Sodexo Announces Fiscal 09 1Q Numbers

Sodexo North America posted organic revenue growth of 5.6% in its first 2009 fiscal quarter. It was 11% if currency impact (4.8%) and acquisitions (0.6%) are included. The company noted strong growth in healthcare, education and senior dining in making the announcement but conceded that the economic crisis has begun to weigh on the corporate dining business, which shrank 2.3% over the period.

The three months of the fiscal quarter ended November 30, thus including the emergence of the credit and banking crisis in October. Sodexo blamed a reduction in discretionary spending by corporate clients, fewer numbers of employees among some clients and the scheduled close at end of project life of contracts in the energy sector in Canada for the B&I business shortfall. There were some new contract wins, however, including Blue Cross & Blue Shield, five Procter & Gamble Paper Products Co., Ltd. sites and La Sarcelle, a remote site operation in Canada.

In healthcare, Sodexo recorded organic growth of 8.4%, a result in particular of strong comparable unit growth (food cost inflation pass through and an expanded service offering) and the ramp up effect of an important facilities management contract at Abbotsford in British Columbia. Recent contract wins in the segment include John Peter Smith Hospital in Texas, the University of Mississippi Medical Center and Hurley Medical Center in Michigan.

The education segment rose 7.5% thanks to strong comparable unit growth on university campuses and schools, a result of an increased student population, the company says.