Sodexo S/Adr

Good morning. Thank you for standing by and welcome to Sodexo H1 Fiscal Year 2026 Results Conference Call. After the presentation, there will be an opportunity to ask questions by pressing star 1 at any time. I advise you that this conference is being recorded today on Friday, April 10, 2026. At this time, I would like to hand the conference over to the Sodexo team. Please go ahead.

Good morning, everyone, and thank you for joining us for our H1 Fiscal 2026 Results Call. I'm Juliette Klein, Head of Investor Relations. With me on the call today are Thierry Delaporte, our CEO, and Sébastien Detramadieu, our CFO. Thierry will start by sharing his assessment and key messages, followed by Sébastien, who will cover the financials. After that, we will open the line for questions. As usual, we ask you to please limit yourselves to two questions and one follow-up. If you have additional questions after the call, please don't hesitate to reach out to the IR team. With that, I'll now hand over to Thierry.

Merci. Thank you, Juliette. Good morning, everyone, and thank you for joining the call. This is my first earnings call as CEO of Sodexo. I'm very pleased to be speaking with you today. What I'll do is I'll share my perspective on where the company stands today, what we are already doing, but also the priorities we are setting. We are preparing a more comprehensive update for July 16. Based on our current assessment of the business and the actions we are implementing, there are also some near-term financial considerations. So I want to provide context on how this shapes our outlook for 2026. Over the last five months, I've spent most of my time in the field with clients, with teams in operations, and with our partners. I've been traveling across the U.S., where I'm spending half of my time, but also in Asia, in Europe. I joined Sodexo because I'm genuinely attracted to this business. I know B2B, people-intensive services well. I know how much value can be created when execution, discipline, and client focus come together. Sodexo, let me tell you, is a special company. The quality of our people... The pride they take in serving clients every day and the expertise on the ground absolutely stands out. We often operate in environments where reliability, quality, continuity are critical. So delivering this consistently every day and at our scale is no mean feat. The group was built by Pierre Bellon on a clear entrepreneurial ambition and a strong client mindset. I fully adhere to these foundations. Our priority now is to bring them back to life everywhere. At the same time, this business is different from what I have known before. It's complex in a different way. It's operational, physical, highly decentralized, and diversified by nature. We have thousands of sites running every day in real time. Discipline, execution, and attention to every single detail make the difference. The real challenge, therefore, is driving rigor, discipline, and consistent performance at scale. It's about how we lead, organize, and execute. Too often, great people are held back by layers, processes, and administration instead of being fully focused on clients. So my conviction is clear. Growth is the solution. And growth comes from an obsession with clients on the ground every single day. It's earned contract by contract, side by side, by building trusted relationships and creating value at the client level. In our model, growth is not just an outcome. It's a catalyst. It drives operating leverage to support profitability enhancement. It basically fuels the organization with energy, talent, and confidence. So let me start with a balanced picture of Solexo today, our strengths and the realities we need to address. We operate in resilient and growing markets with strong long-term growth drivers. Demand for outsourced services in both food and facility management continues to expand. We also have a global and highly diversified client portfolio, as I said, across geographies, segments, services. In many cases, we are the best partner to self-deliver an integrated proposition with one governance across multiple geographies. This strengthens client relationships and gives us additional levers to grow alongside them. Another key strength, These are people-led service culture, teams who care, who show up for clients every day, and we take pride in delivering. In a people-intensive business like ours, this is fundamental. It's a foundation we will build on as we restore execution and growth. But we also have to face the facts. And the facts are we have consistently underperformed our market and our peers. We underinvested in key capabilities that are critical to run well this business at scale and build a repeatable model. We have not been consistent enough in deploying a best-in-class offer, in execution, and in the predictability of our delivery and guidance. So what has held us back? The root causes go back a long time, and there is no single fix. First, commercial intensity. We have not shown enough appetite to win, not enough hunger to fight for clients, to stay close to them, to truly understand their expectations, to anticipate and even surprise them. We have not been consistent enough in the way we drive growth and retention, winning, defending, Expanding key accounts, always with discipline and cadence. Being a service business, you just can't review sales momentum once in a while and expect intensity to magically appear. It requires systematic follow-up and accountability and sharper engagement with clients. That is changing. Second, empowerment and decisiveness. Decision rights, accountability, have become diluted across layers. A heavy structure slows you down, creates interference, and reduces the permission to act close to the clients and the operations. And so, the prioritization and focus past organizational choices and too many parallel initiatives wasted attention and resources. We were not Consistently putting our people and capital towards the highest value priorities. Sometimes, short-term trade-offs prevail over long-term value creation. As a consequence, we have not invested enough in the capabilities that make execution predictable. Sales effectiveness, account management, processes, systems, and tools. Now, let me move to what we are doing differently starting now and with a clear