French catering and food services group Sodexo has suspended its annual forecast and said that the coronavirus pandemic could impact its annual sales by €2 billion.
The warning came even as the company's first-half performance was currently in line with forecasts, despite including a drop in revenue in China and Italy due to the virus outbreak.
"We are currently running a full bottom-up forecast exercise based on closures and revised traffic estimates, and will provide an update on April 9th along with our H1 results. Currently, early estimates, given the many moving parts, could be for an impact of around €2 billion on annual revenues," Sodexo said.
Sodexo's clients range from the Royal Ascot Racecourse to the US Marine Corps.
Based on the last few weeks' observations in China, Italy, France and the United States, Sodexo said that for each €100 million of lost revenue, the impact on underlying operating profit is for a decline of approximately 30%, depending on the country and the segment of the business affected.
The group said that its education services sector, which caters for schools and colleges, has been hurt by the closures of establishments, notably in the United States.
Its business dealing with sports and leisure, stadiums, cultural destinations, airline lounges, and conference centers is also experiencing a severe scaling down or full closure.
Many clients are also shutting down their plants or offices or are asking their employees to work from home, the company said.
Although its mid-term perspectives were positive, Sodexo said that it has no other choice but to suspend its previous guidance given in January until the situation stabilizes.
Previous Organic Revenue Growth Forecast
In January, Sodexo had stuck to a 2020 forecast for organic revenue growth of approximately 4% and a stable underlying operating margin, excluding the impact of currencies and IFRS 16 accounting standards.