Sodexo S.A. (SW) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to Sodexo 2026 Investor Update. I'm Juliette Klein, Head of Investor Relations. Thank you for joining us, whether you're here in Paris or following the webcast. Before we begin, please have a look at the disclaimer regarding our forward-looking statements. And while that's on the screen, a couple of housekeeping points. Our press release was published earlier this morning, and today's presentation is now available from -- for download from our website. A replay of the webcast will also be available shortly after the event. For those here in the room, the emergency exits are located at your left. If you need any assistance during the event, our team will be happy to help. Let me quickly now go -- walk you through today's agenda. Thierry Delaporte, our CEO, will start by taking you through where we are today, the market context and our Shift & Grow 2030 road map. Along the way, you will hear from several leaders who will provide additional perspectives on some of the key initiatives supporting the plan. Sebastien De Tramasure, our CFO, will then present our financial ambition and capital allocation framework. Thierry will come back after for some closing remarks. We'll then open the floor for Q&A, both here and on the call. So, with that, Thierry, over to you.

Juliette, thank you, and welcome, everyone. Welcome to our investor update. We are very happy to have all of you here today with us for this presentation and to see many of you joining us online as well. So today is about clarity, clarity and commitment on where we stand, on what needs to change and how we move forward with discipline. We will bring clarity on our positioning and on the strategic priorities that will help us accelerate growth and restore competitiveness. We will bring clarity on our execution plan, the three pillars and tech enablers that support it and the progress already visible across the organization. And finally, we'll bring clarity on the financial trajectory we believe this plan can deliver and the value creation opportunity ahead of us. We know that we have underperformed for many years. That is the starting point for today. We are not here to make excuses. Our objective is to explain what is changing and why we believe it will make a difference. This is a multiyear journey, but this is not a story of wait and see. Actions are already underway with, you will see early signs that the organization is moving in the right direction. And today, you will hear not only from me, but from some of the leaders who are driving this transformation on the ground. Damien, who leads Entegra, our GPO and supply engine; Alice, leading tech; Soorya, leading talent and development; Sebastien, our CFO, who you all know; and David, who leads commercial strategy and execution in North America. Back in April, I shared with you my first impression and first assessment of the business after a few months in the field with teams and clients. Today, I want to go one step further, not only to revisit the root causes of our underperformance, but also to explain the choices we are making, how we intend to win and how these choices translate into a clear operational and financial road map. We have underperformed our peers and the market. That's a fact. This was not a market issue. It was mostly an execution issue. What matters in our industry is actually very simple. Are you close to your clients? Do you understand what they want? Do you act on it? And how fast? Can you deliver consistently? And are you competitive? If the answer is yes, you grow. If not, you lose. Over time, we moved away from some of these fundamentals. When I spent time in the field, I saw a business with tremendous strength. But I also saw that we had drifting in how we operate and wherever I went, four things came back very consistently. First, growth stopped being the primary lens. Over time, the organization became too risk averse that affected behaviors, less commercial intensity, more caution in competitive situation and not enough willingness to invest early in client relationship. Too often, we were simply not close enough to our clients. Our excessive focus on protecting short-term margins ultimately made us less competitive. Too often, we price from our cost base rather than from the market. As our cost base became less competitive, so did our offers in our industry, which is highly labor-intensive, sustainable margin comes from growth, scale and retention. The second issue was complexity, empowerment and decisiveness. Decision-making became too centralized and too slow, too many layers, too many approvals, too much distance between leadership and day-to-day execution. Decisions were revisited several times and not always executed consistently. The third issue was that we had not invested enough in the capabilities required to operate consistently at scale. That starts with talent. We need to attract, develop and retain the best people. And that also means being prepared to pay competitively for critical capabilities where they create value. Beyond talent, it means investing in sales force and account management, in supply, in workforce management and tech systems, data. These are business-critical capabilities, and we simply did not build them early enough or at sufficient scale. In some instances, we accumulated a technical debt that became business critical. And lastly, this became particularly visible in North America. The U.S. cannot be managed like another country. It's effectively another headquarter. We are competing here against global leaders in their home market, and that requires a different level of leadership intensity, investment and speed. We were not always operating at that level. That is changing. So this is the starting point. It's not conceptually complicated, but it is demanding. What is exciting is that we operate in large, growing markets with strong long-term fundamentals. Food and facility management together represent a market of more than EUR 1 trillion, growing at around 4% per year. At the same time, client expectations continue to evolve, driven by several structural trends. First, outsourcing continues to grow. Clients are facing labor shortages, increasing operational complexity and higher expectations around service quality, productivity and compliance. Second, many large organizations want to simplify the way they operate. They are consolidating the number of suppliers, reducing complexity and looking for fewer partners who can deliver at scale. Third, demographics continue to support growth, especially with aging populations and focus on longevity, where we see health care evolving the continuum of care and driving long-term demand. But we also see employers placing greater emphasis on the workplace experience as they compete to attract and retain talent in corporate organizations, hospitals, remote camps and educational institutions. And finally, technology and AI, in particular, is raising expectation around productivity, transparency and service quality across all segments. It's also creating new growth opportunities within the tech sector, particularly in areas such as data centers. Now taken together, these trends are changing what it takes to win in our industry. Clients are looking for partners that can operate at scale, execute consistently and deliver high-quality services across geographies. Winning starts with understanding that not all clients have the same expectations and operating environments. Not all clients are looking for the same solution. Some clients want a best-in-class food partner, able to offer a large range of food solutions from value for money to premium experiences. Others are looking for deep expertise in a specific FM service. Increasingly, some want an integrated food and FM solution delivered through a single partner, again, to reduce complexity, to ensure a consistent experience and improve performance. So client centricity starts with understanding client needs and serving them accordingly. Let me now illustrate with two examples. First, tech sector. Within our Corporate Services segment, tech today represents close to EUR 1 billion revenue in our portfolio and is one of the fastest-growing sectors. It's also a sector I know well, having worked closely with many of the clients throughout my career. But tech clients are looking for food solutions that go well beyond traditional on-site dining services from premium retail and barista coffee concepts to pantry, micro markets, even catering, workplace services. Many also value partners simplicity and consistency across occasions. And within this tech sector, many of you have asked us specifically about data center. Well, today, we already provide dining, convenience and workplace experience solutions for several of the leading operators and hyperscalers, particularly in North America and Asia Pac. But the opportunity extends across both operational phase and construction. During the construction phase, sites often require services for a large workforce operating in complex or remote locations. Well, these are capabilities we have developed over many years through our remote site and village operations. In fact, we have recently secured our first food services contract supporting a data center construction project. It's relatively modest in size, but it helps us build our experience and deepen our relationships in this sector. But to be clear, overall, we see tech and data centers as attractive growth opportunities. We already have a presence in the sector. We have capabilities that are relevant, and we intend to build on that foundation over time. The second example is airport lounges. It illustrates a different type of opportunity. Here, the differentiator is experience. Over time, we built capabilities, we invested selectively and leverage our global footprint. Today, we are seeing the benefits. Let's hear directly from the team. [Presentation]

