Sodexo Sa · EURONEXT:SW
Sodexo Sa — H1 FY2020 Earnings Presentation
52 slides from Sodexo Sa's earnings presentation, Apr 9, 2020
Slide 1: Fiscal 2020 First Half Results
Fiscal 2020 First Half Results April 9, 2020
Slide 2: Agenda
AGENDA 1. First Half Fiscal 2020 highlights Figures have been 2. Financial Performance prepared in thousands 3. Review of Operations of euro and published in millions of euro › On-Site Services › Benefits & Rewards Services 4. COVID-19 update 5. Appendices Please refer to Appendix 7 for Alternative
Slide 3: First Half Fiscal 2020 Highlights
FIRST HALF FISCAL 2020 HIGHLIGHTS
Slide 4: H1 Organic Growth in Line with Expectations
H1 ORGANIC GROWTH IN LINE WITH EXPECTATIONS First Half Fiscal 2020 highlights Group On-Site Services RWC contributing 80 bps to H1 growth H1 FY2020 H1 FY2020 North America impacted by Healthcare +3.2% and Sports & Leisure contract exits/losses -0.4% +6.3% Solid momentum in Europe +3.2% North A
Slide 5: OSS Growth Indicators
OSS GROWTH INDICATORS First Half Fiscal 2020 highlights Client retention Comparable unit growth Business development 0 bps +70 bps -10 bps 97.8% 97.8% +2.5% +3.2% 3.0% 2.9% H1 FY2019 H1 FY2020 H1 FY2019 H1FY2020 H1 FY2019 H1 FY2020 5 April 9, 2020 - Sodexo Fiscal 2020 First Half Results
Slide 6: Stable Underlying Operating Profit Margin
STABLE UNDERLYING OPERATING PROFIT MARGIN First Half Fiscal 2020 highlights Underlying Operating Profit Underlying Operating Margin +4.3% At constant rates 0 bps € millions 647 685 5.9% 5.9% H1 2019 H1 2020 H1 2019 H1 2020 +5.9% At current rates 0 bps 6 April 9, 2020 - Sodexo Fiscal 2020 First Half
Slide 7: Solid Financials
SOLID FINANCIALS First Half Fiscal 2020 highlights CAPEX up strongly Solid Balance sheet €268m 2.3% 1.3 50% CAPEX CAPEX / REVENUES NET DEBT RATIO1 GEARING Net Acquisitions Seasonal cash generation €13m +1.1% in H1 -€243m €2,623m FREE CASH FLOW CASH IN BALANCE SHEET SPEND SCOPE CHANGE / REVENUES 7 Ap
Slide 8: A Unique Hospitality Offer in France
A UNIQUE HOSPITALITY OFFER IN FRANCE ELSAN, the 2nd largest private hospital group in France A unique collaborative model to ensure unequaled Quality of Life for all hospital stakeholders. 78 private hospitals Innovative Foodservices, Retail Management and Infection After deployment, control for
Slide 9: A Holistic Approach to Hospitality for Super Bowl LIV
A HOLISTIC APPROACH TO HOSPITALITY FOR SUPER BOWL LIV Tailored-made guest experiences For the first time, a female chef Implementing CSR initiatives for 65,000 spectators in the stadium Dayanny de la Cruz led the kitchen: › Reducing single-use plastic with and 150,000 more in the fan zone at 1
Slide 10: Financial Performance
FINANCIAL PERFORMANCE
Slide 11: Performance in the P&L
PERFORMANCE IN THE P&L First Half Fiscal 2020 Financial Performance, including IFRS16 for the first time* CHANGE At current Excluding € millions H1 FY 2020 H1 FY 2019 exchange rates currency effect Revenues 11,692 11,045 5.9% +4.3% Underlying Operating profit 685 647 +5.9% +4.3% Underlying Operating
Slide 12: Other Income and Expenses
OTHER INCOME AND EXPENSES First Half Fiscal 2020 Financial Performance € millions H1 FY 2020 H1 FY 2019 Other Operating income 5 3 Gains related to perimeter changes 2 3 Gains on changes of post-employment benefits 4 - Other - - Other operating expenses (71) (72) Restructuring and rationalization co
Slide 13: Traditional Weaker Cash Flow in H1
TRADITIONAL WEAKER CASH FLOW IN H1 First Half Fiscal 2020 Financial Performance, including IFRS16 for the first time* FIRST-HALF FISCAL 2020 INCLUDING IFRS16 EXCLUDING FIRST-HALF (€ millions) IFRS 16 IMPACT IFRS16 FISCAL 2019 Operating cash flow 791 (120) 672 648 Change in working capital excluding
Slide 14: Robust Balance Sheet and Ratios
