As originally announced this past summer and fully effective from October 1st, 2022, Sodexo has reorganized its On-site Services unit into three geographic zones (North America, Europe and Rest of the World), each led by a zone president. As a result, from the beginning of Fiscal 2023, the company intends to report the breakdown of its On-site Services revenues and underlying operating profit by geographic zone rather than by global client segment, along with a secondary level breakout of information by three market segments: Business & Administrations (B&A), Healthcare & Seniors (H&S) and Education.
In making the announcement Sodexo also provided the comparative information for Fiscal 2022, which shows that North America was the largest of the three geographic zones over the period, generating 44% of total On-site Services revenues, followed by Europe with 38% and Rest of the World with 18%. Also of note from these figures was that North America also led the way in underlying operating profit margin with a 5.3% rate for the fiscal year (in comparison, Europe was at 3.9% and Rest of the World at 4.3%), a performance especially pronounced in the first half, when North American underlying operating profit margin was at 6.2% while Europe was at 3.8% and Rest of the World at 4.1%.
Among individual market segments, the North American zone derived 34.5% of its revenues from H&S, 33.8% from B&A and 31.7% from Education in fiscal 2022. Among quarterly results for each of these three operating markets, Q4 was the largest for both B&A and H&S while Education dropped substantially, no doubt due to the quarter largely covering the summer months.
B&A saw a 3.7% drop in Q2 from Q1 but rebounded with a 28% increase in Q3 and another 16.5% gain in Q4, probably due to the B&I market starting to see a rebound with return to office trends accelerating and crowds returning to sports and entertainment facilities in pre-pandemic numbers.
Meanwhile, H&S saw steady quarterly increases through the fiscal year of 5.3%, 7.2% and 7.3% in Q2, Q3 and Q4, respectively, while Education fluctuated—dropping 28.5% in Q2 from Q1, increasing 16.5% in Q3 and dropping 69.5% in Q4—no doubt due to the annual academic year’s schedule fluctuations in K-12 and higher education.
