPS (in euro)



2.91



2.84



+2.6%








Sodexo CEO Denis Machuel said:



a??The First Half was better than we expected, with many positive signs in most segments that the underlying dynamics were improving.

With the rapid spread of COVID-19 around the world, our focus is on protecting the health and safety of our people, consumers and clients and ensuring business continuity.

We have seen a significant number of sites fully or partially closed in Education, Corporate Services and Sports & Leisure, and the Olympics Games have been pushed back a year. We immediately identified all means to reduce our costs, reduce our capex and ensure that we collect and protect our cash to reduce the impact of this revenue shortfall. We are using all proposed government measures to protect employment. We know that this situation will have a significant impact on our results for the year.

I am extremely proud of our teamsa?? exemplary efforts and engagement and am convinced that the improved momentum in this first half will help us emerge stronger than we were before.a??

Highlights of the period

First Half Fiscal 2020 Group revenue was 11,692 million euro, up +5.9%, helped by a positive currency and M&A contribution, resulting in Group organic revenue growth at +3.2%.



On-site Services organic revenue growth was also +3.2% reflecting:

A very successful Rugby World Cup in the first quarter, contributing 80 bps to the growth,



Modest underlying organic growth excluding the Rugby World Cup in Q1 and Q2 (at +2.3% and +2.5% respectively) due to the end of several healthcare contracts in North America from the fourth quarter last fiscal year and a large contract exited from the middle of the first quarter this year.



Key Performance Indicators are encouraging:

Client retention is stable;



New sales development declined by -10 bps;



Same site sales growth is strong at +70 bps.







Benefits & Rewards Services organic revenue growth was +4.0%. Organic growth in Europe remains sustained at +9.5% but Latin America has been impacted by weakness in Brazil, against a strong previous year performance and a very competitive environment.



Underlying operating profit increased +5.9% resulting in an Underlying operating margin of 5.9%, stable against last year both at current and constant exchange rate:

On-site Services Underlying operating margin, excluding currency effect, was down -10 bps resulting from increased medical costs in the USA, representing 14 bps. Excluding this, the margin would have been up slightly, with improvement in Business & Administrations and Healthcare compensating the deterioration in Education.



Benefits & Rewards Services achieved a strong increase in margin of +160 bps, at constant rates, due to a much more efficient operating environment after substantial digital transformation of the back-offices over the last few years and very tight control of costs in Brazil, in line with the weak top line.






Other operating expenses (net) amounted to 66 million euro, more or less stable compared to the First Half of the previous fiscal year.



Reported net profit of 378A millionA euro was up +3.8%. Basic EPS was a?¬2.59, up +3.7%. Underlying Net profit totaled 424 millionA euro, up +2.8%.



Free cash flow this semester was an outflow of 243 million euro, principally as a result of an increase in capital expenditure to 268 million euro, or 2.3% of revenue, payable adjustments in the UK following implementation of the prompt payment code, a cut-off issue in Benefits & Rewards and an outflow linked to the Rugby World Cup. Consequently, the net debt ratio2 at the end of the period was 1.3x against 1.2x at the end of the First Half last year.



Sodexoa??s commitment in corporate responsibility continues to be recognized within the financial community, with the highest marks in SAMa??s a??Sustainability Yearbooka?? for the13thA consecutive year, as well as gold class recognition by EcoVadis. Sodexo also remains the top-rated company in its sector within the Dow Jones Sustainability Index (DJSI), for the 15thA consecutive year and was included in the 2020 Bloomberg Gender-Equality Index, recognizing commitment to advancing women in the workplace. Sodexo also joined The ValuableA 500 initiative to place disability on the business agenda, reinforcing its commitments to disability inclusion.

Outlook
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