French catering group Sodexho Alliance posted better-than-expected full-year sales, raised a key profit forecast and said it could compensate for rising input prices, sending its shares sharply higher.
At 0848 GMT, Sodexho shares were 4.5 percent higher at 51.40 euros, making them the biggest gainer among French blue chips, and compared with a 1.5 percent rise in the Dow Jones Stoxx index of travel and leisure company shares.
Sodexho said on Wednesday sales in the year to August 31 rose 4.6 percent to 13.39 billion euros ($19 billion), thanks to robust business in North America, a recovery in Britain and a 19.7 percent rise in revenues from its vouchers business.
Chief Executive Officer Michel Landel told a conference call the group now expected full year operating profit, excluding currency swings, to rise between 12 and 15 percent from a pre-exceptional 577 million euros it announced for 2006.
It had previously forecast a rise of around 12 percent. "We believe the upgrade in guidance sends a positive message to the market about Sodexho's ability to manage the cost environment," Citigroup analyst Leslie Zarka said in a research note, reiterating a "buy" recommendation on Sodexho shares.
Landel said Sodexho had been able to compensate for a 3 to 4 percent rise in food ingredient prices in 2007 and was confident about being able to do likewise in 2008. "We have a strong pipeline for the coming year and as we move into fiscal 2008 we remain very optimistic about our prospects," he said. "It's obvious that we have seen some inflation and moving forward into 2008 we anticipate that this inflation will be relatively strong, probably between 4 and 6 percent," he said.
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