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Sodexo SA — H1 2015 Earnings Presentation

45 slides from Sodexo SA's earnings presentation, Apr 16, 2015

  1. Slide 1: First Half Fiscal 2015 Results

    April 16, 2015 FIRST HALF FISCAL 2015 RESULTS

  2. Slide 2: Forward-Looking Information

    FORWARD-LOOKING INFORMATION This presentation contains statements that may be considered forward- looking statements and as such may not relate strictly to historical or current facts. These statements represent management's views as of the date they are made and we assume no obligation to update th

  3. Slide 3: Summary

    SUMMARY 1. FIRST HALF FISCAL 2015: A SOLID PERFORMANCE 2. FINANCIAL PERFORMANCE 3. ON-SITE SERVICES 4. BENEFITS AND REWARDS SERVICES 5. OUTLOOK 6. APPENDICES 3 – First Half Fiscal 2015 Results - April 16, 2015

  4. Slide 4: First Half Fiscal 2015: A Solid Performance

    FIRST HALF 1 FISCAL 2015: A SOLID PERFORMANCE 4 – First Half Fiscal 2015 Results - April 16, 2015

  5. Slide 5: Solid performance in H1 2015, full fiscal 2015 objectives confirmed

    FIRST HALF FISCAL 2015 Solid performance in H1 2015 Full fiscal 2015 objectives confirmed 5 – First Half Fiscal 2014 Results – April 17, 2014

  6. Slide 6: First Half Fiscal 2015: A Solid Performance

    FIRST HALF FISCAL 2015: A SOLID PERFORMANCE Total revenues 9.9 bn € +7% Organic revenue growth +2.2% Operating profit 620 M€ +10.9%* +8.6%* Excl. Currency effects Operating margin 6.2% +30 bps** Excl. Currency effects Net income 343 M€ +23.4% +17.6% Excl. Currency effects * Compares with H1 2014 bef

  7. Slide 7: First Half Fiscal 2015: A Solid Performance

    FIRST HALF FISCAL 2015: A SOLID PERFORMANCE  A major lever to accelerate organic growth Recognized expertise as in On-site Services e.g., an integrator of Facilities • In the UK (+8.4%) management services • In Corporate in North America (+6.6%) A relevant offer in Benefits  Strong double-digit gr

  8. Slide 8: First Half Fiscal 2015: A Solid Performance

    FIRST HALF FISCAL 2015: A SOLID PERFORMANCE  Program to improve operational efficiency and reduce costs continues to deliver returns Operating profit up and  Growth in on-site services operating profits in line with Fiscal 2015 objectives  Another double-digit progression in Benefits and Rewards

  9. Slide 9: New Contract Wins: Quality of Life Services Offer

    FIRST HALF FISCAL 2014-2015 NEW CONTRACT WINS: QUALITY OF LIFE SERVICES OFFER CORPORATE DIAGEO in the UK and in Ireland Facilities management services for 70 sites STMicroelectronics, France HEALTHCARE University of Louisville Hospital, Kentucky, USA Shanghai Starcastle Senior Living Services, China

  10. Slide 10: New Contract Wins: Quality of Life Services Offer

    FIRST HALF FISCAL 2014-2015 NEW CONTRACT WINS: QUALITY OF LIFE SERVICES OFFER EDUCATION Medical University of South Carolina, USA REMOTE SITES Jerriwah Village, Australia Integrated services on a mining site BENEFITS AND REWARDS SERVICES Axis Bank, India GE Medical Systems, Turkey 10 – First Half Fi

  11. Slide 11: Financial Performance

    2 FINANCIAL PERFORMANCE 11 – First Half Fiscal 2015 Results - April 16, 2015

  12. Slide 12: Revenue Growth

    FIRST HALF 2015 REVENUES REVENUE GROWTH € Million +4.8% Positive currency +2.2% effect 9,931 9,283 Organic growth* +7.0% TOTAL CHANGE H1 2014 H1 2015 * Organic growth: increase in revenues at constant scope of consolidation and exchange rates, with the exception of the Venezuelan Bolivar Fuerte, for

