Sodexo (SW) H2 2025 earnings summary

Executive summary

• Fiscal year 2025 delivered 3.3% organic revenue growth (3.7% underlying), with consolidated revenues at €24.1 billion, in line with revised guidance despite operational and commercial challenges, especially in North America and U.S. higher education.

• Strategic repositioning as a pure-play food and services company advanced, including the Pluxee spin-off, with food now over two-thirds of the portfolio and branded offers exceeding 50% of revenues.

• Digital engagement and sustainability targets were met, with nearly 6 million active consumers and strong progress on workplace safety, carbon, and food waste.

• Retention averaged 94% in 2025, impacted by a global account loss and softer North American education performance; U.S. healthcare and other regions showed stronger retention.

• Leadership transition to Thierry Delaporte as CEO effective November 2025, with a focus on execution, commercial acceleration, and restoring growth momentum from 2027 onward.

Financial highlights

• Organic growth was 3.3% (3.7% excluding major sports events and prior year dip); consolidated revenue reached €24.1 billion, up 1.2% year-over-year.

• Underlying operating margin was 4.7%, up 10 bps at constant currencies; underlying operating profit rose 2.7% to €1,139 million.

• Free cash flow was €459 million, including a €160 million exceptional tax outflow; underlying cash conversion was 91%.

• Underlying EPS rose to €5.37; proposed dividend of €2.70 per share, up 1.9%.

• Net profit reached €695 million; underlying net profit €785 million, up 3.7% at constant currencies.

Outlook and guidance

• Fiscal 2026 is positioned as a transition year, with organic growth expected between 1.5% and 2.5%, at least +2% from pricing, and a one-off contract reclassification reducing reported growth by 70 bps.

• Underlying operating margin to be slightly lower than 2025, mainly due to investment and mix, with margin pressure concentrated in North America.

• CapEx target increased to 2.5% of revenue to support retention, development, and digital transformation; targeted ROCE above 15%.

• Dividend payout ratio maintained at 50% of underlying net income.

• Continued focus on opex investments in supply chain tech, sales & marketing, and digital foundations.