Q1 2025 Sodexo SA Corporate Sales Call Transcript

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

Question: Julien Richer - Kepler Cheuvreux - Analyst : Yes, good morning, everyone. Best wishes. I have three questions, if I may. The first one, if you can give us a little bit more details on the net new business and volume performance in Q1 and how you see those two items evolving for the rest of the year? And if there is any change compared to what you mentioned during your full year call? The second point is on the Facilities Management performance in Europe. Is it possible to have just the performance of Facilities Management in Europe and not at the group level, but just in that region? And last one, more generally speaking, on Europe, your view or more detail or granularity on the environment in Europe, the underlying situation because you are talking about tourist activity in France that is weak, site closure on the B&I activity. On an underlying basis, how do you see that evolving going forward? Thank you.

Question: Julien Richer - Kepler Cheuvreux - Analyst : And more overall globally speaking -- yeah, please, sorry.

Question: Julien Richer - Kepler Cheuvreux - Analyst : Okay. Thank you.

Question: Jamie Rollo - Morgan Stanley - Analyst : Thanks. Good morning. Happy New Year, everyone. Just sort of following up for most questions, if I may. First of all, I think if volumes are up around 2%, that implies pretty nill net new business contribution in Q1, and you're saying that should be similar in Q2. So are you still expecting 2% for the year, which would imply a step up to 4% in the second half? Secondly, I know you didn't give retention figures with the quarterly results, but it sounds like things are going pretty well in terms of renewals in Q1. So presumably, you're not expecting any sort of lumpy further contract losses for the remainder of this year? And then thirdly just back to Europe, there's quite a lot to unpack in the numbers there. B&I does quite weak up 1%, but you're saying Food services is still solid. Perhaps you could just please quantify some of the project work losses that you mentioned and site closures too. Thank you.

Question: Jamie Rollo - Morgan Stanley - Analyst : That's really helpful. Thank you very much.

Question: Vicki Stern - Barclays - Analyst : Yeah, morning. Happy New Year. Just following up on the last point, any reason to sort of think that the project work activity, was there a particularly tough comp there in Q1? Would you be assuming within your guidance that this slightly softer project activity would continue into future quarters? Or is there any reason to think there was something a bit specific about Q1? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 07, 2025 / 8:00AM, EXHO.PA - Q1 2025 Sodexo SA Corporate Sales Call And on the margin growth, any risk to the targets there if there's been a slightly softer volume backdrop? I guess there could be decently material drop through on lost volumes. So just anything to think about there that could be meaningful. And related to that, how should we be thinking about the phasing of that margin growth, H1 versus H2? Just lastly, just to follow back, I didn't hear. Did you actually -- did you confirm the net new for the full year at 2%? I got the reacceleration in the second half, but I wasn't clear if you'd confirm 2% is still a good number for the full year.

Question: Vicki Stern - Barclays - Analyst : Great, thanks very much.

Question: Simon Lechipre - Jefferies - Analyst : Yes, good morning. Three questions, please. First of all, coming back on Q2 organic growth, so you were seeing Q2 should be similar to Q1, but you were also seeing net new wins should be similar in Q2 with Q1. So -- I mean how do you expect to offset the leap year comps, which I think is 80 bps negative impact? And also, I think you have two additional contracts, which are going to be demobilized from Jan. So yeah, curious around the building blocks of Q2 at around 4.5. Secondly, if you could please give us some details on the savings you expect this year and next year on the GBS initiative? And lastly, you touched on the competitive development in LatAm, but I would be curious to get your thoughts on the competitive environment in Europe. I mean we have seen Compass accelerating quite a bit in the region, doing some acquisitions, notably in France. So did you notice any change in the competitive landscape here? Thank you.

Question: Simon Lechipre - Jefferies - Analyst : Okay. And just to follow up on my question around Q2, I mean you said net new in Q2 similar to Q1. So basically, my question is how are you going to offset the leap-year comps, which is another basically 80 bps between quarter to quarter?

Question: Simon Lechipre - Jefferies - Analyst : So net new would be better in Q2 than Q1?

Question: Simon Lechipre - Jefferies - Analyst : Okay. Thank you.

