Sodexo plunges in Paris, cuts 2026 guidance after first-half decline

(Il Sole 24 Ore Radiocor) - Sodexo's thud on the Paris Stock Exchange, after the foodservice group revised down its financial targets for the year ending August 2026, in the wake of disappointing first-half performance. The share price fell more than 13% to a low of EUR 35.50, finishing at the bottom of the Sbf 120 index and also the Stoxx Europe 600. Competitor Elior also fell (-4.3%). The CAC 40 index is up modestly.

In the first half of FY2026, Sodexo reported revenues of EUR12.02 billion, down 3.7% (+1.6% at constant currencies), withadjusted operating profit of EUR442 million (-32%) and margin down to 3.7% from 5.2% "due to operational challenges and early management initiatives". Reported operating profit decreased 46% to 312 million and net profit fell 56.7% to 188 million. 'My main priority as CEO has been to have a clear and objective view of our current situation and how to proceed. It is undeniable that we underperformed the market average and our main competitors. The root causes have accumulated over time and are mainly related to insufficient investments and poor operating capacity,' commented CEO Thierry Delaporte, who has led the group since November, quoted in a statement.

"We have conducted an in-depth analysis of our contracts and assets, with short-term financial implications that are reflected in both the first half results and the revised forecasts we are setting out for the 2026 financial year. This operation is deliberate and necessary to rebuild a powerful growth engine and restore the group's competitiveness on a large scale," added the CEO, who during a conference call with journalists, pledged to urgently turn around the group's performance. Delaporte emphasised that significant changes in leadership and organisational simplification have been introduced to speed up decision-making.

"In North America, 70% of the leadership structure has been renewed in five months," the CEO pointed out. Against this backdrop, the group revised its estimates for the year and now expects organic revenue growth of between +0.5% and +1%, compared to +1.5%/2.5% previously indicated (versus consensus at +1.9%), an adjusted Ebit margin of between 3.2% and 3.4%, compared to "a slight decline" previously predicted (consensus 4.4%, versus 4.7% for FY2025). "While it is common for a new CEO to revise forecasts (a phenomenon known as 'kitchen sinking'), the magnitude of this revision is considerable and, just like the market, we will significantly lower our targets for 2026 and likely 2027 as well," AlphaValue analysts commented.

"Consensus revisions are to be expected to be significant following this announcement. The key question is whether the new CEO has sacrificed the 2025-2026 financial year to trigger a rapid recovery or whether these new targets reflect a challenging environment and gradual recovery," Invest Securities indicated. "We expect significant downward revisions to the consensus for Sodexo following this release, with a reduction of around 25% in operating profit for FY2025-2026," Oddo Bhf's experts said in turn. Jefferies estimates first-half results to be 19% lower than the Ebit forecast due to operational difficulties, reduced operating debt, accelerated investments and revised contracts and activities. The group will present its new roadmap and medium-term ambitions at a meeting with investors on 16 July.