France’s Sodexo to spin off Benefits & Rewards Services business

By Diana Mandia

(Reuters) -French catering and food services group Sodexo plans to spin off and list its Benefits & Rewards Services (BRS) business during 2024, it said on Wednesday, sending its shares up more than 11% in early trading.

Sodexo last May scrapped a plan to sell a minority stake in BRS, which delivers vouchers and benefit cards to businesses for employees.

It now intends to spin off and list it by distributing shares to Sodexo shareholders.

“The business is doing very well, driven by interest rates, by inflation …so it’s the perfect time to put this jewel on the market and let it fly on its own,” Chief Executive Sophie Bellon told reporters.

Sodexo declined to comment on the value of the business after it is spun off. It said the Bellon founding family, which controls the group with 57.5% of the voting rights, will remain a core shareholder.

The BRS business reported a core profit of 162 million euros ($177 million) in the first half of 2023, up 46.4% from a year earlier excluding currency impacts.

Core profit for the group was 704 million euros, beating analysts’ average forecast of 679 million euros, according to a company-compiled consensus.

Price increases will remain above 5% in the second part of 2023, Sodexo said.

“Inflation is higher than what we pass on to our customers, but we manage it because we have action plans to mitigate the impact, that’s how we keep our margins,” Chief Financial Officer Marc Rolland said.

The company said it expected organic revenue growth of close to 11% in fiscal 2023, compared with the 8% to 10% it previously forecast.

It also raised its full-year forecast for the BRS business, targeting organic revenue growth of close to 20% and an underlying operating profit margin of close to 32%.

($1 = 0.9128 euros)

(Reporting Diana Mandiá; editing by Matt Scuffham and Jamie Freed)