ROBUST BALANCE SHEET AND RATIOS First Half Fiscal 2020 Financial Performance, including IFRS16 for the first time* € millions FEBRUARY 29, 2020 FEBRUARY 28, 2019 FEBRUARY 29, 2020 FEBRUARY 28, 2019 Non-current assets 10,9491 9,147 Shareholders’ equity 4,098 3,999 Current assets excluding cash 5,926
Slide 15: Review of Operations
REVIEW OF OPERATIONS On-site Services Benefits & Rewards Services
Slide 16: Solid Growth up to End of First Half
SOLID GROWTH UP TO END OF FIRST HALF First Half Fiscal 2020 Financial Performance REVENUE AT €11.7 bn TOTAL GROWTH +5.9% Currency effect Scope change +1.6% +1.1% ORGANIC GROWTH +3.2% of which: On-site Services Benefits & Rewards Services +3.2% +4.0% 16 April 9, 2020 - Sodexo Fiscal 2020 First Half R
Slide 17: OSS Review of Operations
REVIEW OF OPERATIONS On-site Services revenues OSS
Slide 18: OSS Organic Growth by Region
OSS ORGANIC GROWTH BY REGION NORTH AMERICA 45% of OSS -0.4% EUROPE 39% of OSS +4.5% +2.4% ON-SITE SERVICES Excluding Rugby AFRICA, ASIA, +6.3% AUSTRALIA, LATAM & MIDDLE EAST Excluding North America 16% of OSS +10.8% 18 April 9, 2020 - Sodexo Fiscal 2020 First Half Results Please refer to Appendix 7
Slide 19: Business & Administrations – Revenues
55% BUSINESS & ADMINISTRATIONS – REVENUES On-site Services FY19 NON RESTATED ORGANIC GROWTH RESTATED ORGANIC GROWTH1 € millions Organic Favorable North America growth currency 1.8%1 -1.3% Net Strong comparable unit growth in Corporate Services effect +8.0% acquisitions Good performance in G&A dr
Slide 20: Healthcare & Seniors – Revenues
25% HEALTHCARE & SENIORS – REVENUES On-site Services FY19 NON RESTATED ORGANIC GROWTH RESTATED ORGANIC GROWTH1 -4,6% North America € millions Impact of contract exit and losses in Healthcare 62% Favorable Net currency Selective development acquisitions effect Seniors improving with a better co
Slide 21: Education – Revenues
20% EDUCATION – REVENUES On-site Services FY 19 RESTATED ORGANIC GROWTH1 € millions Favorable Organic currency North America Growth Net effect +1.4% +0.6% acquisitions Neutral net new business Strong comparable sales in schools boosted 72% by higher volumes and price increases Inflation passed
Slide 22: OSS UOP Margin Stable
OSS UOP MARGIN STABLE First Half Fiscal 2020 highlights Underlying Operating Profit Underlying Operating Margin +3.4% At constant rates -10 bps € millions 581 616 5.5% 5.5% H1 2019 H1 2020 H1 2019 H1 2020 +6.0% At current rates 0 bps Higher health benefit costs in USA impacting UOP by 14 bps 22 Ap
Slide 23: OSS UOP by Segment
OSS UOP BY SEGMENT H1 Variation FY 2020 Constant rate €245m +17.9% Strong growth in Europe, Asia and Latin America Business & Administration Improvement of underperforming contracts 4.0%* +30 bps Health benefit costs impact of 8 bps €160m -3.8% Excluding increase in cost of health benefits,
Slide 24: BRS Results
REVIEW OF OPERATIONS Benefits & Rewards Services results BRS
Slide 25: BRS Revenues by Service Line
BRS REVENUES BY SERVICE LINE Employee Benefits 80% Services diversification 20% FY 19 BRS FY 19 BRS revenues € millions € millions revenues Organic growth Net +3.2% acquisitions Unfavorable currency effect 341 348 Organic growth Favorable +7.2% currency effect 88 96 H1 FY 2019 H1 FY 2020 H1 FY 2019
Slide 26: BRS Revenues by Region
BRS REVENUES BY REGION Europe, Asia, USA 56% Latin America 44% € millions FY 19 BRS revenues € millions FY 19 BRS revenues 10.0 Organic growth Net Favorable +9.5% acquisitions currency effect 244 270 -3.1% Unfavorable currency effect Organic growth 186 173 H1 FY 2019 H1 FY 2020 H1 FY 2019 H1 FY 2020
Slide 27: BRS Revenues by Nature
BRS REVENUES BY NATURE Operating Revenues 91% Financial Revenues 9% FY 19 BRS FY 19 BRS € millions revenues € millions revenues Organic growth Net +5.4% acquisitions Unfavorable currency effect 394 412 Favorable Organic growth currency effect 36 -11.3% 31 H1 FY 2019 H1 FY 2020 H1 FY 2019 H1 FY 2020
Slide 28: Improvement in BRS UOP Margin