  13. Slide 13: Organic Growth

    FIRST HALF FISCAL 2015 ORGANIC GROWTH Growth driven by integrated Quality of Life Services offers  On-Site Services:  Benefits and Rewards Services: • Facilities management growth above 6% • Sustained strong momentum in Latin • Return to growth in Remote Sites America Organic growth of 2.2%* of wh

  14. Slide 14: Operating Profit

    FINANCIAL PERFORMANCE OPERATING PROFIT Operating profit up 10.9% € Million Positive currency effects 620 607 559* +8.6% EXCLUDING CURRENCY EFFECTS H1 2014 H1 2015 * Operating profit and margin are presented before exceptional costs related to the operational efficiency improvement program in H1 2014

  15. Slide 15: Operating Margin (Adjusted)

    FINANCIAL PERFORMANCE OPERATING MARGIN (ADJUSTED)* 5.9% 6.2% +30bp H1 2014 H1 2015 • Adjusted: Operating profit and margin are presented before exceptional costs related to the operational efficiency improvement program in H1 2014 and Operating margin restated for H1 2014 using the rate 1USD = 51.06

  16. Slide 16: Consolidated Statement of Income

    FINANCIAL PERFORMANCE CONSOLIDATED STATEMENT OF INCOME H1 2014 H1 2015 CHANGE millions € millions € At current At constant exchange rates exchange rates Revenues 9,283 9,931 +7.0% +2.2% Operating profit before exceptional items 559 620 +10.9% +8.6% Exceptional items (30) - Operating profit (reported

  17. Slide 17: Program to Improve Operational Efficiency and Reduce Costs

    SOLID FINANCIAL PERFORMANCE PROGRAM TO IMPROVE OPERATIONAL EFFICIENCY AND REDUCE COSTS € Million EXCEPTIONAL IMPLEMENTATION TOTAL over 18 months 166 (Sept. 2012-Feb. 2014) COSTS Achieved in 100 Fiscal 2014 SUSTAINABLE ANNUAL Achieved in 35 H1 Fiscal 2015 SAVINGS Objective for 160 Fiscal 2015  Susta

  18. Slide 18: Consolidated Cash Flow

    FINANCIAL PERFORMANCE CONSOLIDATED CASH FLOW € Million S1 13-14 S1 14-15 Operating cash flow 376 483 Net capital expenditure (146) (160) Change in working capital (138) (272) Free cash flow 92 51 Net acquisitions (48) (45) Change in shareholder’s equity (225) (284) Other changes (including scope and

  19. Slide 19: Consolidated Balance Sheet

    FINANCIAL PERFORMANCE CONSOLIDATED BALANCE SHEET SOLID FINANCIAL POSITION € Million February February February February 28, 2014 28, 2015 28, 2014 28, 2015 Non-current assets 6,554 7,447 Shareholders’ equity 2,929 3,514 Current assets 4,347 5,000 Non-controlling interests 46 40 excluding cash Financ

  20. Slide 20: On-Site Services

    3 ON-SITE SERVICES 20 – First Half Fiscal 2015 Results - April 16, 2015

  21. Slide 21: On-Site Services Organic Growth +1.9%

    ON-SITE SERVICES ORGANIC GROWTH +1.9% United Kingdom and Ireland -0.3% Continental Europe North +8.4% America +1.5% Rest of +4.1% the World 21 – First Half Fiscal 2015 Results - April 16, 2015

  22. Slide 22: Organic Growth by Client Segment

    ON-SITE SERVICES ORGANIC GROWTH BY CLIENT SEGMENT Corporate  Strong demand for integrated Quality of Life Services offers +3.9%  Progression fuelled by growth in facilities management services  Return to growth in Remote Sites Health Care and Seniors  Voluntary withdrawal in late FY 2014 from pa

  23. Slide 23: North America Revenues

    ON-SITE SERVICES NORTH AMERICA € Million Revenues Corporate +6.6% Favorable currency effect 4,014  Strong demand for integrated Organic Quality of Life Services offers 3,579 growth Acquisitions Healthcare and Seniors -1.0%  Voluntary withdrawal in late +1.5% FY14 from part of HCR ManorCare ORGANIC