Focus execute scale. We know how to do it. These examples illustrate the same principle. Clients are looking for a partner that can adapt to their specific needs while delivering consistency at scale. This is exactly where Sodexo stands out. We hold a distinctive market position with leadership in both food and facilities management. We operate in more than 40 countries, allowing us to deliver a seamless and consistent experience. This positions us as the one trusted partner to support large, complex organizations across multiple geographies and service needs. This allows us to bring the best of Sodexo to our accounts. But we also have something that is much harder to replicate our service culture. For almost 60 years, we have built our business around people, client proximity and operational excellence. That culture remains one of our greatest strengths, and it's reflected every day in the quality of services we are delivering. And finally, but not the least, sustainability. We have established the undisputed leadership on this topic. It shapes the way we run the business through our Better Tomorrow road map. We are helping our clients achieve their own sustainability ambitions. We are continuously reducing our environmental footprint through measurable externally validated commitments. And we are making a positive contribution to the communities where we operate and it matters. And above all, it starts with our people. Sodexo is a place where people can learn, develop, build careers, create opportunities for themselves. That has always been part of who we are, and this makes us a stronger company. It helps us attract and retain talent. It strengthens our relationships with clients. It increasingly supports our commercial success. We see sustainability as one of the foundations of long-term profitable growth and value creation for our stakeholders. Taken together, these strengths gives us tremendous opportunities. The next step now is to leverage them more systematically and at greater scale. It starts with being absolutely clear about where we play, where we invest and where we can create the greatest value for our clients and our stakeholders. Over time, however, our positioning became less consistent. A gap emerged between what we said to the market, what market understood, what our teams do on the ground and what our clients actually expect from us. At times, we created confusion about how we positioned our priorities between food and FM. Today, with Shift & Grow 2030, we are removing that ambiguity. We are not changing who we are. We are clarifying where we play, where we invest and how we compete in both food and FM. We absolutely want to be client first, but client first doesn't mean everything everywhere at any cost. It means making clear choices to create more value for clients and shareholders. This means being more disciplined in how we allocate resources, management attention and investment. We reviewed our entire portfolio and asked a few simple questions. How are our client needs evolving? Can we build a leadership position? Is the market attractive enough? Can we scale profitably? But also is the model repeatable? And can we create sustainable value. This translates into choices at three levels: geographies, segments and services. First, geographies. The U.S. is a clear priority for the group to restore competitiveness and accelerate growth, absolute priority. It remains the most attractive market for us. But beyond the U.S., we will concentrate investments in a limited number of core countries where we see the opportunity to grow and win. Elsewhere, we take a more disciplined approach, more continuing to support our global clients for sure, while focusing more on profitability and cash generation. Second, we are clear about the client segments where we believe we can create the most value and build sustainable leadership positions. At group level, health care, corporate and Sports & Leisure are clear priorities. These are large, attractive markets where our capabilities, scale and client relationships position us particularly well to win. Our other segments such as Energy & Resources, seniors, education or government are local growth opportunities. This means that each country focuses on global priorities and one or two additional local opportunities where relevant to build leadership. For example, in the U.S., our business in education is very large and a critical growth opportunity. Similarly, in Australia, we will continue to grow our energy and resource remote site business, delivering an end-to-end food and FM integration solution. Now the third level is services and capabilities. In food, our priorities remain clear. Food is often where the client relationship starts, and it remains our strongest anchor. We are expanding into the full food ecosystem with convenience and retail offers to capture more opportunities within existing accounts. FM and all the other services we are providing to our clients also play an increasingly important role where it makes sense for our clients and for us, they help us open new doors, grow existing accounts and create more value. Finally, we will be pragmatic and disciplined in how we build capabilities. Where we believe we can develop real expertise and scale, we will invest. Where we can't, we will partner. The objective is simple: providing the best solution for the client while ensuring consistency, scalability and value creation. Now within all this, M&A is an enabler. Our growth plan does not depend on acquisitions, but targeted acquisitions can accelerate it. It allows us to strengthen the differentiated capabilities, bring in new talent, expertise, expand the solutions we offer to clients and accelerate access to attractive segment and priority markets. It can also deepen our relationship with existing clients while creating additional value through scale and synergies. We'll look at bolt-ons that strengthen priority markets or critical capabilities, for example, vending or GPO. The discipline is clear, strategic fit, financial returns, value creation. Now that I've clarified the choices we are making, let me take you through our ambition and how we will deliver it. By 2030, we want to be fully back in the game, a company that competes with the best in our industry, delivering consistent growth, improving profitability in a disciplined way and becoming the partner of choice for our clients. That ambition requires a clear execution framework. We call it Shift & Grow 2030. It is built around two objectives: accelerate growth, restore competitiveness. We are addressing those through three pillars and enabler. You will hear today from some of the leaders responsible for driving initiatives within Shift & Grow and how they are already translating them into action. First, I said we are rebuilding the growth engine. We are strengthening the capabilities, the processes and the mindset required to grow consistently. Second, we are transforming the way we operate, reducing complexity, improving productivity, leveraging our scale much more effectively across the group. Third, we are strengthening our performance culture, creating a company that moves faster, execute more consistently and holds itself to higher standards. And fourth, as I said, we are accelerating investment in tech and data, not as a separate strategy, but as an enabler of growth of productivity and execution at scale. Sustainability underpins all of this. It's at the core of Sodexo's DNA. It strengthens the long-term resilience of our business, but also sharpens our client value proposition. It also gives purpose to our teams. When we do good for our clients, our people, society and the planet, engagement grows, and this fuels our ability to perform and win. Now before we look at each pillar, let me explain how we intend to phase the transformation. Fiscal 2026 and 2027 are about rebuilding the foundations and restoring competitiveness, restoring