EthiFinance Ratings has reaffirmed its SR1 short-term rating for the €1.75bn NEU CP instrument of Sodexo Finance DAC

05/05/2022

Rating rationale

EthiFinance Ratings has analyzed the credit prole of Sodexo in order to assess its short-term rating. The outcome is an SR1 short-term rating, the second-highest grade in EthiFinance Ratings’ rating scale.

Credit profile

Our SR1 rating continues to reflect Sodexo’s large scale, global market presence, and the benets from diversied activities servicing various end-markets - which we see as strong competitive advantages compared to local, smaller rivals, enabling Sodexo to offer diverse integrated services in many countries. The dominant positions enjoyed by Sodexo’s businesses and an adaptation of its services have enabled a gradual recovery of Sodexo’s nancial performance as the economic and health conditions improved from the peak of the pandemic. We view positively the group’s credit prole, which benets from a prudent nancial policy, along with satisfactory cash generation and moderate indebtedness.

Through 2021 and into 2022 the group’s performance has recovered well from the impacts of the Covid-19 pandemic. Indeed, Sodexo’s revenues for the twelve months to end-February 2022 were at €19.0bn, up by 18% (versus €16.2bn over the previous 12-month period). Each business unit has grown over the period from March 2021 to February 2022. Revenue growth in the period was strongest for the two divisions which were particularly impacted by the Covid-19 pandemic, namely Business & Administration and Education, respectively at 17% and 34%. This is mainly due to the progressive reopening of corporate and university collective catering following the easing of measures to limit the spread of the virus. Sodexo’s global activities have still not returned to their pre-crisis level. However, assuming that the health situation improves further in the months ahead, and that the Russia-Ukraine con"ict and higher in"ation do not derail global economic activity, we expect continued sales growth, especially in North America, which is slightly behind Europe in terms of recovery post-pandemic.

The gradual increase of protability fueled by the operating recovery should drive the group’s credit metrics close to levels seen prior to the Covid-19 pandemic, again provided that health situation improves in a sustainable manner.

Liquidity profile

The liquidity profile of Sodexo is good with of score of 3 which is the maximum score according to our methodology. This is due to the significant amount of cash available and to the appropriate maturity profile of its bonds.

Credit metrics expected evolution (CMEE): Positive

We assess the CMEE to be Positive as we expect a signicant improvement of Sodexo’s credit metrics over the next 12 months due to the recovery expected with the easing of the Covid-19 pandemic

Our methodologies used for this rating are available at:

Sodexo

Founded in 1966, Sodexo is a France-based provider of food services and facility management services to various end-markets (Education, Corporate Services, Healthcare, Sports & Leisure). The group is one of the leading global companies in its sector and is relatively well-diversied in terms of geographic mix, with an operating presence across 55 countries as of the end of February 2022 (down from 64 due to divestments of some non-core activities). Sodexo is listed on Euronext Paris with a market capitalization of €10.6bn as of April 28 2022. It is controlled by the family-owned holding company Bellon SA (42.8% of Sodexo shares and 57.4% of the voting rights as of endFebruary 2022).

EthiFinance

EthiFinance is an innovative European rating, research and advisory group serving sustainable nance and sustainable development. It provides investors, companies and organizations with solutions to the challenges of nancing as well as environmental and societal transformation. Created in 2017, EthiFinance is the result of the merger between Spread Research and EthiFinance, French financial and extra-financial rating agencies both founded in 2004. EthiFinance provides its services to a wide range of leading international clients under the brands Spread Research (independent credit research), EthiFinance Ratings (credit rating agency), EthiFinance Analytics (Risk Modelling), and EthiFinance (extra-financial rating and advisory agency).

EthiFinance operates as a credit rating agency registered with and regulated by the European Securities and Markets Authority (ESMA) since July 2013, and as an External Credit Assessment Institution (ECAI). Our ratings are recognized by the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA), and can be used for the internal calculation and models of banks and insurance companies. Under the EthiFinance Ratings brand, EthiFinance provides nancial analysis, assigns credit ratings for issuers, and provides credit opinions for nancial operations (particularly for private debt funding operations or for the purpose of accounting/tax documentation). EthiFinance is one of the rating agencies authorized by the Banque de France to rate NEU CP and NEU MTN programs.

Press contact

EthiFinance

Elie Hériard-Dubreuil / elie.heriard-dubreuil@ethifinance.com


Auteurs

Marc Pierron

Head of CRA team

marc.pierron@ethifinance.com

Mickael Kérézéon

CRA Analyst

mickael.kerezeon@ethifinance.com