Sodexo SA Investor Day Transcript

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

Question: Simon LeChipre - MainFirst Bank AG, Research Division - Analyst : Three questions, if I may. First of all, in North America, you mentioned what you have done to address your issues. So just wondering how happy are you right now with the performance of the specific Healthcare and Universities businesses? And what are the key aspects you need to further improve to achieve the right performance? And secondly, in terms of profitability, which proportion of the savings you announced this morning you expect to -- I mean, you need to reinvest over the next 2 years? And related to this, when do you expect margin to be back to the level of 2019? And lastly, you mentioned CapEx would accelerate, notably driven by new food models. How do you see the return on this incremental CapEx compared to the historical return of the industry? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 02, 2020 / 1:00PM, EXHO.PA - Sodexo SA Investor Day

Question: Jaafar Mestari - Exane BNP Paribas, Research Division - Analyst : It's Jaafar from Exane. I've got 2 questions, if that's okay. Firstly, on the risk assessments on remote work. Can you just help us reconcile minus 27% reduction in office hours with the other statements that only less than 10% of your corporate volumes are at risk? Of course, I see that minus 27% applies only to office, which is only half of corporate. But then even with that, it sounds like you're assuming that you're going to recoup 1/3 of the volume impact through higher spend per customer. Is that correct? And what gives you confidence that there's such an increase in spend per customer? And secondly, on medium-term profitability, if your revenue to EBIT drop-through remains the same at around 20%, then with EUR 300 million cost savings, you could, in theory, deliver your full year '19 margin with, I calculate, something like 8% total reduction in group revenue. But that doesn't seem to be what you're expecting, so if corporate volume comes down 10% and the rest is not permanently impaired. So is it right to assume that in full year '22, you could have a significant net increase in the margins already because you will have delivered those savings? And lastly, on the cost savings, investors will have 1 or 2 experiences with cost savings at Sodexo. 2014, '15, you delivered significant margin improvement, but then we find out that this has impaired the group's ability to grow. Or more recently, you've delivered on savings, but they have been mostly defensive, they haven't really benefited the bottom line. So on that spectrum, where do we think this new cost savings ends up? And what have been the lessons learned from the previous cost savings programs?

Question: Jaafar Mestari - Exane BNP Paribas, Research Division - Analyst : That's okay. Just to clarify, so minus 27%, I think, is very clear from your presentation, what this represents. And what I was trying to ask is, how do we go from minus 27% reduction in office hour in food services, corporate services, office types from this to the other figure, which is minus 10% volume risk, which you are referencing in the press release this morning? And that's minus 10% of total corporate services, if I'm correct. What's the bridge there, please?

Question: Jaafar Mestari - Exane BNP Paribas, Research Division - Analyst : So the takeaway is minus 10% doesn't include any mitigation or increase in spend per head? Or anything like that?

Question: Johanna Jourdain - ODDO BHF Corporate & Markets, Research Division - Analyst : Two questions on BRS as well for me. So the first one is regarding the CapEx. So you had net CapEx of more than 9% in 2020. So that's a strong acceleration versus last year. So how should we think about your investment strategy in this division in the coming years in terms of CapEx? And what does the 20% of revenue invested in tech refers to? And my second question still on BRS. So which technology do you need or miss at the moment? And could it come with targeted acquisition or would you rather favor CapEx?

Question: Johanna Jourdain - ODDO BHF Corporate & Markets, Research Division - Analyst : And maybe just a follow-on regarding the 20% of revenue that needs to be invested in tech. How long do you think you will need to have this kind of target? So how should we think about the margin improvement going forward?