Question: Simona Sarli - BofA Global Research - Analyst : Yes. Good morning and Happy New Year, and thanks for taking my question. So I have just a couple of them left. So first of all, it's on pricing. So considering it has already normalized to 3%, which is in line with your guidance for the full fiscal year, how comfortable you are that you can sustain that for the rest of the year? And also if this 3% is potentially also inflated by the contribution of a high inflation countries. So that's the first question. And then second question, again, going back to your guidance for Q2. If you can elaborate a little bit more on the like-for-like volume growth that is expected in Q2 versus Q1, so if that will be substantially better and potentially also explaining the bridge to get to overall in organic growth similar to Q1. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 07, 2025 / 8:00AM, EXHO.PA - Q1 2025 Sodexo SA Corporate Sales Call

Question: Simona Sarli - BofA Global Research - Analyst : Thank you.

Question: Jaafar Mestari - BNP Paribas Exane - Analyst : Hi, good morning. I'm sorry, just a couple of things. I will ask you to confirm or repeat, apologies. So on that Q2 organic growth discussion, I just want to clarify when you say very similar to Q1, does this refer to the reported number of 4.6%, in which case, this discussion of leap year being compensated by net new? Or do you mean the underlying trend will be similar, 4.9%? And similarly, on new business signings, I'm sorry, I didn't quite hear the number. I think you gave a euro million number for the findings you achieved in Q1, and you said it's more than 50% higher than Q1 last year. So if you could please confirm that number. Thank you.

Question: Jaafar Mestari - BNP Paribas Exane - Analyst : Thank you.

Question: Jaafar Mestari - BNP Paribas Exane - Analyst : Super. Thank you. And so in terms of signings, the EUR500 million, I just want to clarify this is comparable to EUR1.9 billion for last year. Is there normally a phasing of those signings, if you're signing a quarter of that in Q1 already, is that good news. I'm sorry, we usually don't have that quarterly number. Just asking for a bit more detail. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 07, 2025 / 8:00AM, EXHO.PA - Q1 2025 Sodexo SA Corporate Sales Call

Question: Jaafar Mestari - BNP Paribas Exane - Analyst : Yeah. I mean just sometimes your peers mentioned numbers like that, and then it turns out that one contract has moved from one week to the other. And so around that end of August cutoff, it can be just a question of which day exactly you signed it, but you're saying it's underlying strong, no big phasing impacts.

Question: Jaafar Mestari - BNP Paribas Exane - Analyst : Thank you.

Question: Neil Tyler - Redburn Atlantic - Analyst : Hey, good morning. Thank you. Happy New Year, everybody. A couple of questions, please. Firstly, just coming back to the project activity, Vicki's question. In terms of the noncontractual activities within Facilities Management, where do this sort of stand as a percentage of the total compared to a sort of normal run rate? Just to try to understand and get it back to the point as to whether this year's dip is back to a normal level or taking you to sort of a below normal level of nonproject -- noncontractual revenue. Second question, US Education, you mentioned university enrollment's down. Can you just clarify whether that's sort of broadly across your venues or enrollment into your meal plans? And the net new negative that you've called out in the schools' revenues, is that something that you were expecting given sort of contract renewals and losses? And then final question. On margin, can I just confirm the -- that you're assuming no material margin drag from mobilization costs in the second half of the year on the net new ramp-up? Thank you.

Question: Neil Tyler - Redburn Atlantic - Analyst : Got it understood. Thank you. That's very helpful.

Question: Estelle Weingrod - JPMorgan - Analyst : Hi, good morning. Two quick questions from my side. Just back to organic growth. Sorry, I mean, we asked a lot of questions on this one. But Q2, we understand is not going to be too dissimilar to Q1. Q4 is a relatively small quarter for you typically and you have the Olympics comp. So correct me if I'm wrong, so this implies a very strong Q3 to make the guidance. My question is what's giving you confidence in that Q3 inflection? And just the last one on the phasing of margin expansion. I mean you said it would not be too dissimilar between H1 and H2, perhaps a bit more expansion in H2 despite the mobilization cost. But in any case, we're still expecting H1 margin expansion within the 30 to 40 basis point guidance range. Thank you.

Question: Estelle Weingrod - JPMorgan - Analyst : Okay. Thank you.