Sodexo (PAR: SW.PA) shares experienced a downturn on Tuesday following the release of its third-quarter financial results, which failed to meet analyst expectations for revenue growth. The French multinational, renowned for its catering and facilities management services, reported an organic revenue increase of 6.8% year-over-year, reaching €6.07 billion for the quarter ending May 31. However, this figure fell short of the consensus forecast of 7.0%, as indicated by projections from UBS.
One of the key hurdles for Sodexo in this quarter was its underperformance in its Chinese operations, alongside a significant decrease in price hikes. Both these factors combined accounted for roughly half of the quarterly organic revenue growth.
Despite these setbacks, management provided some reassurance. The group declared its third-quarter performance was "in line" with internal projections, reaffirming its annual guidance. It continues to target organic revenue growth at the upper end of the 6% to 8% range. It aims to increase the underlying operating profit margin by 30 to 40 basis points at constant exchange rates.
In a statement, Chief Executive Sophie Bellon expressed confidence in the company's trajectory. While the company's long-term outlook and reaffirmation of annual targets may provide some comfort, the immediate dip in share price underscores the market's sensitivity to any deviation from expectations.