IMPROVEMENT IN BRS UOP MARGIN Underlying Operating Profit Underlying Operating Margin +9.8% At constant rates +160 bps € millions 125 134 29.1% 30.2% H1 2019 H1 2020 H1 2019 H1 2020 +6.7% At current rates +110 bps 28 April 9, 2020 - Sodexo Fiscal 2020 First Half Results Please refer to Appendix 7 fo
Slide 29: COVID-19 Update
COVID-19 UPDATE
Slide 30: Fully Mobilized Against COVID-19
FULLY MOBILIZED AGAINST COVID-19 Since the beginning of January, Sodexo is implementing all necessary actions 1. Secure the safety of our employees, our clients and consumers 2. Ensure the business continuity of our operations 3. Secure the sustainability of our company and our business, over the sh
Slide 31: Fully Mobilized Against COVID-19: Safety
FULLY MOBILIZED AGAINST COVID-19 Secure the safety of our employees, our clients and consumers Sodexo is coordinating globally, regionally and locally to support and protect its employees and consumers across all of its geographies. As services experts, we work closely with our clients to support
Slide 32: Fully Mobilized Against COVID-19: Business Continuity
FULLY MOBILIZED AGAINST COVID-19 Ensure the business continuity and secure the sustainability of our company Proactive workforce Strict management Supply chain management of our cash position monitoring Redeployment of people to high- Maintaining ongoing dialogue Securing supplies of critical
Slide 33: Fully Mobilized Against COVID-19: Execution and SG&A
FULLY MOBILIZED AGAINST COVID-19 Ensure the business continuity and secure the sustainability of our company Strong execution SG&A Monitoring and contract management Control of authorities relief Immediate mitigation plans Delay non-critical projects Direct and indirect taxes (changes in servi
Slide 34: COVID-19 Revenue Reduction in H2
COVID 19 Revenue reduction in H2 top line model as of April 9, 2020 (vs last year) Q3 Q4 H2 Business & Administrations 30% 15% 25% Of which Corporate Services 30% 10% 20% Of which Sports & Leisure 85% 75% 80% Education 60% 40% 55% Of which Schools 70% 30% 55% Of which Universities 60% 50% 55% Health
Slide 35: COVID-19 Flow-Through Hypothesis
COVID 19 Flow-through hypothesis as of April 9, 2020 (vs last year) Revenue decrease vs LY: Flow-through UOP decrease: -100 circa -25 UOP decrease SG&A Revenue reduction decrease Site cost reduction 35 April 9, 2020 - Sodexo Fiscal 2020 First Half Results
Slide 36: Solid Financing Structure
SOLID FINANCING STRUCTURE Focus on cash as of 29/2/2020 BY MATURITY Gross Debt: €4.7 bn < 1 year 773 Mainly commercial paper Cash position: €2.6 bn 1-2 years 874 Of which €1.8 bn of unused credit facilities €258m USPP in March 2021 €600m bond in January 2022 Strong Investment Grade S&P “A-/A
Slide 37: Appendices
APPENDICES
Slide 38: Contract Wins and Extensions
CONTRACT WINS AND EXTENSIONS Appendix 1 Tim Hortons Field Quilter Grupo HYCSA Contract Wins Sports & Leisure contract Corporate contract Benefits & Rewards contract in Canada in the UK in Mexico KLM Na u g a tu c k S c h o o ls Emory & Henry College Contract Retention Corporate contract Education co
Slide 39: H1 Fiscal 2020 Exchange Rates
H1 FISCAL 2020 EXCHANGE RATES Appendix 2 AVERAGE AVERAGE RATE CLOSING RATE CLOSING RATE CLOSING RATE 1€ = RATE AVERAGE RATE H1 FISCAL 20 FISCAL 19 H1 FISCAL 20 29/02/20 H1 FISCAL 20 H1 FISCAL 19 VS. H1 FISCAL 19 AT 31/08/2019 AT 29/02/2020 VS. 31/08/19 U.S. Dollar 1.105 1.145 +3.7% 1.104 1.098 +0.5%
Slide 40: Breakdown of Gross Financial Debt: €4,697M
BREAKDOWN OF GROSS FINANCIAL DEBT: €4,697M* Appendix 3 EXCLUDING IFRS16 LEASES € millions BY CURRENCY BY MATURITY 42% $ < 1 year 773 * 2% Other 48% € 1-2 years 874 8% £ Average maturity 2-3 years of 4.3 Years 9 0 at 29/02/2020 INTEREST RATE 3-4 years 430 85% 4-5 years 476 Fixed 15% > 5 years 2,136 V
Slide 41: Number of Shares
NUMBER OF SHARES Appendix 4 COMPANY’S SHARE CAPITAL FEBRUARY 29, 2020 AUGUST 31, 2019 FEBRUARY 28, 2019 Company’s share capital, number of shares 147,454,887 147,454,887 147,454,887 Treasury shares 1,821,266 1,448,566 1,731,012 Number of shares for EPS calculation (Basic weighted average number of s
