Sodexo S/Adr

Good morning. Thank you for standing by and welcome to Sodexo's first half fiscal 2025 results conference call. After the presentation, there will be an opportunity to ask questions by pressing star and one at any time. I advise that this conference is being recorded today, Friday, on the 4th of April, 2025. I would now like to hand the conference over to the Sodexo team. Please go ahead.

Good morning, everyone. Thank you for joining us today. I'm Juliette Klein, Head of Investor Relations, and I'm pleased to welcome you on our H1 Fiscal 2025 Results Call. On the call today is Chairwoman and CEO Sophie Bellon and CFO Sébastien Dutra-Mazur to take us through the presentation. After their remarks, we'll open the line for questions. We'll ask you to please limit yourselves to two questions and one follow-up. The press release is available on FedExo.com. Please note that this call is being recorded and may not be shared without our consent. Just a reminder that our next announcement will be the Q3 figures on July 1st. Please reach out to the IR team if you have any questions after the call. With that, I now hand over to Sophie.

Thank you very much, Juliette. Thank you for joining us today. Just two weeks ago, we shared our preliminary H1 results and revised our full year guidance. We recognize them and reiterate today that some of our initial assumptions have not played out as expected. Today, we want to provide further clarity on what has changed and why we remain confident in our strategy. When we started the year, we believed there was a clear path to achieving our targets. This was based on strong commercial momentum, expected volume growth, and the wrap-up of key contracts. Several factors, however, did not materialize as we anticipated. Upon receiving particularly weak February results, we immediately started to review and analyze our data and assumptions in granular detail. We concluded that our FY25 guidance was too optimistic regarding the pace of volume acceleration and new contract openings. Sébastien will provide you with more details just after. The challenges we are facing are in a few specific areas, and we are addressing them head-on. In North America, education remains the key focus. We have a new leader in place since February. His roadmap is clear. Refine the portfolio mix, strengthen our offer, and accelerate innovation to improve growth and performance. The impact of this initiative should become visible throughout fiscal year 26. Another significant challenge this year is a negative net new contribution in North America. While our 24 signings were strong, two large contracts will only start contributing in financial year 26 and beyond. This means the underlying financial year 24 net new contribution was effectively neutral. At the same time, net signing in the first half of fiscal year 25 were weaker than expected. We are having to deal also with the timing challenges. Some of the new contracts are ramping up gradually, while some losses take full effect immediately, which means net new contribution is a headwind for this year in North America. Our plan to address this challenge is based on two key pillars. First, we are intensifying our focus on sales and retention, building on the initiative we have implemented over the past year, and this includes the effective deployment of branded offers, the complete review of incentive schemes for our sales team done this year, and extensive training programs. These efforts are already showing encouraging signs. Our North American pipeline remains strong, and we have secured notable contract wins in recent weeks. While these will have a limited impact on this year's results, mainly starting in Q4, they lay the foundation for growth in fiscal year 26 and beyond. Second, we are tightening our approach and criteria to assessing contract ramps up and scrutinizing volume assumptions more closely. This will help improve predictability and ensure a more disciplined execution of our growth strategy. Finally, in Europe, While microeconomic conditions continue to impact facility management, we are focused on execution and operational efficiency to mitigate the effects. Despite these challenges, our confidence in our strategy remains unchanged. Our teams are highly engaged and committed to execution, restoring performance in these key areas and tightening predictability. Looking ahead, our priorities are clear. We are executing with discipline, adapting when necessary, and staying focused on long-term value creation. With that, I will hand it over to Sébastien, who will take you through the details of what led to the guidance revision and provide clarity on how we view the second half of the year.