Prepared for Manish Chopra by Henry Obegi

Sodexo S.A. (SW.PA) — Deep Dive Analysis

Euronext Paris • Contract Catering & Facilities Management • February 2026

Tax Regime

JurisdictionStatutory RateNotes
France25% (+surcharge to 36.3%)Temporary surcharge 2025-26 for large companies on French profits
United States21% federal + state (~25-28%)~46% of Sodexo revenue is USD-denominated
United Kingdom25%Up from 19% in April 2023; permanent
Brazil34%Among highest in Sodexo's footprint (~4-5% of revenue)
Sodexo Effective Tax Rate (5Y range)22-27%
FY2025 ETR22.2% (one-off benefit)
Normalized ETR assumption~25-26%
OECD Pillar Two impactNegligible

Currency Exposure

Currency% of RevenueFX Risk Type
USD~42%Translation only (natural hedge: local costs match revenue)
EUR~20%Base currency — no translation risk
GBP~9%Translation; partly hedged via GBP-denominated debt (7%)
BRL~5%Higher volatility but small share
Other~24%Diversified across INR, AUD, CLP, etc.
FX Translation Impact (FY2025)-1.8%
FX Translation Impact (Q1 FY2026)-4.0%
Strong natural hedge. Local costs match local revenues, so FX risk is purely translation (P&L conversion), not transactional. Sodexo partially mitigates by matching debt currency to revenue (40% USD, 53% EUR, 7% GBP).

Labor & Food Cost Dynamics

50-60%
Labor / Revenue
27-35%
Food Cost / Revenue
~3%
Annual Pricing Power
6-12 mo
Cost Pass-through Lag
Existential risk: A 1% increase in labor cost as % of revenue would wipe out ~21% of operating profit. This is the single biggest vulnerability in the business model.
Current tailwind: FAO Food Price Index declining since Aug 2025. In disinflation, the 6-12 month lag works in Sodexo's favor — pricing holds while costs moderate, boosting margins.

Interest Rate Sensitivity

Debt Structure95% Fixed Rate
Blended Cost of Debt (FY2025)2.7%
Drift Estimate (as legacy bonds mature)3.5-4.0%
Undrawn RCFEUR 1.75bn (to 2029)
Pension LiabilitiesImmaterial

Macro Cycle Positioning

MarketGDP Growth (2026E)Impact on Sodexo
United States+2.4%Moderating but still positive; key for NA recovery
Eurozone+1.3%Sluggish; France school pricing pressure
Global+3.3%Supportive of RoW growth (+7.5% organic)
Late-cycle, benign but decelerating. Sodexo's moderately defensive profile (revenue beta ~0.5-0.7x GDP) provides a floor. The secular outsourcing trend (45% → multi-decade runway to 60%+) supports organic growth even in mild downturns.
Henry Obegi • Sodexo Deep Dive • February 2026 • Prepared for Manish Chopra