Sodexho counts cost of French war stance

by Ben Walker , Tuesday 29th April 2003 10:01
French catering giant Sodexho Alliance says it failed to win supply contracts to US and UK forces in the Gulf because of France's opposition to the war.

Chief financial officer Sian Herbert-Jones blamed the French government's political stance for the company's failure to win any short-term supply service contracts from armed forces in the Gulf. "Support assistance in the reconstruction phase remains undetermined," she added.

Herbert-Jones said Sodexho would normally have expected to win a significant number of the contracts, given its strong presence in the Middle East and its $975m-worth (£619m) of existing contracts with the US Marine Corps.

Last month 60 members of the US House of Representatives wrote to US Defense Secretary Donald Rumsfeld urging him to cancel the contract.

But Sodexho denies the contract is in jeopardy and has asked the Paris stock market watchdog to investigate rumours about its cancellation. In a statement, the company said: "We have established a strong relationship of mutual respect and true partnership with the US Marine Corps, and they have recently assured us that they are satisfied with our performance and have no basis to cancel our contract."

It said only four mess halls had been closed temporarily because of the deployment of marines to Iraq. Sodexho caters at 55 marine bases across the USA. It denied there had been any further impact on its US business from anti-French sentiment, and pointed to new contract wins including a group deal with Hewlett Packard and openings with General Mills, Bell South and Sony Pictures.

In the six months to the end of February, sales at Sodexho UK & Ireland fell by 4.4% to €756m (£521.2m). The decline was attributed to continued layoffs by clients, site closures in the engineering and manufacturing sectors, fewer retained contracts in the healthcare division, and Sodexho's decision to axe contracts worth about £13m in annual turnover.

Turnover in Sodexho's other divisions increased. In North America, sales were up by 2.6% to €5.74b (£4b), in Continental Europe they were up by 4.3% to €1.8b (£1.2b), and in the rest of the world sales rose by 6% to €234m (£161.3m).

However, overall sales fell by 6.1% to €6.2b (£4.3b), caused, said Sodexho, by the strength of the euro against other currencies, particularly the US dollar.

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