Sodexo Slumps After Saying Revenue Growth to be at Lower End of Range
2022.04.01 13:58
By Dhirendra Tripathi
Investing.com – Sodexo (PA:EXHO) stock plummeted 9% in Paris trading Friday after the company said revenue growth in the ongoing year will be around the bottom of its previously forecast range of 15-18%.
The company blamed the coronavirus pandemic, the Russia-Ukraine conflict, and closure of COVID-19 testing centers in the U.K. for its moderation.
Chief Executive Sophie Bellon said, “several mobilizations in Russia will not happen” due to the war. The conflict has also sent food prices soaring, creating another challenge for Sodexo.
“Inflation is a subject on which we work a lot. We are very, very vigilant because the situation surrounding the war in Ukraine is causing certain volatility in certain commodities, so it’s something we are watching like a hawk,” Reuters quoted Group Chief Financial Officer Marc Rolland as saying.
However, the group remains confident it can manage inflationary pressure on margins, with its business model allowing price rises to be passed on to clients progressively.
“We are confident that we can manage the year end inflationary pressure on margins. Currencies should give us a nice tailwind…” Rolland said in a statement.
For the first half ended February 28, the group clocked revenue of 10.26 billion euros ($11.35 billion), more than 19% higher. Underlying operating profit was 538 million euros. The company said it has seen a pickup since the end of February after the Delta and Omicron coronavirus variants had slowed recovery in the second quarter.