  24. Slide 24: North America Operating Profit

    ON-SITE SERVICES NORTH AMERICA € Million Operating profit* Operating margin* 284 7.1% Growth at constant rates 6.6% 238 Favorable currency effect +7.1% CHANGE EXCLUDING CURRENCY EFFECTS H1 14 H1 15 H1 14 H1 15  Effective pass through of inflation  Labor productivity gains, notably in Education * O

  25. Slide 25: Continental Europe Revenues

    ON-SITE SERVICES CONTINENTAL EUROPE € Million Revenues Corporate +2.1%  Decline in foodservices volumes offset by the continued success 2,961 2,926 of facilities management offers Unfavorable currency effect Health Care and Seniors -2.6% -0.3%  Weak growth on existing sites ORGANIC  Slower pace o

  26. Slide 26: Continental Europe Operating Profit

    ON-SITE SERVICES CONTINENTAL EUROPE € Million Operating profit* Operating margin* Growth at 4.3% 4.3% 128 constant rates 127 Unfavorable currency effect 0.0% CHANGE EXCLUDING CURRENCY EFFECTS S1 13-14 S1 14-15 S1 13-14 S1 14-15  Savings achieved in line with objectives from the operational efficien

  27. Slide 27: Rest of World Revenues

    ON-SITE SERVICES REST OF WORLD € Million Revenues Corporate +3.0%  Return to growth in Remote Sites Organic growth Favorable currency (+6.1%) 1,745 1,635 effect  Strong growth in India and Southeast Asia  A more challenging environment in Latin America +4.1% ORGANIC Healthcare and Seniors +21.8%

  28. Slide 28: Rest of World Operating Profit

    ON-SITE SERVICES REST OF WORLD € Million Operating Profit* Operating margin* Growth at 4.2% constant rates 74 54 Favorable currency effect 3.3% +27.8% CHANGE EXCLUDING CURRENCY EFFECTS H1 14 H1 15 H1 14 H1 15  Solid level of offshore activity  Positive impact of ongoing productivity initiatives in

  29. Slide 29: United Kingdom and Ireland Revenues

    ON-SITE SERVICES UNITED KINGDOM AND IRELAND € Million Revenues Corporate +8.1% Favorable currency effect 821  Solid development of integrated Organic growth services 707  Significant growth in Justice (Northumberland) +8.4% Health Care and Seniors +10.9% ORGANIC GROWTH  Contribution of new contra

  30. Slide 30: United Kingdom and Ireland Operating Profit

    ON-SITE SERVICES UNITED KINGDOM AND IRELAND € Million Operating profit* Operating margin* Favorable 4.4% 4.4% Change at currency effect 36 constant rates 31 +9.7% CHANGE EXCLUDING CURRENCY EFFECTS H1 14 H1 15 H1 14 H1 15  Operating profit growth driven by new business development * Operating profit

  31. Slide 31: Benefits and Rewards Services

    4 BENEFITS AND REWARDS SERVICES 31 – First Half Fiscal 2015 Results - April 16, 2015

  32. Slide 32: Issue Volume and Revenues

    BENEFITS AND REWARDS SERVICES ISSUE VOLUME AND REVENUES Group Issue Volume Revenues Billion € € Million Organic Acquisitions Organic growth 8.6 growth Acquisitions 428 8.3 Unfavorable 404 currency Unfavorable effect currency effect +7.2% +9.8% ORGANIC ORGANIC GROWTH* GROWTH* H1 14 H1 15 H1 14 H1 15

  33. Slide 33: Issue Volume and Revenues: Latin America

    BENEFITS AND REWARDS SERVICES ISSUE VOLUME AND REVENUES Latin America Issue Volume Revenues Billion € € Million Organic Organic growth growth 4.0 4.0 223 229 Unfavorable Unfavorable currency effect currency effect +12.3% +17.7% ORGANIC ORGANIC GROWTH* GROWTH* H1 14 H1 15 H1 14 H1 15  Increase in fa

