Exchange rate fluctuations do not generate operational risks, because each subsidiary bills its revenues and incurs its expenses in the same currency.
| €1= | AVERAGE RATE FY 2023 | AVERAGE RATE FY 2022 | AVERAGE RATE FY 2023 VS. FY 2022 | CLOSING RATE AT 08/31/2023 | CLOSING RATE AT 08/31/2022 | CLOSING RATE 08/31/2023 VS. 08/31/2022 |
|---|---|---|---|---|---|---|
| U.S. dollar | U.S. dollar AVERAGE RATE FY 2023 1.059 |
U.S. dollar AVERAGE RATE FY 2022 1.101 |
U.S. dollar AVERAGE RATE FY 2023 VS. FY 2022 +4.0% |
U.S. dollar CLOSING RATE AT 08/31/2023 1.087 |
U.S. dollar CLOSING RATE AT 08/31/2022 1.000 |
U.S. dollar CLOSING RATE 08/31/2023 VS. 08/31/2022 -8.0 % |
| Pound Sterling | Pound Sterling AVERAGE RATE FY 2023 0.871 |
Pound Sterling AVERAGE RATE FY 2022 0.846 |
Pound Sterling AVERAGE RATE FY 2023 VS. FY 2022 -2.8 % |
Pound Sterling CLOSING RATE AT 08/31/2023 0.857 |
Pound Sterling CLOSING RATE AT 08/31/2022 0.860 |
Pound Sterling CLOSING RATE 08/31/2023 VS. 08/31/2022 +0.4% |
| Brazilian real | Brazilian real AVERAGE RATE FY 2023 5.403 |
Brazilian real AVERAGE RATE FY 2022 5.772 |
Brazilian real AVERAGE RATE FY 2023 VS. FY 2022 +6.8 % |
Brazilian real CLOSING RATE AT 08/31/2023 5.308 |
Brazilian real CLOSING RATE AT 08/31/2022 5.148 |
Brazilian real CLOSING RATE 08/31/2023 VS. 08/31/2022 -3.0 % |
The +1.5% positive impact of currencies on Sodexo continuing activities Fiscal 2023 revenues is linked to the weakness of the euro against the U.S. dollar during the first half of the year. However, the euro has been increasing since the end of the first half Fiscal 2023 and therefore the currency impact is negative in the second half. On the other hand, UK pound Sterling was down -2.8% during the year, explaining a negative impact of currencies in Europe. The impact of currency mix on the Underlying operating margin was negligible. Group net income was impacted by a negative currency impact of -1.3%, mainly coming from Pluxee discontinued operations.
Sodexo (continuing activities) operates in 45 countries. The percentage of total revenues and Underlying operating profit denominated in the main currencies are as follows:
| FISCAL 2023 | % OF REVENUES | % OF UNDERLYING OPERATING PROFIT |
|---|---|---|
| U.S. dollar | U.S. dollar % OF REVENUES 44 % |
U.S. dollar % OF UNDERLYING OPERATING PROFIT 63 % |
| Euro | Euro % OF REVENUES 23 % |
Euro % OF UNDERLYING OPERATING PROFIT -4 % |
| UK pound Sterling | UK pound Sterling % OF REVENUES 8 % |
UK pound Sterling % OF UNDERLYING OPERATING PROFIT 11 % |
| Brazilian real | Brazilian real % OF REVENUES 4 % |
Brazilian real % OF UNDERLYING OPERATING PROFIT 8 % |
The currency effect is determined by applying the previous year’s average exchange rates to the current year figures.
Given the strategic progress made in Fiscal 2022 and 2023, Sodexo is on track to pursue its recovery in North America, enhance efficiency and agility, continue to transform the food offers and operations and grow selectively in Facilities management. Commercial excellence, data and digital investments and supply management support, will all contribute to better commercial momentum and better margins.
The underlying revenue growth rate exit rate in the fourth quarter was over 10%. With continued inflation being passed through, pricing is expected to average out at 3-4% for Fiscal 2024. The contribution from net new business should be above 2%, amplified by some cross-selling.
As a result, Sodexo (excluding Pluxee) Fiscal 2024 and 2025 guidance:
In July 2023 the Company launched a consent solicitation process relating to its 4.4 billion euros of outstanding EUR and GBP bonds, in order to seek certain approvals and waivers to proceed with the proposed spin-off of the Benefits & Rewards Services activity (Pluxee). The proposal was approved in relation to 7 out of the 8 bonds series. The consent solicitation in relation to the 300 million euros 1.125% bonds due May 22, 2025 (the “May 2025 Bonds”) was terminated and, on October 25, 2023, the Board of Directors decided to redeem the May 2025 Bonds and to publish the make-whole redemption notice on October 26, 2023. Sodexo will redeem the total aggregate principal amount of the May 2025 Bonds outstanding on November 10, 2023.
At the end of July 2023, Sodexo signed an agreement for the acquisition of A.H. Management, independent convenience solutions, to accelerate food transformation and development in North America.
A.H. Management, the premier convenience solutions operator in the Chicago region and Southeast Wisconsin, is one of the largest operators in the Mid-West. This acquisition, closed in September 2023, will extend InReach’s offerings in the fast-growing North American convenience market.
At the end of September 2023, the Group signed a disposal agreement for its worldwide Homecare services including subsidiaries in the United States, United Kingdom, and Scandinavian countries. The transaction is subject to the satisfaction of customary closing conditions and is expected to be finalized by the end of the calendar year.
