Q3 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. Two questions for me, please. The first one, if you could give us a little bit more detail on your Q4 implicit growth because as you initially expected Q4 to be above Q3. So now it seems that it's going to be below. And if I take the low end of the 3% to 4% range, it means that Q4 might be below 2%. And can you please give us the impact of retention and impact of development in Q4? And then the second question on 2026. Any guidance you can give at this stage or any color you can give at this stage in terms of the evolution of retention rate and the evolution of the like-for-like, so the net business and like-for-like for next year, please? Thank you.

Question: Julien Richer - Kepler Cheuvreux - Analyst : And regarding Q4, when you are looking at your ramp-up of recently signed contracts. Is it in line of Santos that was expected to mobilize in Q3, the Captis contract? Is it in line with what you had in mind? Or is it maybe softer than what you initially expected? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 01, 2025 / 7:00AM, EXHO.PA - Q3 2025 Sodexo SA Corporate Sales Call

Question: Julien Richer - Kepler Cheuvreux - Analyst : Thank you very much.

Question: Jamie Rollo - Morgan Stanley - Analyst : Thanks, morning, everyone. My first question is just, are you seeing in North America any weakness in underlying volumes in either business or administrations or sports and leisure from the sort of more uncertain economic and political environment in the US? And then the other one, just again, if I can get back to 2026, I know you're not guiding yet, but consensus has got margin growth of 20 basis points. And obviously, this year, we're going to be more like 10 basis points. And you just talked a bit about reinvestment on the call then. So just really wondering, early days, how you're sort of feeling about margin progression next year. Thank you.

Question: Jamie Rollo - Morgan Stanley - Analyst : And just a sort of clarity, that October results outlook, is that just going to be a one-year guidance or will you be giving a multiyear target framework again?

Question: Jamie Rollo - Morgan Stanley - Analyst : Thank you very much.

Question: Pravin Gondhale - Barclays Investment Bank - Analyst : Hi morning. Thanks for taking my question. Firstly, can you give a bit more color on details of net new and volume performance in Q3? And if there has been any change in signing momentum compared to what you mentioned during your H1 call? And then secondly, I know you don't give retention figures with quarterly results, but can you share some more color on how this has trended since -- trended in Q3? And is there any lumpiness over the next few months in terms of contract renewals?

Question: Pravin Gondhale - Barclays Investment Bank - Analyst : Yes, if there is any lumpiness over the next few months in terms of contract renewals.

Question: Pravin Gondhale - Barclays Investment Bank - Analyst : Thank you very much.

Question: Ivar Billfalk-Kelly - UBS Group AG - Analyst : Thank you so much for taking my question. Can you please give us a breakdown of the growth between food services and facilities management. At 2Q, you did highlight that FM was weak in part because of lower project work. Are you hearing from many clients that this could effectively be REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 01, 2025 / 7:00AM, EXHO.PA - Q3 2025 Sodexo SA Corporate Sales Call phasing with a backlog of work that needs to be done that can provide support for future quarters? Or should we actually see that as just a loss growth that won't be recovered in the future? And secondly, on the pricing, you mentioned 3%. But if I look at the inflation indexes in the America, -- it seems that food-away-from-home inflation is trending closer to 4%. So what is it that means that your pricing isn't actually able to keep up? And equally, could we actually expect that you should try and recover this to an extent in next year?

Question: Ivar Billfalk-Kelly - UBS Group AG - Analyst : Follow up on the first question, specifically around project work because I understand that was one of the key drivers weak. Is that expected to recover at any point? And could you see tailwinds from recovery of a backlog that was missed?

Question: Simon Lechipre - Jefferies Group LLC - Analyst : So two questions. First of all, are you able to confirm the retention target of above 94% for the end of this year given the outcome of the selling season in US education. And secondly, a follow-up on margins. Your updated guidance seems to imply flat margin year-over-year in H2. And I mean, given the kind of lower growth trajectory for next year and the reinvestments you were talking about. I mean, is it realistic to assume some year-on-year margin improvement next year? Or should we be a bit more cautious given the slower growth from reinvestment and so on.

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

Question: Estelle Weingrod - JPMorgan Chase & Co. - Analyst : Hi, Good morning. Three questions on my side. And the first one, what changed between March when you downgraded the guidance and today? Second one, North America, what is your organic growth run rate within Education, excluding the impact of favorable calendar? And is the additional campus event? When will you start lapping contract losses there? And the last one, very quick one What's driving the higher other income and expense increase today?

Question: Estelle Weingrod - JPMorgan Chase & Co. - Analyst : Okay. Thank you.

Question: Jaafar Mestari - BNP Paribas - Analyst : Hi, good morning. I have two questions, please. Firstly, on the US education selling season, you mentioned that you had a number of new losses in US Education since March. It's very unusual for the US education selling season to come this early in the year, while the universities are effectively still open. Do you think it's now over? It was all much earlier than usual this year for some reason? Or did we just had a handful of early RFPs, and as we move into July and August, we still have as every year, a large number of universities that are still to award their contracts for the next full semester? And then on the margins, if I calculate what the updated guidance means H2, it means flat margins, up a couple of basis points in H2. You had some planned ramp-up from cost efficiencies, the shared services centers, et cetera. So is there a very rough bridge to explain that, is the underlying trend slightly negative, but then you have efficiencies? Or is the underlying trend flattish and then the efficiencies are taking a bit more time or are reinvested?

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

Question: Neil Tyler - Roth Shield & Co - Analyst : Hi. Just two left from me, please. Similarly, on the Education business in North America, do the current season experience risk -- probably a negative...

Question: Neil Tyler - Roth Shield & Co - Analyst : Apologies, apologies. Is that better? Better now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 01, 2025 / 7:00AM, EXHO.PA - Q3 2025 Sodexo SA Corporate Sales Call

Question: Neil Tyler - Roth Shield & Co - Analyst : Yes, thanks. Yes, sorry. So back to the selling season in Education in North America, does this limit your optimism that you can deliver positive net new for US or North America education in FY26. Is that more likely to be sort of neutral to negative net new in that business? And then second question on health care in North America. The slower ramp up, does this -- are you still confident that this is a sort of slower progression to the same point? Or do you think it might reflect a lower absolute level of revenue opportunity at those sites?

Question: Neil Tyler - Roth Shield & Co - Analyst : Okay. Thank you.

Question: Sabrina Blanc - Bernstein - Analyst : Yes. I have two questions from my part. The first one is regarding the potential impact of currency on a full year basis. It looks like that you have a negative impact in Q3, which looks like to deteriorate at the end of the year. So can we assume, let's say, minus 1.3% currency impact plus a negative 0.3% scope impact for the full year? And my second question is regarding the development of GPOs in Europe. You have mentioned an acquisition in France, but can we have more color globally in Europe and specifically in France?

Question: Sabrina Blanc - Bernstein - Analyst : And just for coming back on the question on change and on the scope effect, shall we assume 0.3% or something like that?

Question: Sabrina Blanc - Bernstein - Analyst : Thank you.

Question: Andre Juillard - Deutsche Bank - Analyst : Good morning. Two follow-up questions, if I may. First one about reinvestment that you mentioned. Could you give us some more color about the split between CapEx and OpEx? Second one about the labor in North America. Do you see any tension regarding the actual environment and the politic of the actual government? And What is your forecast for the next few months in terms of wages and if you see some tension on volume.

Question: Simon Lechipre - Jefferies Group LLC - Analyst : Yes, follow-up on the margin and the FX impact. Do you expect any negative FX impact on margin given the mix effect and the recent move of the US dollar or it should be more or less neutral? s

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