During Fiscal 2022, Sodexo accelerated its response to the challenges of the post-Covid period, strengthening its competitiveness and accelerating its transformation.
Revenue growth and profitability improvement have been strong during the period, reflecting the solid recovery in all activities. Fiscal 2022 consolidated revenues reached 21.1 billion euros, up +21.2% year-on-year, driven by organic growth of +16.9%, a net contribution from acquisitions and disposals of -1.2% and a strong positive currency impact of +5.5%. In On-site Services, the recovery continued sequentially throughout the year, returning to 99% of Fiscal 2019 in the last quarter. Key performance indicators improved significantly with client retention up +140 bps compared to the previous year, new sales development up +150 bps with a solid contribution from all segments. Benefits & Rewards Services organic growth was +14.2% with Employee benefits at +18.7%, accelerating quarter after quarter. Underlying operating profit was 1,059 million euros, up +83.3% and Underlying operating margin reached 5.0%, up +170 bps, as the results of the strong recovery in volumes, the benefit of the GET efficiency program and strong actions to mitigate inflation through indexation, contract renegotiations and productivity.
Since October 2021 and the appointment of Sophie Bellon as CEO, Sodexo has made fast and significant progress on her immediate priorities.
In North America, organic growth has accelerated and profitability has improved, with significant progress on all KPIs. Operational execution is improving. As a result, retention is up by 400 basis point vs last year, to over 96%. Development is also up 400 basis points in North America. For the first time since 2017, Sodexo had a positive net new business, which will contribute to growth next year. First-time outsourcing is increasing, and now represents 44% of new signatures. In addition to the simplification of the operational organization, a long-term incentive scheme has also been implemented for 97 members of the North America senior leadership team.
Attractive brands and offers, focusing on high-quality, seasonal, fresh and locally-sourced food, are being deployed in the major geographies, addressing, in particular, the new trends within the industry and new expectations. Sodexo is also focusing on the transformation of production and logistics, with a new generation of off-site units to centralize production, key to support its advanced models such as connected fridges. This year, Sodexo acquired Frontline Food Services and VendEdge in the U.S. and opened a new off-site production unit in Boston, enabling the Group to respond to the quickly evolving environment and consumer expectations, and providing its clients with new, innovative, high-quality, expert food offers to attract people back into the office and support their employee value proposition. Premium brands such as Fooditude, Nourish, as well as the central production units in Boston and Beijing now account for 6% of Corporate Services food revenues.
The Group ensures that each of its activities benefits from optimal positioning in its market. As part of its portfolio review, Sodexo continued to divest from non-core activities, services and geographies, where density, market shares or expertise pools were inadequate. For example, Sodexo combined its childcare activities with those of the Grandir group and sold its On-site activities in Morocco and the Congo, its activities in Russia as well as non-strategic account portfolios in Australia and the Czech Republic. In the meantime, Benefits & Rewards Services divested from its operations in Russia, sold Rydoo, its Travel & Expenses business, and exited its investments in Sports aggregation. Sodexo is continuing to reduce its geographical footprint, from 80 countries in 2018 to 53 countries at the end of Fiscal 2022. At the same time, Sodexo developed its convenience business, which is a profitable addressable market and actively built its GPO in Europe through acquisitions. Sodexo Benefits & Rewards Services also acquired a majority stake in Wedoogift (now Glady), creating the leading player in the gift voucher market in France.
The GET efficiency program was closed during Fiscal 2022 with better cost savings than anticipated. It was designed, on the one hand, to protect gross margins by adapting on-site cost structures to new post-pandemic volumes. On the other hand, this program also aims to structurally reduce SG&A by simplifying the Group's structures to free-up capacity for investment in growth and to improve margins. To capitalize on the exceptional agility demonstrated during the pandemic, the Group pursues the adaptation of its organization to enhance its effectiveness. In Fiscal 2022, Sodexo announced the transfer of end-to-end P&L management to regions and countries, to bring empowerment, decision-making and reactivity to a local level. The On-site Services activities are now regrouped into three geographic zones: North America, Europe and Rest of the World, which includes Asia-Pacific, Middle East, Africa, Brazil, and Latin America. Benefits & Rewards Services also benefits from a dedicated governance.
CONSOLIDATED REVENUES €21,125m (+16,9% organic growth)
ON-SITE SERVICES REVENUES €20,263m (99% of Fiscal 2019 revenues at constant rate by the fourth quarter)
BENEFITS & REWARDS SERVICES REVENUES €865m (115% of Fiscal 2019 revenues at constant rate by the fourth quarter)
In 2022, the teams fully supported the resumption of activities on client sites and worked to achieve objectives in terms of natural resources preservation and sustainable practices in particular.
For more information on Sodexo performance, see pages 34 to 39.
