Sodexo Says H2 Sales May Plunge 26% Due To COVID-19 Crisis
French catering and food services group Sodexo has said that its second-half revenue could tumble by as much as 26% due to government measures to contain the coronavirus, which will likely batter underlying operating income.
The revenue slide in the second half could be between €2.4 billion and €2.8 billion, Sodexo said, adding that the impact on underlying operating profit will probably be a quarter of the revenue hit or as much as €700 million.
The Paris-based firm reported an underlying operating profit of €553 million for the same period a year earlier.
Chief executive Denis Machuel said in a statement that a number of sites have either fully or partially closed across Sodexo's education, sports, leisure and corporate businesses.
"We immediately identified all means to reduce our costs, reduce our capex and ensure that we collect and protect our cash to reduce the impact of this revenue shortfall," he said, adding that Sodexo is using all proposed government measures to protect employment.
Last week, Sodexo said that Machuel and other top managers had agreed to pay cuts to help fund a €30 million support programme for employees facing lay-offs.
"We know that this situation will have a significant impact on our results for the year," he added.
Latest Revenue And Profit Statistics
Sodexo, which is one of the world's largest catering groups alongside Britain's Compass, reported revenue of €11.7 billion for the six months to the end of February, up 3.2% from the previous year.
The group's underlying operating profit increased 3.1% to €647 million while underlying net profit was up 4.1% at 413 million euros.
Sodexo had suspended full-year guidance last month, as clients, which range from England's Royal Ascot Racecourse to the US Marine Corps, downsized or closed offices, sporting events, cultural destinations, airline lounges, conference centres, schools and colleges.