Catering group Sodexo says H2 sales may plunge 26% on coronavirus, income to take big hit

[BENGALURU] French catering and food services group Sodexo said on Thursday that second-half revenue could tumble as much as 26 per cent due to government measures to contain the coronavirus, which will likely batter underlying operating income.

The revenue slide in the second half could be between 2.4 billion euros (S$3.71 billion) and 2.8 billion euros, it said, adding that the impact on underlying operating profit would probably be a quarter of the revenue hit or as much as 700 million euros.

The Paris-based firm reported an underlying operating profit of 553 million euros for the same period a year earlier.

Chief executive Denis Machuel said in a statement that a number of sites had either fully or partially closed across its education, sports, leisure and corporate businesses.

"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," he said, adding that Sodexo was using all proposed government measures to protect employment.

Last week, Sodexo said Mr Machuel and other top managers had agreed to pay cuts to help fund a 30 million euro support programme for employees facing lay-offs.

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"We know that this situation will have a significant impact on our results for the year," he added.

Sodexo, one of the world's largest catering groups alongside Britain's Compass, reported revenue of 11.7 billion euros for the six months to the end of February, up 3.2 per cent from the previous year.

The group's underlying operating profit increased 3.1 per cent to 647 million euros while underlying net profit was up 4.1 per cent at 413 million euros.

The results helped lift Sodexo's shares 7.5 per cent in early trade after steep slides this year due to the pandemic.

Sodexo had suspended full-year guidance last month, as clients, which range from England's Royal Ascot Racecourse to the US Marine Corps, downsized or closed offices, sporting events, cultural destinations, airline lounges, conference centres, schools and colleges.

REUTERS