Weak US dollar puts Sodexho on the slide

Sodexho Alliance, the world's second-largest catering company, posted a 4.5% fall in first-half sales due to a weak dollar hampering its US business and to continuing poor performance in the UK.

The French catering company said that its revenues to 29 February were g5.9b (£3.9b), down from last year's g6.2b (£4.1b). It blamed the deterioration in sales on the strengthening of the euro against other currencies, notably the dollar in the USA, home to nearly half of Sodexho's business.

However, the company also saw business and industry revenues fall in the USA by 0.7%, as companies laid off staff and closed sites, it said.

The caterer said its organic growth for the period was 3.9% - better than the 2.9% achieved in the first half of last year, but still behind the figure for its main rival, Compass, which recently predicted first-half like-for-like sales growth of 7%.

Despite dumping unprofitable contracts in the UK and Ireland, the group's fortunes have yet to turn round, with currency-adjusted revenues 7.2% lower.

A sales total of g654m (£429m), down from g760m (£498m) the year before, was, according to the company, the result of cutting poorly performing contracts. However, it predicted a brighter future in the UK, having signed two long-term contracts in the past three months - with the Colchester Garrison and Havering Hospital, both with a yearly turnover of g19m (£12.5m). It said: "The full effect of these contracts will be felt once the related construction is completed, two years from now."

Sodexho's first-half results in the rest of the world and at remote sites would have given the group some cheer, with organic growth up by 21.5% to g549m (£360m). It said this was mainly due to strong sales in remote sites and to revenue from last year's Rugby World Cup in Australia.