Sodexo S/Adr

Good morning, everyone. Welcome to our Q1 fiscal 2026 revenue call. On the call today is Sébastien Dutramazur, our CFO, to take us through the presentation. After Sébastien's remark, we will open the line to take your questions. We'll ask you to please limit yourself to two questions and one follow-up. Please get back to the IR team if you have any further questions after the call. With that, I'll now hand over to Sébastien.

Thank you, Juliette. And good morning, everyone. I wish you all a very happy, healthy, and successful 2026. And thank you for joining us today. So I will start this call with a brief look at our first quarter performance before I touch on our operational priorities and our outlook for the year. And then I will be happy to take your questions. So in the first quarter of fiscal 2026, So Nexo delivered revenue of 6.3 billion euros, and this is broadly in line with our expectation. Organic revenue growth was 1.8%, while reported revenue were impacted by a negative 4% currency effect, with a negligible contribution from acquisitions and disposal. So looking now at our performance by geography. In North America, organic growth was minus 1.5%. This reflects several known factors, including contract exit in education and business and administration last year, as well as a strong prior year comparison for Sodexo Live, as we had exceptional event activity in the first two quarters of last fiscal year. And these effects were partially offset by contributions from the new healthcare contracts. We enter into the fourth quarter of last fiscal year. In business and administration, while we had anticipated a negative trend due to the contract exit I just mentioned, it was amplified by scope changes at a few larger accounts and to a lesser extent by external elements linked to the U.S. government shutdown. Meanwhile, Sodexo Live performed slightly better than expected. The Mariners' successful run in the playoffs provided a welcome boost, with additional games at the T-Mobile Park having a positive contribution on revenue. In Europe, organic growth reached 2.4%. This was driven by new contracts in business and administration and healthcare. which more than offset high prior year comparable in Sodexo Live linked to the Paralympics, as well as softer trend in education, mainly reflecting contract exits. In the rest of the world, OrganiGo was strong at just over 10%. This was driven by solid performances in Australia, supported by new contract and scope extensions, along with good momentum in India in corporate services and in Brazil and Chile. Overall, across the dynamic markets where we operate in this region, we are making significant progress with a robust growth coming from both new wins and from healthy underlying momentum on existing contracts. Then from a strategic and operational perspective, as you know, Thierry joined us as our new CEO in November. And as stated in the press release this morning, he's currently in an assessment phase across the business, spending a lot of time in the field with our client and with our team. And he will share his initial views at our half-year result in April. And this will be followed by a more comprehensive assessment and plan before the summer break. In the meantime, we are not standing still. Our near-term priorities are clear and execution is moving forward. And let me briefly update you on the initiative we outlined as our full year. In the U.S., we are strengthening our sales organization. Our objective is to double the size of our North American sales team within two years. Since the beginning of this fiscal year, our sales floor has increased by 20% with continued recruitment in priority segment. For example, we have increased the number of sales people in our education segment by 40%, and more broadly, Over half of our sales team has joined in the past 18 months, bringing in new talent and fresh energy. We are also accelerating the time to productivity by strengthening onboarding and training, and by embedding AI across the sales cycle from prospecting to proposal development. On supply chain, we are redesigning how we buy food and moving to standardize ingredient level offers with common specs so we can buy at scale and strengthen compliance through our digital tools. In the US, this new target operating model is already delivering tangible benefits in the first pilot sites. We are also running out our AI-based retail compliance tool. It's called Perfect Score. This is significantly improving planogram compliance. And these early results give us confidence as we scale the model across US portfolios through fiscal year 26. On ERP, India will go live in the second half of the year with our global finance and supply system. And in North America, Deployment of the new food management system is now on the way. Overall, this multi-year program remains key enablers of operational discipline and scalability. On global business services, progress continues. We have completed our large IT outsourcing program covering run activities for applications and infrastructure. We are also expanding our share service footprint and including the new Bogota Center, which now supports North America with close to 150 FTEs. And around 30% of North America's share support is now delivered through global business services, giving us access to more flexible and scalable support capacity. Overall, we have now over... 1,000 people working across our three shared service centers, and we are accelerating the program with additional expansion to follow. So overall, we are progressing as planned on this key initiative to strengthen the underlying foundation of our business. Turning now to our outlook and expected fading effects for Fish Failure 26. We are reiterating our guidance framework with organic revenue growth expected between 1.5% and 2.5%, and our underlying operating margin expected to be slightly lower than fiscal year 2025. In terms of revenue phasing, we expect the second quarter to be towards the lower end of the four-year guidance range, and this will be followed by a gradual improvement in the second half, mainly driven by favorable comparatives and phasing of the DEXA line. On margin, so we usually see some seasonality with H1 being higher than H2. This year, the phasing will be different with H1 and H2 margin more closely aligned. This means that H1 will show a higher year-on-year reduction in margin. Three main factors explain this. First, the acceleration of the investment we started in the second half of last year. Second, mobilization cost on our new large healthcare contracts. And third, the impact of negative organic growth in North America with limiting operating leverage and a less favorable segment and contract mix. For fiscal 2026, we now expect other income and expenses to be around 200 million euros, compared to our initial indication of 160 million euros. This increase mainly reflects additional restructuring costs related to organizational changes, acceleration in the global business service program to push our competitive depth, and some other one-off elements. Meanwhile, we continue to expect an M&A impact of revenue of 0.5%, net financial cost of around 140 million euros, and an effective tax rate of approximately 27%. And as usual, all the numbers are in the appendix of the slide deck. So overall, our fiscal Q1 performance is consistent with our expectation. But let me be clear here. This does not reflect the potential we aim to realize for the company. We remain focused on execution, staying close to clients, moving faster, focusing on growth, and executing with more rigor and simplicity. And together with Thierry, we will provide more color on this in due course.

With that, we'll open the call to questions.