  34. Slide 34: Issue Volume and Revenues: Europe and Asia

    BENEFITS AND REWARDS SERVICES ISSUE VOLUME AND REVENUES Europe and Asia Issue Volume Revenues Billion € € Million Favorable currency Favorable Organic Acquisitions effect 4.6 Organic currency 4.3 growth growth Acquisitions effect 199 181 +3.1% +1.4% ORGANIC ORGANIC GROWTH GRWOTH H1 14 H1 15 H1 14 H1

  35. Slide 35: Operating Profit

    BENEFITS AND REWARDS SERVICES OPERATING PROFIT € Million Operating profit Operating margin Growth at constant rates 158 153 36.9% Unfavorable currency effect 36.6%* +17% CHANGE EXCLUDING CURRENCY EFFECTS H1 14 H1 15 H1 14 H1 15  Productivity gains in processing costs and strict control of overheads

  36. Slide 36: Outlook

    5 OUTLOOK 36 – First Half Fiscal 2015 Results - April 16, 2015

  37. Slide 37: Fiscal 2015 Objectives Confirmed

    OUTLOOK FISCAL 2015 OBJECTIVES CONFIRMED As indicated last November, Sodexo’s objectives are: Organic revenue growth of around 3% and an increase in operating profit of around 10% (excluding currency effects and exceptional items). As a result, operating margin is targeted to increase by 0.8% over t

  38. Slide 38: Thank You!

    THANK YOU! 38 – First Half Fiscal 2015 Results - April 16, 2015

  39. Slide 39: Q&A

    Q&A 39 – First Half Fiscal 2015 Results - April 16, 2015

  40. Slide 40: Appendices

    APPENDICES 1. Financial debt analysis 2. Free cash flow 3. Principal exchange rates used 4. Impact of the principal exchange rates on the balance sheet 5. Currency effect: Venezuelan bolivar 40 – First Half Fiscal 2015 Results – April 16, 2015

  41. Slide 41: Free Cash Flow

    FREE CASH FLOW 483 Change in working capital Operating 235 cash flow (248) Net cash from operating Capex (24)** 51 activities Change in financial assets related to (consolidated Benefits and cash flow statement) Rewards Services FCF (160)* * (160) = (154) Tangible and intangible fixed asset investme

  42. Slide 42: Analysis of Financial Debt

    ANALYSIS OF FINANCIAL DEBT € millions BY CURRENCY BY MATURITY 39% € < 1 year 318 1-2 years 78 61% $ 2-3 years 9 BY INTEREST RATE 3-4 years 287 4-5 years 137 100% Fixed average rate of > 5 years 2,252 3.8% as of Feb 28, 2015 * Financial debt of 3,081 million euro (excluding derivative financial instr

  43. Slide 43: Principal Exchange Rates

    PRINCIPAL EXCHANGE RATES Average rate Average rate Impact Change on revenues H1 2015 H1 2014 (in millions euros) Dollar US 1.22 1.36 +11.5% +397 Livre sterling 0.78 0.84 +7.8% +62 Real brésilien 3.12 3.15 +0.8% +4 Bolivar fuerte 57.39 14.10 -75.5% -45 43 – First Half Fiscal 2015 Results – April 16,

  44. Slide 44: Principal Currency Effects on Balance Sheet

    PRINCIPAL CURRENCY EFFECTS ON BALANCE SHEET as of February 28, 2015 € millions USD £ BRL VEF USD £ BRL VEF Non-current Shareholders’ 472 79 (75) 0 224 63 (66) 2 assets equity Deferred tax Provisions 3 1 (4) 0 16 2 (4) 0 assets Deferred tax 11 1 (9) 0 liabilities Change in working capital 152 31 (60)

  45. Slide 45: Impacts of the Devaluation of the Venezuelan Bolivar Fuerte

    IMPACTS OF THE DEVALUATION OF THE VENEZUELAN BOLIVAR FUERTE Continuing the conversion method used since 2010 and in the absence of any new transactions in the first half of Fiscal 2015, Sodexo continues to convert Venezuelan bolivars at the rate used for the most recent transactions, which were carr

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