commercial momentum and improving execution discipline, simplifying the organization and reinvesting in the capabilities, systems, infrastructure we need to support future growth. From fiscal 2028 onwards, the focus progressively shifts towards scaling the model, accelerating growth, leveraging the investments we are making and improving profitability more meaningfully over time. All of this translates into clear financial framework. Let me start with fiscal 2027. We expect organic growth between 2% and 3% and an underlying operating margin broadly in line with fiscal '26. Let me be clear on how to think about it. Fiscal '27 is still a year of rebuilding. Our priority is not to maximize short-term margins. Our priority is to rebuild the foundations of the business. That means continuing to invest, strengthening our commercial engine, simplifying the organization, fixing execution where needed. We believe this is the right way to create stronger and more sustainable performance from fiscal '28 onwards. Looking further ahead by fiscal 2030, we believe we have the capacity to consistently deliver organic growth above 5% and underlying operating margin above 5%. And that brings me now to capital allocation. Delivering this plan requires discipline, not only in how we operate the business, but also in how we deploy capital. We'll continue to invest behind our strategic priorities. At the same time, we remain committed to maintaining a strong balance sheet and a disciplined approach to capital allocation. Sebastien will come back to that in more details, but the principle is straightforward. Every euro we invest, whether in the business, technology or acquisitions must strengthen our competitive positioning and create sustainable shareholder value. So we've talked about the destination. Now let me show you the journey. Everything that follows is about execution. It's about the actions already underway to rebuild growth and competitiveness. Let me start with the first pillar, rebuilding the growth engine. Growth starts with our clients, keeping the clients we already serve, winning new ones, competing more effectively and building a stronger relationship with our largest clients. These are the four priorities driving our commercial transformation. So, first, retention. This is fundamentally a relationship business. When we lose a client, it's really because of a single operational incident. More often, relationships weaken over time, concerns are addressed too late, then by the time we enter the renewal discussion, the outcome has often already been decided. That is why our biggest opportunity is to fundamentally strengthen account management. Today, honestly, accountability is often too fragmented. Several people may be involved, but no one is fully accountable for the relationship. We are changing that. Every strategic client will have one clearly identified account manager with end-to-end responsibility for client satisfaction, retention, growth and financial performance overall. By the end of this calendar year, this will be in place for all of the top 200 clients. At the same time, we are making the entire retention process much more systematic. We have introduced dedicated retention rooms for our highest priority renewals and are building proactive retention plans up to two years before contracts come up for renewal. And trust me, it's pretty new. U.S. education is a great example of why we are changing the approach. The challenges are well known. In many cases, they reflect issues that had built over several years and client concerns that have not been addressed early enough. relationship reaches that stage. It's extremely difficult to reverse the outcome during just a single renewal cycle. So that is why our response goes well beyond individual renewal efforts. Of course, it's the responsibility of the account managers, no doubt about it. I said it, but I also want our leaders to be personally involved. I have renewed the leadership team here, I can tell you, very active on the ground with clients. I feel today an intense mobilization, especially around retaining our business. These actions will not change every renewal overnight, but they fundamentally change how we manage client relationships going forward. Second, new business development. Retention alone is not enough. We also need a much stronger engine to win new contracts consistently. That starts with investing in commercial capacity. We are increasing sales resources in our priority markets. We are bringing in experienced hunters from other B2B service industries. In the U.S. alone, we expect our sales team to be more than 30% larger by year-end. This will be the result of both significant recruitment and the continued strengthening of our commercial organization. This commercial focus is also reflected in our leadership. Today, around 20% of our top 250 leaders are account managers or day-to-day client-facing leaders. It was less than 5% just a year ago. Adding people is only part of the answer. Growth should no longer depend on individual efforts. That's the reality. It needs to become a repeatable commercial system. Not all sales opportunities require the same level of expertise. So we are also introducing a much more standardized approach for smaller opportunities using configurable offers, common proposal templates and AI to prepare, structure, process bids more efficiently and consistently. This allows us to -- allows our most experienced commercial teams to focus on our largest and most strategic opportunities as well. But above all, commercial excellence is very much a matter of intensity and discipline, the energy to fight, to compete, the appetite to win. Third, now, price competitiveness. Winning more business is also about competing more effectively. For us, becoming more competitive is not about simply lowering prices. It's about becoming much more disciplined in how we approach opportunities. It's about pricing to win. I told you how we used to start from our cost base. Now we ask ourselves what it takes to win this opportunity. This is a deliberate change in our pricing strategy. We will compete where we want to win. We will make ourselves competitive by addressing our cost base at the same time. That requires much better preparation, understanding the client, the competition and the economics of the opportunity before designing the offer. The objective is to make pricing decisions based on understanding what success requires. In fact, when you review major opportunities today, I often say to the teams, one, are you clear on clients' expectations? Second, do you know what's the winning price? If the answer is no, then there's no discussion. Today, every major bid goes through a structured price to win review. It allows us to design better offers to make better investment decisions and to be much more deliberate about where we compete. Finally, large account strategy. Large global clients represent one of our most attractive growth opportunities. Historically, we have not captured our fair share of the largest opportunities despite having many of the capabilities that matter most to these clients. Our breadth of services, global footprint, integrated operating model and single governance makes us honestly, uniquely positioned to serve large, complex national or multinational organizations. So we want to fully leverage these strengths. That's why we are putting in place a different commercial model, identifying our highest potential accounts, developing dedicated account strategies, investing in senior account managers and strengthening global account oversight. Let me make this more concrete. I want to show you a recent example of what this commercial engine looks like when it comes together. Over the past months, we have been selected by Meta to deliver workplace food services across more than 130 locations in over 30 countries across very different operating environment. The reason I'm telling you this is not only to celebrate the win. It's because it shows what happens when we bring the best of Sodexo together and operate as one company with aligned teams, high intensity, clear ownership and the right expertise around the client. When we do that, we become a formidable competitor, able to compete and win on the largest global opportunities. And I'll let the team tell the story. [Presentation]

What you just saw is exactly the point of this first lever. Two takeaways. First, these clients are not buying a service. They are buying consistency, accountability and the ability to deliver at scale across a complex global footprint. And second, this cannot rely on a few individual heroes. We are working on building a repeatable commercial model. Now let's deep dive with David, who leads commercial strategy and execution in North America. He has been at the center of redesigning how we approach large clients, structure opportunities and improve commercial discipline. David, over to you.

Thank you, Thierry. The Meta example is a fantastic example, but it is just one example. Congratulations to Damien and Catharine, Martin, Joe, Alice and the team. It was a win, and it really is a strong proof point. But it's also part of a much bigger opportunity. Large accounts are central to Sodexo's ambition to deliver more predictable, profitable growth. In the U.S. alone, large accounts represent $75 billion in addressable spend. That's about 15% of the total market. It is a significant market, and many large organizations remain underserved by traditional sectorized approaches. Large accounts operate across multiple geographies with various sites and all kinds of services. They involve multiple stakeholders, and therefore, they demand strong account governance. The thing they want least is multiple vendors and fragmented contracts. They want -- they're seeking simplification. They just want a partner that can operate at scale, deliver consistently and bring clear accountability across all the geographies. One of these clients told me, David, anyone can serve our headquarters. That's the easy job. What I need is someone that can support us across our entire footprint. That captures the challenge very well. Winning large accounts is not only about what you sell, it's also about how you sell. I tell my team, good sellers can tell you why to buy from Sodexo. Great sellers can tell you not only why to buy but how to help you how to buy. Differentiating yourself during the buying experience is critical with these large clients. And when we do this, we know we can win. We've already proven it. You saw it in the airline lounge business. We've proven it in sectors such as fast-moving consumer goods and in health care. But we've not done it consistently enough across the entire portfolio. So we are changing the way we're going to work. First, we're going to select differently. We've identified priority accounts that Sodexo can truly differentiate and create long-term value. This means focusing our resources on the strongest areas where we have a right to win. Out of the 800 clients we've identified, we've already identified the first tranche, which is circa 15% to start proactively developing those opportunities. For example, we recently targeted a client who had a gap in service coverage in some countries where one of our competitors had recently vacated. We were able to quickly structure a contract to support them. The second change is how we design and price opportunities. We now spend much more time upfront. And this is not only to better understand the client, but also understand how they buy and what is the likely price to win. Once we have that level of clarity, we're able to design a solution that is easy to purchase, that meets the client's expectation and is attractive to Sodexo from a returns perspective. This creates much greater discipline. For example, we are in the midst of completing a contract with an existing client to add several sites where they're currently self-performing the services. Third, we're making ownership much, much clearer. We're asking ourselves who leads the relationship? Who makes the decisions? Who is accountable for execution. And fourth, we are gaining much greater discipline and speed to how we pursue these opportunities. It's important to remember that the complexity and time are the key silent killers of growth in any organization. We now operate through structured win rooms, bringing senior cross-functional leadership expertise together much earlier in the process. These deals are built collectively from day one. There is -- the client is at the center of all these opportunities. As a result, opportunities move much faster, decisions are clearer and clients experience a much more seamless approach. In one recent example, a win room expedited the extension and expansion with one of our largest clients in the U.S. Early signs of progress and momentum are building. Yet we are still at the very beginning of this journey. We do have the operating model. We're building the governance and the team is now all in place. Now we can scale this approach. We're already seeing encouraging signs. Our large accounts pipeline is much more structured and focused. And even more importantly to me, the quality of the buying experience for these clients is improving. Let me close with three messages. First, large clients are the most attractive growth opportunity for Sodexo. Second, we have the assets and we know how to win. And third, we are now investing to ensure our approach is scalable and systematic. Thank you. Back to you, Thierry.

Thank you, David. What David described is exactly the type of commercial discipline we need to accelerate growth. Over recent years, our net new business growth has been around zero. The first pillar is designed to fundamentally change that. We'll track proactive retention through retention rate, new business through development rate, pricing competitiveness through bid rate and our ability to unlock large accounts through the growth of our related pipeline. Bottom line, success will be measured by one outcome, a return to sustainable profitable growth. By 2030, our ambition is to consistently generate more than 3% net new business growth, supported by stronger client retention and greater business development. Let me now turn to the second pillar, simplifying and standardizing how we operate. The pillar is about making Sodexo simpler, faster, more competitive. What we are now putting in place is much more standardization around operations, workforce productivity and procurement. The objective is to remove unnecessary complexity so teams can focus on clients and our operations. It starts with how we manage the performance of our existing contracts. This is an area where we see significant upside. We have many strong well-performing sites for sure, but performance is not always consistent enough across the group. Over the past months, we have systematically reviewed our portfolio. We identified a targeted set of contracts with significant gross profit recovery potential. For each of them, we start with the same questions. Why is this contract not performing? Is it an operational execution issue? Has the scope evolved? Is pricing still aligned with today's reality or have the client needs fundamentally changed? The answer determines the action plans. That may involve improving operational execution, simplifying staffing models and increasing workforce productivity or adjusting pricing and scope where appropriate. What is changing is that this is now managed much more systematically. Every region has identified the priority contracts and committed to clear recovery objectives by fiscal 2027. We've also dedicated recovery teams working on the most critical situations, bringing together some of our strongest operational leaders to accelerate improvement. And we are, in parallel, putting in place one common methodology across the group with shared performance scorecards, systematic tracking of operational leakage and common recovery playbook. Our objective goes well beyond fixing today's underperforming contract. Every recovery program is also an opportunity to improve the way we operate. The lesson we learned are being translated into new delivery standards, simpler operating models and best practices that can be deployed across the wider organization. This is hard work. It is highly operational, but it's also where a significant amount of value sits, and it's largely under our control. The second area is simplifying the way we operate. If we want better performance to become repeatable, we also need a simpler, more productive organization. Before going into what we are changing, it's important to understand why our organization lost competitiveness in some area. The answer is quite simple. It is the shape of our workforce pyramid. Over time, in different parts of the group, the pyramid has become unbalanced. Why? Because when you don't grow, you don't bring enough new talent at the base of the organization. At the same time, people stay longer in their roles and salaries continue to increase. So what happens is simple. The base of the pyramid becomes too narrow, the middle and the top of the pyramid become too heavy and overall productivity deteriorates. And beyond productivity, it also limits our ability to refresh skills, bring in new talent and develop the next generation of leaders. So that is the situation we are fixing. First, we are simplifying support functions and overheads. We are accelerating the expansion of our global business services, standardizing processes, removing duplication across the organizations. Our mindset is simple. Business services by default, unless there is a clear business reason for them to remain based in HQs. The role of our support functions is to enable the business, not to add complexity. We want leaner headquarters, stronger shared capabilities and more resources focused on serving our operations and our clients. Second, we are flattening the organization. Today, we have the number of management layers very significantly across the group. In some countries, though, there can be as many as 12 layers between the site and the regional CEO. In others, there are 7. So that gap tells us there is considerable room for simplification. Every additional layer slows decision-making, weakens accountability and at the end, creates distance from the client. So we are, therefore, reducing management layers, increasing spans of control and moving resources closer to the front line. Pierre Bellon often reminded that this is a penny business. We need to operate accordingly with a lean organization, empowered local teams and support function that exists to help the business succeed and not the other way around. Third, we are improving workforce productivity. Labor represents roughly half of our cost base. That makes workforce productivity one of the most powerful performance levers we have. But historically, we have not managed workforce productivity consistently enough across the group. Simple indicators such as workforce utilization or revenue per employee were not even measured and therefore, could not be acted upon. Managers also need much better visibility. Today, in too many situations, they simply do not have real-time information on workforce allocation, on labor productivity or operational performance. So that is why we are introducing common KPIs, much better operational visibility and stronger discipline around workforce planning and resource deployment. Taken together, these initiatives create a simpler organization, a healthier cost structure and a much more scalable operating model. As we execute this agenda, we expect these operational improvements to translate into improvements to meaningful productivity gains and stronger profitability over time. The final part of this pillar is procurement. Historically, we did not always leverage our scale as effectively as we could. We are now building a much more integrated procurement model with greater standardization, stronger purchasing discipline and much better use of our collective buying power. This is already delivering tangible results, but we believe the opportunity remains significant. Damien, who leads Entegra and supply, will take you through it. The model he and his team are implementing is one of the clearest example of how we can convert our scale into better competitiveness and stronger returns. Damien, over to you.

Thank you, Thierry. Hello, everyone. Over the years, we have built a powerful supply ecosystem. We have scale in purchasing with around EUR 7 billion of spend across the client sites where Sodexo operates. We also have deep operational and culinary expertise. And we have Entegra, a leading and fast-growing group purchasing organization, GPO, aggregating over EUR 38 billion third-party member spend. We have all the right assets. However, we have not been capturing their full value consistently. Why? Because our operating model was fragmented in two ways. First, many operational and purchasing decisions were made independently at site level. Second, our supply organization in Entegra have operated as two separate organizations under separate leadership. Our site level decision-making brought flexibility, proximity to local markets and strong entrepreneurial execution. However, when offers are designed locally, when ingredients vary across sites and when purchasing decisions are fragmented, over time, scale gets diluted. In practice, this translates into inconsistent buying leverage, limited compliance and variability in execution. And what we are doing is fundamentally solving for that. It is a full reset of our operating model. We are changing the way the model operates day-to-day to connect brands and offers, menus, recipes, ingredients, purchasing decisions and execution at unit level. Our units do not start from a blank page anymore. Menus, recipes and ingredient choices become much more prescribed and structured. And that simplifies execution at site level, improves purchasing consistency and makes scale easier to leverage. Today, in many units, planning, forecasting and ordering can take up to two or three days per month. This is a real operational burden that is now being reduced to a couple of hours. And that really matters because in a business like ours, reducing operational complexity directly improves execution quality. In parallel, we are creating a model that is AI native by design, and AI will help us automate, allowing us to move from reactive operations to more predictive and consistent execution. The results are better economics, better execution and better experience for both clients and consumers. This consistently will allow us to better leverage our scale, but that's only the first part of the equation. The second part is how we organize Sodexo Supply and Entegra. The reality is that we will -- we still operate as separate teams in most of our countries. In Europe, the Entegra business grew through bolt-on acquisitions with separate supply chain. The integration work country by country has not yet been completed. And in North America, until recently, we had separate leadership teams and different ways of working. And as a result, we were not fully leveraging the combined scale, expertise and capabilities. Today, we are starting to work as one team with joint category strategies, increasingly integrated ways of working. Honestly, we've wrestled with this topic for years. On the one hand, we've been successful at growing our Entegra business, focused on external members, and that strategy worked. Entegra has consistently grown faster than the market and has built leading capabilities in procurement, data and digital. On the other hand, however, we were not fully capturing the value of our overall scale. Today, that opportunity has shifted. As we deploy our operating model, it provides the operational discipline that is required to leverage our scale. That is why bringing Sodexo Supply and Entegra together is the right decision. This creates value in two ways: First, efficiency. By combining internal and external purchasing volumes, we are strengthening our buying power, strengthening our supplier relationships, increasing compliance and improving purchasing discipline across the system. Second, growth. As David just mentioned, procurement is becoming part of why we win contracts. Supply and Entegra are now involved much earlier in the sales process, helping us build more competitive client solutions, accelerate mobilization and create value from day one. On several recent contracts, Entegra was live within weeks of the contract award, well ahead of the broader organizational mobilization. And that's a good example of how supply can become a commercial differentiator, helping us accelerate value delivery and strengthening client confidence from day one. This is also why we continue to invest in Entegra. Entegra has grown double digits consistently over the past five years, and we want to further accelerate. We will continue to invest in sales capabilities, identify bolt-on M&A opportunities and continue our geographic expansion. Everything that I have described started in North America, where we chose to build, test and refine the model before scaling it. So what have we done already? Well, we brought supply and Entegra under one leadership to test and learn the model. We've rolled out order guides on some of our largest categories such as produce and bakery across our entire portfolio of units, and that's all 8,000 of them. We have deployed our new planogram technology to monitor our retail operations across all major units. And we've aligned general managers' incentives to include KPIs on supply chain compliance, essentially buying the right products from the right suppliers. We're still at an early stage in the journey, but we are confident in the opportunity ahead. Sebastien will come back on the financial implications and explain how procurement, supply chain efficiencies and the broader operating model transformation will contribute to the margin improvement potential embedded in our plan. As you can see on the slide, we have already started the rollout. Today, every North American unit is already benefiting from parts of the new operating model. And the early results are encouraging with north of 50 basis points of gross profit uplift on our pilot sites. And the next phase is about bringing all of those building blocks together end-to-end. And as our ERP platform is deployed, it will enable us to accelerate the rollout and scale the model across North America. So let me leave you with three messages. First, we are fundamentally simplifying and standardizing our supply and operational model. Second, we have brought together supply and Entegra under one leadership to better leverage our scale and capabilities. And finally, with Entegra's aggressive growth plan, we are turning one of Sodexo's strongest assets, our supply chain and procurement capabilities into a source of competitive advantage, growth and value creation. With that, Thierry, back to you.