Slide 42: FY2020 On Site Services Inter-Segment Revenue Reclassifications
FY2020 ON SITE SERVICES Appendix 5 INTER-SEGMENT REVENUE RECLASSIFICATIONS Revenues FY19 Q119 Q219 Q319 Q419 (in millions of euros) B&A HC EDU B&A HC EDU B&A HC EDU B&A HC EDU B&A HC EDU North America Europe +221 -143 -78 59 -36 -23 56 -36 -20 58 -35 -23 48 -37 -11 Africa, Asia, Australia, 17 -17 4
Slide 43: IFRS 16 Leases
IFRS 16 “LEASES” Appendix 6 New accounting standard applied in First Half Fiscal 2020 Sodexo applied IFRS 16 from September 1, 2019 with no restatement of comparative periods, in accordance with the standard IAS 17 dual accounting model applicable to lessees* replaced by a single model: all leas
Slide 44: IFRS 16 Leases: Impact on Financial Statements
IFRS 16 “LEASES” Appendix 6 Impact on First Half Fiscal 2020 Consolidated financial statements Impact on P&L H1 FY 2020 H1 FY 2019 › Operating lease expense replaced from Fiscal 2020 by: • a depreciation of the right-of-use asset € millions Post-IFRS 16 (published) IFRS 16 impact Pre-IFRS 16 IAS 17
Slide 45: IFRS 16 Leases: Impact on Alternative Performance Measures
IFRS 16 “LEASES” Appendix 6 Impact on First Half Fiscal 2020 Alternative Performance Measures* The Group does not believe the new accounting treatment introduced by IFRS 16 modifies the operating nature of its lease transactions. Accordingly, to ensure the Group’s performance measures continue to be
Slide 46: Alternative Performance Measure Definitions
ALTERNATIVE PERFORMANCE MEASURE DEFINITIONS Appendix 7 Blended cost of debt Organic growth The blended cost of debt is calculated at period end and is the weighted Organic growth corresponds to the increase in revenue for a given period blended of financing rates on borrowings, (including derivative
Slide 47: Alternative Performance Measure Definitions
ALTERNATIVE PERFORMANCE MEASURE DEFINITIONS Appendix 7 Underlying Operating profit Underlying Net profit per share Operating profit excluding other operating income and other operating Underlying Net profit per share presents the Underlying net profit divided by expenses. Other operating income and
Slide 48: APM - Financial Ratios Definitions & Reconciliation
APM - FINANCIAL RATIOS DEFINITIONS Appendix 7 & RECONCILIATION H1 2020 H1 2019 Gross borrowings(1) – operating cash(2) Gearing ratio 50% 45% Shareholders’ equity and non-controlling interests Gross borrowings(1) – operating cash(2) Net debt ratio 1.3 1.2 Rolling Underlying Earnings before Interest,
Slide 49: Revenue Breakdown
REVENUE BREAKDOWN Appendix 8 RESTATED REVENUES BY SEGMENT ORGANIC EXTERNAL CURRENCY TOTAL H1 FY20 H1 FY19 ORGANIC (In millions of euro) GROWTH GROWTH EFFECT GROWTH GROWTH Business & Administrations 6,186 5,645 5.7% 8.0% 0.6% 1.0% 9.6% HealthCare & Seniors 2,538 2,552 -2.0% -5.0% 2.5% 2.0% -0.5% Educ
Slide 50: Financial Calendar
FINANCIAL CALENDAR Appendix 10 Fiscal 2020 nine month revenues July 7, 2020 Fiscal 2020 Annual results October 29, 2020 Fiscal 2020 Annual Shareholders Meeting January 12, 2021 These dates are purely indicative, and are subject to change without notice. Regular updates are available in the calendar
Slide 51: Sodexo Key Figures
SODEXO KEY FIGURES Appendix 11 €22 bn revenues Founded in 1966 by Pierre Bellon As at 31/08/2019, Bellon S.A. holds 42.2% of capital (56.7% of voting rights) 470,000 employees 19th Largest private employer worldwide 100 million consumers served daily 67 countries market Strong Investment €9.4 bn
Slide 52: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS Appendix 12 Head of Investor Relations www.sodexo.com Virginia JEANSON Tel: + 33 1 57 75 80 56 virginia.jeanson@sodexo.com Investor Relations Manager Sarah JAMALI-KLEIN Tel: + 33 1 57 75 83 68 sarah.jamali@sodexo.com Investor Relations Coordinator Cynthia CATTY Tel: