Legal charge weighs on Sodexho profits

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Sodexho Alliance, the French catering company, reported a 31.4 per cent fall in first-half net profits after a discrimination lawsuit in the US left it with legal costs of €69m.

The company, which provides canteen services for schools, prisons, and the US Marine Corps, reported a net profit of €67m compared with €97m the same period last year.

Sodexho announced last month it would settle a class action over discrimination launched by African American employees of its US subsidiary, who alleged the company engaged in systematic racial discrimination. The company agreed to a pay-out of €60m admitting liability.

Net income, excluding total legal costs of €69m, was up 9.7 per cent.

The company said that the appreciation of the euro against the dollar knocked almost 4 per cent from revenues leaving sales flat for the first half at €5.89bn.

Underlying organic sales growth for the six months to February 28 was 4 per cent, up from 3.9 per cent the previous year, excluding the one-off boost from Sodexho’s Rugby World Cup contract in November 2003.

In North America, the group’s largest market, margins slipped due to the costs of starting up new education contracts and military contracts suffering due to greater overseas deployment of US Marines.

Sodexho operates in 76 countries and revenues were €2.6bn in North America in the first half.

In early morning trade the shares were almost flat at €26.00.

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