Thank you, Damien. So over the next few years, we'll track our execution progress to continuously simplify and standardize our operating model. The productivity gains will show in our margins and also be reinvested to strengthen our commercial competitiveness. But organizations and processes are only part of the picture. Ultimately, sustainable performance depends on people, how we lead, how we manage performance and how we build the right culture. So that brings me to our third pillar, building a stronger performance culture. Culture is what determines how decisions are made, how quickly we act, how leaders behave and how people are held accountable for results. In other words, culture determines how the organization performs every day. And frankly, over time, we lost some of that intensity. We became too complacent in parts of the organization, too slow to make decisions, to tolerant of underperformance, too reluctant to make difficult decisions. That has started to change. For me, it starts with leadership. If we expect the organization to move faster, make better decisions and execute with more discipline, that has to start at the top. This is why one of my first decision was to reshape our leadership model. At group level, we simplified the execution committee and removed the zone layer. Today, all regional CEOs report directly to me. The objective was simple. Again, shorten decision path, strengthen accountability and bring leadership much closer to our clients and our operations. As an example, a EUR 100 million account does not need four layers of management around it. We've also strengthened leadership where we believed new capabilities were needed. As a matter of example, North America alone, we have made 15 changes, 15 across the senior leadership team over the past nine months, including 10 external hires. But we also continue to strengthen the group leadership team, including with the recent appointment of our new Chief Human Resource Officer. The second element is performance management. People perform better when expectations are clear, when performance is measured consistently and accountability is not open to interpretation. This is about fewer KPIs, clearer expectations and much more rigorous follow-through. The third element is incentive. We've simplified and harmonized our incentive framework across the group around one simple principle. People should be rewarded for the value they create. Growth carries now much more -- much greater weight than before, for sure, so do client execution and accountability, client retention, incredibly key. We've also aligned incentives much more closely with individual responsibilities. Hunters are rewarded for winning new business. Account managers are rewarded for growing and retaining their accounts. Operational leaders are rewarded for delivering growth and profitability. In other words, incentives are now directly aligned with the outcomes that matter most for our clients and for Sodexo. Building a high-performance culture means continuing to attract, develop and retain great people. It also requires a much more proactive approach to talent management, identifying high potential individuals, accelerating their development and creating the right opportunities for them to grow. But we also want to bring in more talent from the industry. And by the way, let me tell you, we are seeing this happening with more and more talent reaching out and willing to join. They certainly want to help drive the transformation and leave Mark. And as a matter of fact, this is probably one of the most exciting moment to join Sodexo. Now to bring this to life, let me hand over to Soorya. Soorya, over the past seven years, has led the transformation of APAC's performance culture and management system. A few months ago, I appointed her as SVP, Talent and Development to help embed these practices across the group. Soorya, over to you.

Thank you, Thierry. Thank you. So let me share my personal journey with Sodexo. So when I joined APAC region seven years ago, I didn't find an organization lacking talented people. We actually had talented people. What we lacked was a consistent management system. And let me explain. Because of the way we have actually organized ourselves, decision often had to travel many organization layers before they were made. And the results, slower decisions and diluted accountability. And performance bank different things depending on who you actually ask. And along the way, we had actually become a little too sympathetic. What we were doing is that we were discussing and defending underperformance rather than acting or addressing it. So let me share one statistics globally last year, right? Last fiscal year, 96% of our senior leaders were rated fully achieved or exceed expectations. In fact, more than 50% actually was rated exceed expectations, yet we fall short on our financial ambitions. And that doesn't add up. We weren't differentiating performance. We were actually normalizing performance. And that's why I described our starting point in just three words: complexity, inconsistency and complacency. Now performance rarely collapse overnight. It actually dreams. And so is our culture. Culture works exactly the same way. It's shaped by what our leaders reinforce, recognizes and what they choose to tolerate and not to tolerate. So once we understood the problem, the question become obvious in APAC region then. How do you build a sustainable performance? Sustainable performance doesn't happen by chance. It comes from a management system that actually creates clarity, accountability and consistent execution. And sustainable performance requires both the what and the how. Neither alone is called sustainable performance. Now if you reward what without the how, you are actually promoting toxicity. People may hit their numbers, but at the expense of teams, collaboration, succession and so on, right? And on the other hand, if you reward the how without the what, you actually promote mediocrity. Great intention without delivery doesn't create any value. So that's why we built our approach in three simple principles. First, clearer standards because people cannot be hold accountable if they don't understand what is actually expected of them. So we made success explicit. For example, every managing director in the region knows exactly what success looks like and how they will be assessed, and they know exactly where they stood throughout the year. Number two, fair assessment. Performance should never depend on who your manager is, right? So we moved from opinion-based to evidence-based assessments. And finally, stronger accountability. We reward outcomes and we recognize behaviors. That's our philosophy. We stopped recycling underperformance. Obviously, we addressed them, right? We supported them. Some people improve, some move to a smaller role and where there could be -- there couldn't be any improvement, we actually had to make a very difficult decision. And managing low performers actually requires a very different leadership mindset. It requires empathy and not sympathy, right? Sympathy removes accountability from individuals, but empathy actually supports people to succeed. So, looking back, everything comes down to one simple belief, performance should never be open for interpretation. So did it work? The answer is on this slide. So let me show you why. So if you look on the right, the revenue grew. Gross profit improved. Underlying operating profit increased significantly. Now those results did not come from one initiative. They came from a business that was actually executing with greater discipline, rigor and consistency. And now look at your left. Engagement among our senior leaders increased from 79% to 89%. Leadership advocacy reached 64%, placing us firmly in the best-in-class benchmark and regrettable attrition also reduced. So the important point isn't that one metric improve, they all actually move together. And that's exactly what you would expect from a stronger management system. Now raising performance standards actually strengthen engagement. So now having demonstrated that in APAC, the next question becomes obvious, can we leverage it? Can we strengthen it? Can we scale it across Sodexo? And now that's exactly what this slide is about. And one important point, these are not future ideas. They're actually being implemented as we speak. Together, they are actually creating one integrated performance management model across Sodexo. Now first, we are creating much clearer expectations through what and how assessment, day one target cascade. And it's not like day month four, right, that people actually is getting their targets. But day one target cascade, simplified bonus KPIs. Every employee will understand what success will look like from the beginning of the year and how their performance will actually be assessed. Second, we are strengthening accountability. High performance will be recognized more clearly and sustained underperformance will be addressed earlier and more consistently. So we will no longer recycle underperformance. Third, we are improving differentiation, differentiated rewards and evidence-based assessment ensure performance is actually recognized fairly and consistently across the organization. And finally, as Thierry has actually mentioned, we are building a stronger leadership pipeline through critical roles identification, refreshed leadership population framework, we are investing in roles that have greatest impact in today's performance and tomorrow's growth. So here's our ambition by fiscal year 2030. senior leader engagement above 85%, regrettable attrition below 18% and ready now successor for at least 80% of our top 250 critical roles. Now this isn't a collection of HR initiative. It's one enterprise management ecosystem that is changing the way Sodexo is managed. So let me finish with this. What we are doing is a permanent change. If we get this right, the organization will move faster, leadership will become stronger. And when standards are high and applied fairly, engagement will follow. We proved it in APAC. And now we, as a Sodexo's leadership team are taking this experience, strengthening it and embedding it across Sodexo because ultimately, performance is not an annual event. It's how we choose to lead every single day. With that, thank you. Over to you, Thierry.

