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Sodexo boosts interim operating profit by 32% in UK and Ireland

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Sodexo boosts interim operating profit by 32% in UK and Ireland
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Food service and facilities management company Sodexo saw operating profit for the UK and Ireland rising by 32% in the first half of its financial year, despite revenue falling by 3.8%.

The group’s UK and Ireland arm achieved operating profit of £20.7m on lower revenue of £518m for the six months to February 28, due to “improvements in site productivity”. The operating margin was 4.1% – compared with 3% during the first half of the previous year.

The business and industry division saw revenue fall by 7% to £348m, as clients cut jobs and closed sites. The conclusion of a major justice contract during the summer of 2009 also contributed to the decline in revenue, Sodexo said.

Education division also suffered a fall in revenue – dropping 6.3% to £53m – reflecting the strict control of spending by students and their families as well as significant continued “commercial selectivity”.

In contrast, the health care and seniors division performed strongly, benefiting from a number of Public Private Partnership contract wins, including Manchester Royal
Infirmary and North Staffordshire Hospital, and a new £13m deal at Nuffield Health and Wellbeing. Revenue for the division was up by 10.6% to £103m.

Globally, Sodexo saw operating profit rising to €426m (£368m), up 1.2% on €421m (£363m) for the same period 12 months before. Revenues for the period were €7.5b (£6.47b), a 1.7% fall on the previous year’s €7.63b (£6.59b).

Michel Landel, Sodexo chief executive, said: “The positive results in the first half reflect the efforts of Sodexo and its teams to retain clients, succeed in new markets, continue our productivity improvements and invest in the long term. The initial signs of recovery in business development reinforce our confidence in the group’s medium term outlook.”

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By Daniel Thomas

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