Sodexo Q1 growth hampered by poor performance in healthcare

A double-digit decline in Sodexo's healthcare business in the UK and Ireland has contributed to its first quarter performance trailing behind the company's other three geographical regions.

The healthcare and seniors sector suffered a 10.1% drop in year-on-year organic growth during the first quarter of 2011, which ended 30 November 2010.

However Sodexo's corporate business grew by 5.4% and education by 2.6%, resulting in total organic growth of 1.8% in the UK and Ireland.

A "lack of development" in the healthcare side of the business in response to "uncertainties weighed on public budgets" was blamed for the poor performance, as well as the loss of a lucrative contract at London's King's College Hospital, won by Compass Group's Medirest.

The global business fared better with a sales increase of 11% (organic growth +4.7%), boosted by Latin America and Asia putting in strong performances for the first quarter.

Sodexo chief executive officer Michael Landel said the figures were in line with expectations but added that the economic environment means Sodexo will continue to be cautious.

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By Janie Stamford

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