(Reuters) — French catering-to-vouchers group Sodexo (No. 6 on the DiversityInc Top 50 Companies list) said its cost savings program was on track and was confident of further sales and profits growth in the current fiscal year despite a challenging environment.
Sodexo, the world’s second-biggest catering services company after Compass Group, also expected its ‘remote sites’ business, which provides services on oil platforms and mining sites – to pick up in the second half of the year as the broader commodity sector shows signs of recovering from tough market conditions caused by pressure on oil and metal prices.
Activity in France, which has been hit by security fears tied to Islamist militant attacks, should also stabilise while North America should continue to provide growth opportunities, Chief Executive Michel Landel added on a conference call.
Sodexo increased the dividend by 9.1 percent to 2.40 euros a share and said it would accelerate the pace of its acquisitions.
Sodexo made the forecasts after posting a rise of 2.5 percent in like-for-like revenue to 20.25 billion euros ($21.66 billion) for the fiscal year ended August 31.
Robust growth in North America and Britain, where Sodexo benefited from the 2015 Rugby World Cup contract, offset the tough environment that had impacted its business in the mining and oil sectors, while business in France also suffered from strikes, floods and security fears.
Operating profit before exceptional items rose 8.2 percent to 1.20 billion euros, in line with the group’s guidance for a rise of 8 percent, Sodexo added in a statement.
Sodexo manages canteens and facilities for office workers, armed forces, schools, hospitals and prisons, and also supplies vouchers for meals and gifts. Its clients range from the Royal Ascot Racecourse in England to the U.S. Marine Corps.
CEO Landel said it was too early to discuss the impact that the new administration of U.S. President-elect Donald Trump would have on Sodexo’s prospects in the United States but stressed that the seven-year contract with the U.S. Marine Corps, which is renewable each year, had been recently renewed.
In France, which accounts for 15 percent of group turnover, a wave of Islamist attacks hurt the group’s local tourism business, shaving some 45 million euros from revenue.
“Business will stabilise this year in France but activity will be subdued in an election year. We are not expecting miracles in France,” Landel said.
Sodexo owns the Paris cabaret Le Lido, the Yachts de Paris luxury river cruising business and also has the catering contract for the Tour Eiffel restaurant. Its tourism business generates sales of around 300 million euros.
For the current fiscal year 2016-17, Sodexo forecast underlying revenue growth of around 3 percent and a rise in operating profit, excluding currency effects, of between 8 percent and 9 percent. It also confirmed its medium-term goals.
($1 = 0.9348 euros) (Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)