Yes. Thank you. Thank you. What you've just heard is a management system designed to strengthen execution across the group. It's about restoring a culture with clear executions, stronger accountability. and better leadership at every level of the organization. As with every pillar in our plan, we have defined a clear set of indicators to track our own execution. We'll monitor our ability to attract and retain our best talent through engagement and citable attrition. We will also monitor the effectiveness of our performance management through performance rating distribution. And finally, we will monitor the strength of our leadership pipeline through succession coverage. People are at the heart of our business, right? Our success will always depend on the quality of our leaders, the strength of our teams and how well we identify, develop and retain talent over time. That is what will make the difference. But the next question is, how do we enable our people to perform at their very best every day. Many operational improvements can already happen through better leadership, simpler processes, stronger execution discipline, but technology and data allows us to scale those improvements much more effectively across the organization. Our investments in technology and data are about both catching up and pulling ahead, fixing today's gap while building the capabilities that will differentiate us in the future. Today, let's be clear, we still have technology limitations that a company of our size should not have. Over the years, the organization has allowed for the creation of many local solutions. This has resulted in a landscape of fragmented system that often do not talk to each other that has prevented us from having a relevant operational data. In some instances, we still don't have the most simple operational performance management tools. This prevents us managing performance rigorously. So the first priority is clear, fix the foundations, once and for good. That starts with much tighter governance. So today, it's very simple. All the tech teams around the world are reporting directly to Alice so that we make sure we have one unique governance model, one shared technology road map and in the end, much stronger discipline around investment decisions. That allows us to accelerate the implementation of core systems, ERP, HR, procurement systems and build a common data foundation across the group. Reliable, real-time data allows managers to make better decisions, act earlier and execute much more consistently. With integrated systems, managers can deploy resources more effectively, improve productivity and manage the cost base much more dynamically. Now once those foundations are in place, we can scale much faster. Our second priority is to scale digital and AI much more aggressively across the business using AI and digital tools to improve commercial performance, simplify operations and increase productivity. So technology is becoming an increasingly important differentiator for our clients as well, particularly large clients. We expect greater transparency, operational visibility and frankly, data-driven insights. So today, we have the governance, we have the fundings and the foundations to scale these capabilities across the group. Alice is leading the transformation. Alice, over to you. Thank you.

I have the tech person in the team. I have two messages for you. First, our tech was fully fragmented in the past. And trust me, it was a nightmare. Second, we are fixing it. Historically, at Sodexo, technology was developed locally in a federated organization. As an example, we invested in hundreds of digital AI solutions. At some point, we were managing 2,000 systems. We are working in two ways to address this. First, we are operating a big lift in our foundations. Enterprise solutions are one, finance, food, FM supply and data is the second. And here, we are making an urgent investment. This will represent more than 50% of our tech investment. And the advantage to do it now is that we are making it data-centric and AI native. As an example, we have designed a new ERP, including AI to automate menus, optimize supply, predict production in collaboration with Damien. Second, we have created a unified digital and AI platform to integrate all our solutions into one. In the next quarters, the objective is to deploy this AI native platform in our 27,000 sites. Let's deep dive here. All our digital and AI products are now integrated into one consistent platform, Sodexo Spark. Sodexo Spark is modular like LEGO box. It combines standardized modules that can be assembled to meet the different needs of clients, consumers or operators. Let me start with clients. We call it Spark IQ. Spark IQ provides transparency and insights. It combines operational consumer asset modules to help clients make better decisions in food services and FM, such as energy and space optimization. This is now a strong competitive advantage to win large deals. In FM, Spark IQ leverages IoT to move from reactive maintenance to predictive and demand-based maintenance with now more than 5,000 sensors deployed in six countries. We are now able to adjust cleaning routines or hair cooling based on usage of rooms and offices. In food, Spark IQ is deployed across more than 1,500 sites and covers around 40 million transactions every year. It allows us to improve our services on cost in line with our client objectives. The second component is Spark XP. Consumers increasingly expect personalized digital experiences and Spark XP deliver that. We are making every day simpler and more relevant for 10 million active consumers through digital ordering, frictionless retail, customer recommendation, workplace services. As an example, frictionless stores are particularly adapted into stadium and mining context. In the site where it is deployed, Spark XP generates an increase of 15% spend per consumer basket as an average. Beyond the metrics, Spark XP strengthens consumer satisfaction. For our clients, that means better experience in their facilities. For Sodexo, it creates additional growth and stronger consumer loyalty. The third component is Spark OS. It is designed for our operational teams. So they spend less time on administrative tasks and more time serving consumers and clients. Spark OS supports workforce planning, menu creation, procurement, asset management and improve productivity across both food and FM, thanks to data and AI. Today, Sparks OS supports 6,000 operators every day. In 2030, all our site managers will work daily with Spark OS. I now invite you to watch the video that summarize everything. [Presentation]

So what's next? We have started the deployment of the ERP, and it will be live next year in pilot countries, along with FM and HR solutions. We expect full deployment of enterprise core systems and Sodexo Spark towards 2029 and 2030 on all our sites. And to conclude, let me remind me my two key messages. First, we are leaving behind a fragmented tech ecosystem. Second, we are fixing the system by leveraging data and AI, and we are fixing it very fast. There is no doubt in my mind that we are delivering the most efficient tech platform for us that will nurture our growth for a long time. Back to you, Thierry.

