Sodexo shares surge after hospitality group announces spin-off of voucher unit
2023.04.05 05:50
© Reuters
By Scott Kanowsky
Investing.com — Shares in Sodexo SA (EPA:) surged by more than 10% on Wednesday, touching their highest mark in over three years, after the French hospitality group reported better-than-expected income in the first half and unveiled plans to spin-off its voucher business.
Underlying operating profit for the three months until the end of February climbed by 30.9% versus the same period last year to €704 million (€1 = $1.0951), topping Bloomberg consensus estimates of €674.4 million.
The caterer noted that it has seen an uptick in post-COVID demand for on-site services for corporations and sports facilities despite lingering inflationary pressures on its clients. It was also boosted by a bump up in pricing, which helped mitigate elevated food costs.
Meanwhile, Sodexo announced that it is aiming to spin off and list its benefits and rewards services (BRS) division, which gives vouchers and other perks to businesses for their employees.
In a statement, the company argued that the move, which is set to be completed in 2024, will create two pure-play entities in their respective sectors that will “accelerate value creation.” One business will be focused on food and facilities management, while the other will be dedicated to employee benefits and engagement.
Details of the transaction will be presented at a later stage and then submitted for shareholder approval at an extraordinary meeting of investors, Sodexo said.
Organic revenues at the BRS unit grew by just under 25% in the first half, thanks in part to higher interest rates in all of its operating regions. The vouchers business has also been supported by a recent cost-of-living crisis, which has led some employers to deliver added benefits to their workers instead of raising wages.
Analysts responded mostly positively to the proposed BRS spin-off, with Jefferies noting that the move marked a “surprise reversal” from Sodexo’s decision last May to scrap a plan to sell a minority stake in the division.
