Sodexo profits drop as CEO pledges return to ‘best in class'
Operating profits at foodservice giant Sodexo have fallen by €192m (£167m) over the financial year to 31 August 2018, the company has confirmed.
In its annual update the firm revealed that growth had slumped from 1.9% in 2017 to 1.6%. Operating profits also fell, from €1,189m (£1035m) the previous fiscal year to €997m (£867m).
Net profit for the group, which operates worldwide in multiple sectors including education, defence and healthcare, stood at €651m (£566m), down from €629m.
In Europe, business and administration sales were up 1.5% at €5.3b (£4.6b), while education was up 3% at €885m (£770m). Sodexo said that the UK delivered strong growth, despite being impacted by exiting three army contracts.
UK and Ireland chairman Sean Haley said that the company had grown well in key sectors and made acquisitions which strengthened its offering.
He added that the acquisition of the Good Eating Company had strengthened its corporate services business, delivering contracts such as Nomura.
Haley said: "The market has remained highly competitive in the UK and Ireland with continued emphasis on price and increased scrutiny on the value of outsourcing particularly in the public sector. Our investment in our people, consumer insight and acquisitions, supported by our sustainable and ethical business practices, has helped us to win business across all our sectors.
"We have achieved renewed growth in our education business winning state school contracts, such as Wellspring Academy Trust and Great Western Academy, by developing our food offer with insight from school children.
"Our acquisition of the Good Eating Company has strengthened our corporate services business with significant wins such as Nomura.
"In our government business, we won the largest integrator contract in the public sector with the Department of Work & Pensions. We have also continued to invest in client feedback and developing strategic partnerships which has contributed to over 95% retention across our business and successful extensions such as Coca Cola and Chesterfield Royal Hospital.
Chief executive Denis Machuel said that it had been a challenging year for the business.
He said: "But we know what went wrong, and we know what we need to do to fix it. Healthcare and education in North America continue to drag our performance, and the turnaround is going to take some time.
"Vigorous action plans are being deployed across the organisation by the new executive committee to address our execution issues. We are laser-focused on sales and retention, discipline and accountability.
"I am convinced that we are on the right path to enhance productivity, giving us the means to reinvest in accelerating growth, which is our absolute priority today. My ambition is to get growth at Sodexo back up to best in class, and I'm confident we'll get there."
