Rugby helps to kick-start Sodexho in '08

Catering and services group Sodexho Alliance said fiscal 2008 got off to a strong start as the Rugby World Cup helped lift UK sales but the firm's shares sagged on fears about the outlook for its US business.

The company, which employs 342,000 people worldwide to feed office staff, soldiers, patients and visitors to the Eiffel Tower, said first-quarter like-for-like sales grew 10.9 percent and affirmed a goal for full year revenue growth over 7 percent.

"We had a very strong first quarter," Chief Executive Michel Landel told a conference call with analysts. "We are very confident about our objectives for 2008."

The company said sales in the three months to November 30 rose to 3.763 billion euros, which Oddo Securities analyst Guillaume Rascoussier said was above expectations.

But Sodexho shares fell sharply after Landel said the company was seeing some slowdown in its US business catering for special events, and despite his assurances the other 80 percent of its US food business was proving resilient.

He said the slowdown mainly affected catering for financial service firms, although these firms - which have been hit hard by the subprime mortgage crisis - only accounted for about 15 percent of its client base.

At 1039 GMT, Sodexho shares were 3.5 percent lower at 36.59 euros, underperforming a broadly weaker DJ Stoxx European travel and leisure index and its main rival, Compass Group, whose shares were down 0.3 percent.

Sodexho's first-quarter results included a 41.1 percent rise in food and facilities management sales in Britain thanks to a 150 million euros contract linked to the Rugby World Cup.

The company said UK sales would have been flat without the impact, although the underlying trend in the UK was up.

It said its core catering business overall posted a 5.4 percent rise in sales to 3.642 billion euros, or a like-for-like increase of 10.8 percent.

Sales at its smaller but faster-growing service voucher business grew 24.9 percent to 123 million euros, or 13.9 percent like for like.

Agencies

(China Daily 01/10/2008 page17)