Sodexo (SW) H1 2025 earnings summary

Executive summary

• H1 fiscal 2025 revenue reached EUR 12.5 billion, up 3.1% year-over-year, with organic growth of 3.5%.

• Underlying operating profit rose 6.4% to EUR 651 million; underlying net profit increased 5.4% to EUR 450 million.

• Commercial momentum remained strong, with over EUR 1 billion in new contracts signed, up 20% year-over-year.

• Underlying operating profit margin improved by 10 basis points to 5.2%, reflecting operational efficiencies.

• Recognized for sustainability and ethics, including Ethisphere and S&P Global awards.

Financial highlights

• Q1 organic growth was 4.6%, but Q2 slowed to 2.4% due to weak February results in North America.

• Group net profit was EUR 434 million, down 12.5% year-over-year, mainly due to higher restructuring costs and absence of prior-year disposal gain.

• Free cash flow was EUR -234 million, impacted by seasonality and an exceptional tax outflow in France.

• Net debt increased to EUR 3.4 billion, with a net debt/EBITDA ratio of 2.3x, and gearing ratio at 85%.

• Group cost of debt at 1.8% with average maturity just under 3 years.

Outlook and guidance

• Full-year organic growth guidance revised down to 3%-4% from 5.5%-6.5%, mainly due to North American headwinds.

• H2 organic growth expected between 2.5%-4.5%, with Q4 stronger than Q3.

• Margin progression of 10-20 basis points targeted for the year.

• Targeted leverage ratio between 1x and 2x by end of FY25.

• CapEx expected to reach 2.5% of revenue for the full year, driven by new contract mobilizations.