Meta-morphosis. Upgrading to Buy

Research evidence excerpt

Meta-morphosis. Upgrading to Buy

Workforce productivity upside

Another contributor to Sodexo’s lower margin vs. peers is workforce productivity – its

revenue per employee metric is the lowest among the global Top 3 players. Through the

€400m restructuring plan in FY26-27, we estimate Sodexo will likely reduce headcount

by thousands of employees. Based on >426k employees in FY25, this could imply an

increasing revenue/employee metric closer to the $65k level, narrowing the gap with

ARMK.

Exhibit 8: Operating margin FY16-HY26 Exhibit 9: Revenue per employee (USD ‘000) in FY25

Sodexo has lagged in profitability Sodexo has the lowest productivity per employee vs. peers

9% 80 Compass Sodexo Aramark 77.9

8%

74 7%

6% 66.5

'000 68 63.7 5%

4% USD 62

3%

2%

Compass Sodexo Aramark

Source: Company reports, Bloomberg Source: Company reports, Bloomberg

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Global #2 player in a structurally growing

sector

As we highlighted in our Oct-25 initiation note (see here), we like the global catering

industry due to its structurally growing nature and fragmented competitive landscape,

implying ample growth opportunities for the largest players. Sodexo is the #2 player

globally and should benefit from this tailwind. Its FY30 target of 5% organic growth

therefore seems realistic to us, as it is just in line with industry growth, and is

significantly below CPG/ARMK’s current growth rate.

Sodexo has laid out a >€1tn global food & FM services TAM, growing at 4% per annum.

Its largest peer, Compass Group, recently mentioned a relevant TAM of $360bn, growing

at 5% in the next decade. The estimates are different as the companies have included

their own relevant TAM, in terms of geographies and capabilities/specific segments in

Facilities Management.