Sodexo sees decline in core business as global slowdown bites
Food and facilities management company Sodexo saw its core business and industry (B&I) operations decline during the first quarter, as the global slowdown took hold.
Although group food and facilities management turnover in the first fiscal quarter of 2009, which ended 30 November 2008, increased 2.7% to €3.8b/£3.4b (2008: €3.6b/£3.2b) thanks to education and healthcare, group B&I turnover fell 2.6% to €1.8b (£1.6b), with North America and Continental Europe worst affected.
In the UK and Ireland organic turnover was 23.2% lower than last year at €339m (£305m), although this was due to last year's contribution from Sodexo's lucrative Rugby World Cup Hospitality contract, which took place in 2007.
Excluding the Rugby World Cup boost to last year's earnings, organic growth in the UK and Ireland in the first quarter would have been 9.1%, with growth in the division's B&I, healthcare and education businesses.
Michel Landel, Sodexo chief executive, said: "It is likely that the effects of the economic slowdown will be felt most at the beginning of 2009."
"During this financial crisis, which ultimately could lead to increased demand for outsourcing, Sodexo has real competitive advantages including our integrated service offerings in all client segments throughout the world."
Last November Sodexo announced a recruitment freeze to save an estimated £40.5m.
Contract catering predictions for 2009 >>
Sodexo quits £6m Milton Keynes school meals contract >>
King's College Hospital's catering and soft services contract to be re-tendered >>
Sodexo nets £38m deal with Newcastle United Football Club >>
By Chris Druce
E-mail your comments to Chris Druce here.