French food caterer Sodexo has reported a nearly 5% rise in its first-quarter organic revenue, missing market expectations, as robust growth in India, Brazil and Australia was offset by decreased activity in Continental Europe.
Consolidated revenue was €6.4 billion in the three months through November, compared with the €6.5 billion expected by analysts in a company-provided consensus and €6.3 billion a year earlier.
European growth of 2% was weighed down by lower-than-expected volumes in Norway, Germany and the Netherlands due to a contract loss in the facility management division and the closure of some facilities last year, chief financial officer Sebastien de Tramasure said on a call with journalists.
"Moreover, the gap with the consensus is mainly due to the Europe zone," he added.
Inflation Tailwind
During the past years, the catering sector has benefited from tailwinds such as inflation which led to record outsourcing and volumes, boosting growth.
The France-based group's growth came on the back of a 3% increase in pricing in the first quarter, it said. Price hikes however continued to slow down after reaching 4% in the fiscal year 2024 as Sodexo continues to pass through inflation.
It also benefited from 5.9% organic growth in its key North America market, which accounted for 48.4% of its total revenue in the quarter. Europe made up 34.7%.
CRH Catering Acquisition
On January 1, Sodexo completed the acquisition of CRH Catering to strengthen its position in the fast-growing U.S. convenience segment.
The signing of key contracts provides a boost for the coming years, de Tramasure said, highlighting the exclusive marketing of hospitality packages for the next three Rugby World Cups, namely the 2025 Women's World Cup in England and the 2027 Men's and 2029 Women's World Cups in Australia.
Sodexo confirmed the full-year guidance provided with its previous annual results in October.
