(Adds details from call, analyst comment, share performance)
By Juliette Portala and Piotr Lipinski
April 1 (Reuters) - French catering and food services group
Sodexo reported on Thursday a large profit margin beat
but cautious second-half forecasts, flagging short-term
volatility in view of a resurgence in coronavirus infections.
The Paris-based firm posted an underlying operating profit
margin of 3.1% for the six-month period through February,
beating its own raised forecasts of at least 2.5%.
"We are slightly above analysts' estimates, as the consensus
was around 2.7%-2.8%," Finance Chief Marc Rolland said on a call
with reporters.
Lockdowns have hurt the big catering companies such as
Sodexo and British rival Compass Group, with offices
closed in parts of the world and large public events on hold.
Sodexo, whose clients range from England's Royal Ascot
Racecourse to the U.S. Marine Corps, cited the renegotiation of
contracts and tight cost control as reasons behind the
performance, as its restructuring programme moves forward.
In October, the group announced plans to cut more than 2,000
jobs as COVID-19 lockdowns ate into revenue. The plan should be
implemented between now and the summer, Chief Executive Denis
Machuel said on the call.
For the second half of its financial year through August,
the company expects margins to be stable while it sees little
improvement in quarter-on-quarter revenue volumes trends, given
the new waves of the pandemic.
On Wednesday, French President Emmanuel Macron ordered the
country into its third national lockdown.
Sodexo shares slipped 0.4% by 0905 GMT, paring earlier
losses of as much as 1.6%, with analysts seeing the guidance as
generally disappointing.
"Guidance and results combined imply a downgrade to
consensus (full-year 2021) operating profit," Berenberg's
analysts said in a note to clients.
Compass, which announced job cuts, furloughs, and reduced
working hours last year, last month predicted better margins as
it trimmed costs to soften the coronavirus blow.
(Reporting by Juliette Portala and Piotr Lipinski ; Editing by
Sherry Jacob-Phillips and Keith Weir)
Compass Group (CPG)
