Fiscal 2020 Integrated Report

2. A year marked by the Covid-19 crisis

Despite the crisis, Sodexo remains true to its promises and commitments. With our teams, we are creating a collective dynamic and clear path forward to create value for all of our stakeholders.»

Sodexo’s innovation and responsiveness were fully demonstrated through the creation of “rise with Sodexo.” Launched in record time, this global program highlights the unmatched value, uniqueness and relevance of our service portfolio, particularly given the current context. Focused on the needs of our clients and consumers, this program enables them to meet the challenges they face in terms of safe health, well-being and performance. And because we are convinced that trust is a key element in this new reality, we have strengthened this program by establishing a Medical Advisory Board and a certification label for our sites with Bureau Veritas.

Of course, there have been business impacts from closing or reducing many parts of our business, including in Sports & Leisure, Schools & Universities and Corporate Services. To respond to the pandemic’s economic consequences, we quickly identified all possible means to reduce costs, interrupted non-essential investments and protected our cash fl ow. As much as possible, we have sought solutions to preserve employment and support our teams impacted by the crisis, for example by forging partnerships with other sectors under pressure or by establishing an unprecedented global Employee Relief Program, made possible by the support of the Group’s senior executives. Our financial results in the second half of the year were inevitably impacted by the Covid-19 pandemic, with annual consolidated revenues of 19.3 billion euro, down -12%. Our operating margin was 2.9% and the free cash flow stood at 72 million euro. Through rigorous management of the crisis, the fiscal year ended with a solid balance sheet, with liquidity of 5.1 billion euro, allowing us to look to the future with confidence.

During this exceptional period, and reflecting the value of our multi-services expertise, numerous clients placed or renewed their trust in us to support them, both in Facilities Management services and for Foodservices either on-site or off-site. Over the year, our client retention rate demonstrated its solidity at 93.5%. The crisis has also highlighted our strengths: the relevance of our unique service offering, the resilience of our business model, and the exceptional commitment of our employees. With a solid financial model and balanced geographical distribution, we can count on the compatibility of our three activities as a true competitive advantage.

Sodexo’s transformation, initiated before the crisis by strategic choices and targeted investments over the past few years, must be accelerated to build tomorrow’s growth. Indeed, the trends that we had previously identified have greatly accelerated with the Covid-19 pandemic. To move forward , we are focusing on three priorities : rationalize, enable and transform.

First, we are simplifying our organization by reducing our overhead costs on a long-term basis and bringing our teams closer to the field and our clients, while adjusting our resources to meet post-crisis needs. We are also continuing to optimize and streamline our geographic presence as well as our portfolio of technical maintenance services.

At the same time, to generate growth, we are continuing to invest in key targeted fields of marketing and sales, as well as in digital, data and IT systems. These investments, combined with sustainable and responsible Foodservices off ers, will allow us to be more focused than ever on consumer expectations. I am convinced that Sodexo is well positioned to capitalize on the new expectations generated by the crisis, the increasing outsourcing of services, the growing demand for integrated services and the challenges of flexible workspaces. Today, we have all the necessary assets to respond to these demands.

We are also accelerating the transformation of our core business, Foodservices. With redesigned operational and business models, Sodexo has the ability to off er its consumers multimodal and multi channel dining experiences, reinforced by digital innovations and meal delivery off ers. Our clients can also count on our expertise in employee benefit solutions, adapted to new forms of mobility and to remote working. Investments in new Foodservices models driven by digital, one of the engines of our growth, such as FoodChéri, Alchemista, Zeta or Meican, are fully aligned with the expectations and needs of today and tomorrow. So too are our major pioneering commitments to inclusive growth, to the promotion of healthy and sustainable food choices, to the reduction of our carbon emissions and to our fight against food waste.

Today, despite the crisis, Sodexo remains true to its promises and commitments. I know that Sodexo will regain momentum for growth that is based on responsible consumption of resources and putting people at the heart of everything we do. With our teams, we are creating a collective dynamic and clear path forward to create value for all of our stakeholders