Sodexo warns over loss of US contracts
Expansion costs contributed to pre-tax profits at the Irish arm of French catering and food services firm Sodexo declining by 25% to €2.76m last year.
Newly-filed accounts show that Sodexo Ireland recorded the drop in profits despite its revenues increasing by 9.5% to €103.74m.
The company’s Irish-based staff numbers increased by 110 to 1,976, with staff costs rising from €48.95m to €53.6m.
Sodexo Ireland’s business was boosted last year by payments of €3.54m from the Central Bank for providing catering services for the bank’s 2,000 staff at North Wall Quay, Spencer Dock and Sandyford in Dublin.
Shares in Sodexo slumped yesterday as the wider group warned the loss of several contracts in healthcare and sports and leisure in north America would weigh on fourth-quarter sales this year and also impact the start of next year.
Group chief executive Denis Machuel nevertheless struck a confident tone over prospects for next year as the world’s second largest catering services group after the UK’s Compass beat market expectations for third-quarter sales growth.
“The fourth quarter will be less dynamic than the first nine months and we will start next year, even though we are relatively confident, with an impact from the contract losses,” said Mr Machuel.
Sodexo rattled investors’ nerves last year after warnings related to weakness in north America, where cost savings have not been as high as expected and several large contracts have taken time to pay off.
