French global contact firm Sodexo SA posted organic revenue growth of 13.4% while its North American unit, constituting 44% of the company total, grew 16.4% organically in the first half of the company's 2023 fiscal year. Sodexo also announced that it would spin off its voucher business, which has 5,000 employees in 31 countries, by distributing shares to shareholders.
As a result of the higher-than-expected first half growth plus price increases that are expected to remain above 5% in the second half, the company also announced that it now expects organic revenue growth for fiscal 2023 of close to +11%. The company had previously guided for organic revenue growth between 8% and 10%.
"On-site Services, despite inflation, the post-Covid ramp-up in volumes, mitigation actions and pricing have helped us to improve our margins," commented CEO Sophie Bellon. "Food inflation has remained high and is likely to remain so in the second half."
First half Fiscal 2023 North America revenues totaled 5.5 billion euros, up +16.4% organically, helped by strong pricing in all segments, the company's earnings release said.
First half organic growth in Business & Administrations was +31.3%, boosted by strong volume increases in Corporate Services as the return to the workplace continued, as well as in convention centers and air lounges. The Energy & Resources and Government & Agencies segments were also up, although small, convenience solutions and new contracts at Entegra also supported growth.
In Healthcare & Seniors, organic revenue growth of +9.4% was driven by price increases, cross-selling, a recovery in retail volumes and some increase in attendance in Seniors, according to the earning release. The net new development contribution remained neutral, as the losses impacted faster than the wins but the balance is expected to improve in the second half, with the full impact of the Ardent mobilization, it added.
In Education, organic revenue growth was +10.7% with the impact on K-12 volumes of the reduction in government waiver eligibility for students and the last effects of the loss of the Chicago Public Schools contract being compensated for with higher pricing. Meanwhile, growth in Universities was much stronger, with a higher number of board plans as well as one extra day, stronger retail sales and more on-campus event catering, the company says.