Half Year 2025 Sodexo SA Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ivar Billfalk-Kelly - UBS AG - Analyst : I think the first thing on everyone's mind is, of course, the potential impact that you might see from American tariffs now that we have more visibility on the absolute magnitude that we have. Could you please walk us through your expectations, both in terms of first order effects that you could expect? And maybe even second order effects. And there, I mean, for example, could there be impact on the Australian contract, you just won given the depending on some of the Australian economy on the Chinese market, which could suffer in the future? And secondly, looking at your CapEx plans. I mean, you mentioned CapEx to sales of 2.1%, but you still expect it to be 2.5% for the full year. What is it that's actually going to lead to that acceleration? Because that is a pretty big step up compared to where you've been historically.

Question: Ivar Billfalk-Kelly - UBS AG - Analyst : Well, I suppose, I mean, for first order, I mean direct impact within a given country, but the second order, as I mentioned, Australia, they're dependent on the Chinese economy, which could suffer. You just won a big contract there in the offshore and remote services. Could that actually see lower volumes than you previously expected?

Question: Simon LeChipre - Jefferies International Ltd - Analyst : My first question is on the phasing and on your expectation of 3Q organic similar to 2Q. I mean, I think you had an 80 bps impact in Q2. So why Q3

Question: Simon LeChipre - Jefferies International Ltd - Analyst : Okay. Just on retention rate, I'm getting a little bit confused because on slide 9, you mentioned 2025 retention rate above 94% excluding the loss of the global accounts and you just said like it would be 94% including the loss of this account. So could you give us...

Question: Simon LeChipre - Jefferies International Ltd - Analyst : Okay. So slide 9 is wrong?

Question: Simon LeChipre - Jefferies International Ltd - Analyst : So basically, underlying retention rate, all in all, will be 94%?

Question: Leo Carrington - Citigroup Global Markets Ltd - Analyst : Could I firstly ask on the renewals? You mentioned the 80% of contracts being up for renewal this year and last, what's the average contract duration here? Do you -- is there a risk that we face this profile in the (technical difficulty) there efforts that you can deploy to try and work on extensions to try and smooth this renewal cycle in future? And then secondly, in terms of education, just taking into all of the factors mentioned earlier on this call, to what extent are the Q2 issues a forecasting issue or more of a performance issue versus expectations in terms of volumes and net new?

Question: Andre Juillard - Deutsche Bank AG - Analyst : First one is about the US. Regarding the actual environment and the fact that Donald Trump is pushing for America first. Don't you have any fear about having a preference for US player rather than you in the new renegotiation contract? First question. Second question about retention. If we look at a more midterm view, what is your target to come back rapidly on above 95% or do you still consider that 94% to 95% is a normal rate? And last question, very short, about tax rate, I just wanted to revalidate what you've been saying for '25 and for the midterm target you are expecting for the tax rate on a yearly basis.

Question: Jaafar Mestari - Exane BNP Paribas - Analyst : First question on retention, please. Your target to reach an underlying 94.5%. I'm just curious why you're so ambitious in the context of everything else you've said, which includes you have a particularly busy renewal season in education at the end of the year. Since you last spoke, I think some of the bridges you mentioned now includes weaker-than-expected retention in corporate. So I appreciate it's the right medium-term target. But in the short-term, what's something that allows you to have that confidence given a particularly difficult remainder of the year? Secondly, just on US health care. And obviously, when you describe the delay in opening one major new contract, of course, it sounds very, very specific to that client and to you and it doesn't sound like an industry issue. But I guess, could we just maybe take a step back and how much more can you tell us about the underlying reasons there? Is the client just not ready in terms of IT, in terms of invoicing? Or is there more going on? Is your client restructuring, closing down sites, reviewing warrants at certain of these hospitals, et cetera? And then lastly, I assume you have received a letter from the US Embassy last Friday like many French companies operating in the US. I think you had five days to reply. So do you expect to be stating that the Sodexo Group does not operate any diversity and inclusion policies anywhere in the world? Or are you effectively prepared to have your principles in balance with your business with US federal agencies and with the US military?

Question: Jaafar Mestari - Exane BNP Paribas - Analyst : And I'm sorry, something I heard here, did you say the initial agreement was all the members would contribute at least EUR100 million of revenue? I didn't quite catch if that was in the in the first year, in the first years as plural?

Question: Jaafar Mestari - Exane BNP Paribas - Analyst : My question was, I think that definition on two different very clear. My question was you have some particularly busy renewals in education, I think you said. And then you also had some more recent pressures on specifically retention in corporate. So I'm just curious how H2 can be expected to