Sodexo S/Adr

Good morning. Thank you for standing by and welcome to the Sodexo fiscal year 2025 results call. I advise you that this conference is being recorded today, Thursday, October 23rd, 2025. I would like to hand the conference over to the Sodexo team. Please go ahead.

Good morning, everyone. Welcome to our fiscal 2025 results calls. I'm here with Sophie Bellon and Sébastien de Tramasur. They'll go through the presentation and then take your questions. We ask you to please limit yourself to two questions and one follow-up. The slides and the press release are available on FedEx2.com, and you'll be able to access this webcast on our website for the next 12 months. Please get back to the IR team if you have any further questions after the call. I remind you that our Q1 fiscal 2026 revenues announcement will be on Thursday, January 8. With that, I now hand over to Sophie.

Good morning, everyone, and thank you for joining us today. We spoke to you a couple of weeks ago regarding our governance changes, and today we are going to cover our fiscal year 25 results and our priorities and outlook for 2026. Just on the slide here, a brief summary of what we're going to cover today. When I became a CEO in 2022, our priorities were clear. Reposition Sodexo as a pure-play food and services company and simplify the organization. Over the past three years, we've made solid progress, streamlining the portfolio, refocusing on food, accelerating key investments, and strengthening client relationships. These were essential steps to build a strong foundation for sustainable growth. In financial year 2025, Results came in line with revised guidance, reflecting both operational and commercial challenges. We are actively addressing these with targeted action plans in commercial and in U.S. universities. We are also continuing to strengthen our foundation. With this in mind, fiscal year 26 will be a year of transition and the start of a new phase for the group. Thierry Delaporte will soon take over as CEO bring the right experience and profile to drive operational execution, accelerate commercial momentum, and lead the group forward. But let's now first take a backward perspective on our key achievements from the last three years and 2026 priorities. Before, Sébastien walked you through the fiscal year 25 results and the resulting fiscal year 26 guidance. Turning to the next slide, while I won't go into every detail here, this timeline of recent years shows the major steps of our shift to a pure plate food and services company. We have simplified our structure through geography, reorganization, and the sale of soffin sod. We have actively managed the portfolio by spinning off Plexi and making other non-core disposal, while pursuing targeted acquisition to accelerate in food. So, if we look now at the impact of this refocus on core activities, you can see that there has been real progress in the numbers. Let me pick out some highlights. Food now covers more than two-thirds of our portfolio, up from 62% in fiscal year 22. We have modernized the offer based on data-driven insights across culinary, digital, and sustainability. Digital engagement has surged. Almost 6 million active consumers up from just over 1 million, showing how we're expanding our reach and creating new growth avenues. Our branded food offer now represents over 50% of revenues versus less than 20% three years ago, improving client experience, standardization, and operational efficiency. Integra has more than doubled in size, boosting procurement benefits, and we've also advanced catalog compliance. both strengthening our competitive edge. On sustainability, we are hitting the targets we set on workplace safety, carbon, and food waste, thanks to close collaboration with our clients and partners. And we are leading by far the industry on those aspects. And all of this is creating tangible value. Our underlying earning pressure has grown at 14% combined annual growth rate, and we have seen a marked improvement in our return on capital employed. Moving on to commercial performance. We have made a solid improvement in retention and development compared to the pre-COVID period. Over the last three years, our average retention is 94.5 versus 93.5 between 2017 and 2019. Likewise, on development, We signed around 1.7 billion euros of new contracts per year, including cross-selling, compared with 1.4 billion euros before the pandemic. This is a result of our ongoing focus on processes, team culture and competence, but also client relationship. However, this does not reflect our full potential with fiscal year 25, presenting some commercial challenges. In fiscal year 25, Retention came in at 94% due to the negative impact from the loss of a global account and softer performance in North America, in particular in education. Performance is uneven across a business. For example, in U.S. healthcare, we delivered retention above 97%. And in France and Australia, we were above 96%. On development, H1 was strong, especially in Europe and rest of the world, but H2 softened and total new business landed at 1.7 billion euros. North America, which remains our largest market, is where we need to improve. We have clear actions underway. We are addressing near-term priorities in U.S. higher education, and we are strengthening our U.S. sales team through expansion and training. We're also investing and reorganizing to make sure we capture the market's potential. I will now walk you through in more detail how we are addressing the challenges in U.S. higher education. We clearly had some performance gaps over the past couple of years in this segment, and it's translated into market share losses. Since February, together with Michael Zadis and his team, we have carried out a comprehensive diagnostics process to fully understand the root causes behind this lag. A few key issues stood out. First, our footprint is still too concentrated in small and mid-sized institutions. Second, we have not focused enough on mid-plan renegotiation. And third, we've had some resource misalignments. The remedial action plan is already well underway. Michael has put in place a new organization with culinary and digital now reporting directly to him, and he has re-energized the team to drive best practice and greater standardization. Our sales function was clearly subscale, so we have expanded the team by 50% with the newly hired sales executives already in place and operational. We are also targeting more large universities and athletics, working more closely with Sodexo Live. To strengthen existing relationships, we are growing our account management team and refreshing our broader team, bringing in new talent where needed to ensure the right capabilities are in place. Execution is a big focus. We are currently renegotiating 75 meal plans for implementation in fall 2026, and we have rebuilt the meal plan team, which had been disbanded during the COVID period. Now we are harnessing data and tech to methodically track what's selling, where, and to whom. We are deploying digital platforms like Everyday and Grubhub and strengthening our own retail brand to streamline the offer. This plan is clear, but it won't be executed overnight. Some levers will take time and given the timing of the selling season fiscal year 26 is largely set already. The goal is therefore to restore growth momentum and capture new market opportunities progressively from fiscal year 27 onward. Michael and his teams are laser focused. Michael has visited more than 20 campuses in the last three weeks. The feedback is very consistent. Universities are under financial pressure, they are becoming more business-driven, and they are open to change. That creates challenges, but also a lot of opportunities, and we are now in a much better position to seize it. So, as you can see, we have set focus priorities in the U.S. for this year, short-term, very execution-driven, to put us back on a stronger trajectory. With that in mind, fiscal year will very much mark itself as a year of transition. It will still reflect some of the commercial challenges we have just discussed, but also the investments we are making to strengthen our foundation, to drive efficiency, accelerate digital, and prepare for long-term growth. Sébastien will get back to that. We have a strong foundation to build on, with a solid balance sheet and the flexibility to invest where it matters most. We are the number two player globally with a balanced portfolio across region and segments. We have the scale to leverage procurement, technology, and operational excellence across the group. Our culture remains a key driver of sustainable performance, purpose-driven, people-focused, and deeply engaged with our clients. Retention in our industry drives resilience, and our teams are proud to deliver on our mission every day. And of course, we operate in a large and attractive market, still 50% insourced, with significant outsourcing opportunities ahead of us. Looking ahead, I'm also very confident in the next phase for Sodexo. On November 10th, Thierry Delaporte will join us as Group CEO. He brings over a decade of leadership experience in the U.S., strong digital and AI expertise, and proven track record in leading large people-intensive organizations. He's operational and execution-focused and deeply aligned with our values. He's the right fit to take Sodexo into its next stage of development. And with that, I'll now hand over to Sébastien to take you through the fiscal year 25 financial and fiscal year 26 guidance in more detail.