Sodexo has reduced its guidance for fiscal 2026 (FY26), warning of weaker sales growth after highlighting internal execution problems and the impact of a review of its contracts and assets.

The announcement prompted a sharp market reaction, with the French food services and catering group’s shares dropping 13%, Reuters reported.

The company now anticipates organic revenue growth of between 0.5% and 1%, a reduction from its previous projection of 1.5% to 2.5%.

Profitability expectations are also said to have been scaled back.

Sodexo is forecasting an underlying operating margin of 3.2% to 3.4%, having earlier indicated only a modest decline from last year’s 4.7%.

In the first half of ​its financial year, the company recorded consolidated revenues of €12bn. The figure represents a 3.7% year-on-year (YoY) decline, which Sodexo attributed to a negative foreign exchange effect driven by the US dollar.

Underlying operating profit in H1 FY26 fell 32.1% YoY to €442m.

The group’s net profit in the first half of FY26 was €188m, a 56.7% drop from €434m reported in H1 FY25.

Sodexo CEO Thierry Delaporte said: “I am convinced that Sodexo has strong and differentiated assets in an attractive and resilient industry. The engagement of our people, the pride they take in serving clients every day, and the depth of expertise they bring on the ground are a real strength.

“That said, we have undeniably underperformed the market and our main competitors. The root causes have been building over time and relate primarily to under-investment and execution: commercial intensity, decision-making and prioritisation, and consistency in delivery.

“We have conducted a thorough review of our contracts and assets, with short-term financial implications reflected in both our first-half results and in the revised outlook we are setting for FY26. This is deliberate and necessary to rebuild a powerful growth engine and restore group competitiveness at scale.”

Sodexo’s share price has fallen by 40% over the past two years, trailing key competitors Compass and Aramark, according to Reuters.