Fiscal 2021 continued to be significantly impacted by the Covid-19 pandemic. However, in terms of performance there was a marked improvement between the first half and the second half, as the teams constantly adapted to the changing environment and benefited from a favorable comparable basis on the second half of Fiscal 2020. Due to the lack of visibility at the beginning of the year, the decision was made to prepare half-year budgets and provide half-year guidance.
First half Fiscal 2021 organic growth was negative at -21.7%, in line with guidance of -20 to -25%. Activity improved progressively quarter on quarter from a trend of -36% in Q3 Fiscal 2020 at the start of the pandemic, to -20.6% in the second quarter of Fiscal 2021. Profitability also improved progressing to a positive 3.1% in the first half of Fiscal 2021, well ahead of the original guidance of between 2 and 2.5%, and following a negative operating margin of -1.5% in the second half of Fiscal 2020.
As the vaccination levels progressed in Europe and North America, the trend in revenues continued to improve in the second half in most markets. As a result, there was a return to growth compared to the particularly low levels of the previous year. Second half Fiscal 2021 Revenues were up +18.1% organically, despite the emergence of the delta variant in the fourth quarter. By year end, recovery was apparent in all segments and in all regions, even if the pace of recovery was slower in Corporate Services, hampered by a slow return to the office.
Underlying operating profit margin was 3.5%, or 3.7% at constant rates, 20 basis points better than guidance.
As a result, overall for Fiscal 2021, the organic decline was limited to -5.6%, with an Underlying Operating margin at 3.3%, up +40 bps, and a net profit of 139 million euro compared to a net loss of -315 million euro in Fiscal 2020.
Coming out of the pandemic, client discussions are confirming the acceleration of several major trends around Working from home, the need to make the workplace more flexible, attractive and safe, and the digitalization of our markets both in Food and FM services.
According to a client survey in September 2020, and confirmed by recent client discussions, there will be an increase on average of about 27% of working from home compared to 2019 levels. This could have an impact of about 10% on the Corporate Services segment, or 2-3% of Group revenues. More working from home means more flexible office spaces combined with a range of services to attract consumers back to the office and or to maintain the engagement and retention of those working remotely. Our strength is our capacity to provide clients with a holistic approach to reinvent FM and food services through our Vital spaces proposition that Sodexo is deploying in its major markets. These include more flexible spaces, and more convenient, healthy and environmentally-friendly food offerings, delivery, click & collect, produced on or off-site.
This more comprehensive approach to On-site Services is also being deployed in Universities, in Sports & Leisure and Government & Agencies sites, and even in Hospitals.
As part of the simplification of the On-site Services, the Group has continued to reduce the number of countries in which it is present, now down to 56 from 80 at the start of 2018. This process has led to a more disciplined approach to reduce the Group’s presence in certain smaller countries, where either the size, or the growth opportunities were lacking.
A decision was made in July 2021 to enter into exclusive negotiations to combine the Childcare activities with those of the Grandir group, thereby creating an ambitious project to become a global early education leader. Sodexo will maintain a minority stake in the new Childcare entity to ensure a smooth transition. The transaction is expected to be finalized during First half Fiscal 2022.