focus. We are turning the entire organization towards growth, restoring execution discipline, and creating a real sense of accountability and urgency across the board. The first decision I made was to take direct leadership of North America. I wanted to go deep into the business, understand what works and what doesn't, and make the necessary changes at the right pace. Over the past month, we have changed around two services. of the leadership team in North America. This is about bringing the right mix of experience, energy, accountability. We combine internal talent with external hires to better serve our clients and execute more consistently across America. In parallel, we simplified the global leadership structure and we shaped the executive committee to be more execution focused. We removed the zone layer with regional CEOs now reporting directly to me. This inevitably shortens decision paths, strengthens accountability, and brings leadership much closer to clients and operations. The executive committee now brings together the business leaders and a very limited number of global factions. and it has a clear mandate, enable execution across the group with discipline and urgency. We also re-anchored incentives on growth to reinforce focus and accountability across the organization. In parallel, we are reinforcing self-capabilities, not only in the U.S., but everywhere. Beyond resources, we are strengthening our commercial engine by tightening discipline, and governance. We're now consistently running a monthly review of commercial performance, which was not the case, clarifying account ownership, and reinforcing the role of account managers. They are key leaders in the organization, fully accountable for client development and retention. We are also accelerating investments in technology. This work had already started, you know that, but it's clear we need to move faster. The focus is on strengthening our core systems, notably finance and HR, and scaling client-facing digital solutions. To me, these are no option. They are required to improve productivity, speed, and overall performance for our teams and for our clients. Finally, we have reinforced the disciplined and systematic reassessment of contracts and assets. taking into account changes in the environment, but also the strategic choices we make. Sebastian will explain how this has translated into the numbers. These measures, for sure, have a short-term impact on margin. This is deliberate. We are choosing to fix the engine properly rather than optimize around the ages. That allows us to raise execution startups immediately. Then, over time, to re-accelerate growth in a sustainable way. Now, looking forward, our next priorities are also very clear. First, we are aligning the organization around a single execution agenda. One set of priorities and clear choices on where we play, how we operate, and where we invest. Our choices are grounded in our strengths, our clients' needs, and market trends. We call this program Shift and Grow because that is what it is about, shifting the business to grow faster. Second, we are changing how we run the company. Decision-making is being pushed closer to the client. Operational teams are being empowered. Headquarters are refocused on supporting execution rather than adding layers. At the same time, We are restoring competitiveness across the model, starting with labor. In my view, while a lot has already been done on supply, workforce management is where we see the biggest opportunity. Actively managing the workforce pyramid, improving on-site utilization, better matching staffing to client demand. That's what I've done for years. We're going to do it here. All of this supported by stronger processes and tools. And that's because these actions are already in motion. Finally, we are reinforcing a strong client focus. Every day, I'm talking to some of our clients. I make it a priority. In all our leadership meetings, we start with client cases. We're keeping this focus front and center. And I want every leader to personally own the client relationship and performance. We're also strengthening our performance culture. We are developing internal talent, bringing in external capabilities where needed, and raising the bar on delivery. This is about empowerment and accountability. All of this has clear implications for how we invest, allocate capital, and approach the Eurohead. That brings me to the recalibrating baseline we are setting for the fiscal year 26. Turning to H1. The numbers reflect both ongoing execution challenges and deliberate management actions to establish a more disciplined baseline. Organic growth was plus 1.7%, consistent with what we laid out in January, but, frankly, below what this business should be delivering. Looking at our conversion indicators, retention over the last 12 months was 93.4%, and development 5.3%. That's leading to negative net new business levels that are not where they should be, reflecting both execution issues and an insufficient quality of pipeline and win rates. The underlying operating profit margin was 3.7%, which is down 140 basis points year-on-year. This reflects operational challenges in specific areas, for sure, and the impact of the deep review of contracts and assets we have conducted in the last few weeks and days. As we look to the full year, weaker than net-year business in the first half will obviously weigh on organic growth in the second half, as well as lower volumes in an uncertain external environment. Lower operating leverage, execution issues in H1, and the actions we are taking are reflected in our outlook. Taken together, this leads to a recalibrated starting point for FY26, with now an organic growth expected between plus 0.5% and 1%, and an underlying operating profit margin between 3.2% and 3.4%. So before I hand over to Sebastian, I want to say I'm confident in the directions we are taking. The work is well underway. We clearly see where the levers are for improvements. We are buried in markets that are fundamentally attractive, and we are convinced of the relevance of our model. We are already seeing tangible changes in how teams work together, how decisions are made, and how we go to markets. With that, I'll now hand over to Sebastien to walk you through the H1 performance in more details, and we'll talk later. Thank you.