French caterer Sodexo lags Q3 sales expectations on China slowdown

(Reuters) -French food caterer Sodexo (EPA:) reported slower quarterly sales growth on Tuesday, missing market forecasts, citing a slowdown in China and a change in how it recognises revenues from a large project in Australia.

Shares in the Paris-based group, which spun off its voucher business Pluxee at the start of February, fell 5.5% by 0910 GMT.

“The slowdown in China is impacting mainly the tech sector, particularly the corporate service segment,” Chief Financial Officer Sébastien de Tramasure told analysts in a call.

But he added Sodexo’s position in China remains very solid and it strongly believes in the market’s potential in the long term. Sodexo did not report country-specific revenue numbers.

The group’s revenue rose 6.8% organically to 6.07 billion euros ($6.51 billion) in the third quarter through May 31, compared to a year earlier. That was below a consensus forecast of 6.11 billion euros provided by the company.

Excluding an effect from the change in revenue recognition for a large Energy & Resources project in Australia, organic growth was 7.2% in the quarter, it said.

Sodexo said organic growth slowed down from the previous three-month period due to lower pricing effects, higher comparison numbers, and the positive impact of the leap year in the second quarter.

It has not provided a growth number for the second quarter. Organic growth was 8.5% in the first half of the fiscal year.

About half of the organic growth was fuelled by price increases, which fell below 4% in the quarter, compared to more than 5% last year, Sodexo said.

The company, which will provide catering for the Paris Olympic Games and the Paralympics this summer, reaffirmed its outlook for the year to the end of August.