Thank you, Alice. So what Alice has shown is that technology plays two very different role in our transformation. First, we are fixing the foundations. Our ambition here is straightforward to have core systems and data that are reliable, integrated and fit for a company of our scale. We're not trying to build the most sophisticated ERP landscape. We are building one that works, okay? Second, we are using digital and AI to differentiate ourselves in the market, improving productivity, strengthening our value proposition and creating a better experience for our clients and our teams. So they doing both requires significant investment. Over the next three years, we will continue to optimize our business as usual technology spend, right, while materially increasing investment in transformation. Sebastien will come back to this in more detail when he discusses our capital allocation and financial framework. As with every execution pillar, we have here also a clear dashboard to track our progress. We will monitor the deployment of our core platforms, the quality and the availability of our data, the adoption of Sodexo Spark and ultimately, the productivity, the growth and the client value these capabilities generate. Some of these benefits are already visible today. As we scale these capabilities across the group, technology will become an increasingly important source of competitiveness and differentiation. Everything you have seen and heard today is designed to achieve the core objective, accelerate growth and restore competitiveness. We also have a dedicated team and scorecard to monitor execution, measure progress and hold ourselves accountable for delivery. Now I'm sure you're with me. The next question is how this translates into financial performance. So Sebastien will now take you through the financial trajectory we believe this plan can deliver. Sebastien, over to you.

Thank you, Thierry. So most of what you have heard this afternoon has been about improving execution. I will now explain how better execution translates into financial outcomes. And let me start with what I believe is a key question. What gives investors confidence that this plan will deliver. And when I look at the transformation plan, I ask myself two questions. First, do we clearly understand what went wrong? Second, have we translated this assessment into concrete action. And I believe that we can answer yes to both. Growth is being rebuilt with stronger commercial capabilities, proactive account management, disciplined price to win competitiveness and a much more structured approach to large clients. Our competitiveness is addressed with operational excellence, workforce productivity, organizational simplification and supply at scale. Technology is improving the way we serve clients, we operate the business and make better decisions. This is no longer simply a list of priorities. It is a coordinated set of operating changes, management decisions and investment that directly address what was not working. Having seen the organization over many years, I can tell you that it has changed significantly over the past months. I see greater urgency, faster execution and a much stronger focus on client. Let me now address another important point. I want to ensure that we grow both profitably and sustainably. We are changing our commercial approach. We will be much more competitive where we want to win. But being more competitive, it doesn't mean compromising our financial discipline. Every significant investment, major contract continue to go through a rigorous financial and contractual review, clear return criteria and a disciplined governance. Our objective is obviously not growth at any cost. It is profitable growth supported by a more competitive cost base and better execution. And this is something I look at personally. Now let me explain how we think about growth. Our organic growth comes from three drivers: pricing, volumes and net new business. So let me start with pricing. Here, pricing refers to inflation-related price adjustment on existing contracts. It is different from the pricing strategy we described earlier, which is reflected in the net new performance. On pricing, our objective is clear: pass through inflation, protect margins and remain competitive. This requires discipline in our contractual terms in the day-to-day contract management and in our pricing discussions. But we also benefit from structural advantages. that help us manage inflation. Our internal inflation is typically lower than the market because of our scale, because of our purchasing power, our ability to adapt ingredients and menus. Over time, pricing broadly reflects our cost inflation. We are assuming around 2% per year in the midterm, but this will depend on the macro environment. Second, volumes. Volumes reflect the level of activity we have on our existing sites. Part of it depends on the macro environment as well. But we also have clear levers to influence volumes, enhancing our consumer offer, leveraging tech and data to drive participation in retail sales and growing existing accounts through a more proactive cross-selling approach. Overall, we view volumes as a relatively stable contributor between 0% and 1% per year across the cycle. Third is the impact of the net new business, and this is a key driver. Today, our net new business is broadly around breakeven. Our objective is to turn it positive in the near term and then progressively increase it over time. Our ambition is for net new to contribute more than 3% to organic growth by fiscal 2030. And taken together, that supports our trajectory towards above 5% organic growth by fiscal 2030. Now if we look specifically at fiscal '27, our guidance reflects the early stages of that progression. We expect pricing to contribute at least 2%, again, broadly in line with inflation. We expect volume to grow broadly -- to remain broadly stable. And more importantly, we expect net new business to turn positive, although still at the early stage. And taken together, this supports our fiscal '27 organic growth guidance between 2% and 3%. Now before presenting our margin trajectory, I would like to spend a moment on the investment behind Shift & Grow. It explains both the near-term pressure on margin and the long-term value creation opportunity. Across fiscal '26 to fiscal 2030, we are concentrating our investment in four areas. First, commercial capability to accelerate growth. We are significantly strengthening our sales organization through additional sales and account management resources. Once fully deployed, this investment will represent around EUR 100 million of incremental annualized operating cost. Winning and retaining more contracts also means investing alongside our clients. As a result, we expect capital expenditure to increase to our 2.5% to 3% of revenues across the cycle. And it will be driven mainly by contract-related investment at client sites and to a lesser extent, by technology. The remaining investments are different in nature. They are designed to transform the way we operate and strengthen the business over the long term. Across technology and data, workforce transformation and supply, we expect to invest approximately EUR 1 billion in nonrecurring incremental initiatives over the course of the plan. And let me briefly explain where those investments will go. First, tech and data, as Alice described earlier, we already invest around EUR 500 million in technology each year. And over the plan, we will continue to optimize this business as usual spend while adding around EUR 500 million to EUR 600 million of incremental transformation investment. These investments are a critical enabler of productivity, scalability and better decision-making across the group. Second, workforce transformation. And this is the largest margin improvement opportunity within our plan. We have already started this transformation. And over the next 12 to 18 months, we will continue to simplify the organization, further expand global business services and improve workforce productivity across our sites. To support this transformation, we currently expect restructuring costs of around EUR 400 million across fiscal year '26 and '27. This cost will be reported below underlying operating profit within other income and expenses. And the recurring productivity benefit is expected to broadly offset that restructuring investment over time. And third, supply, as presented by Damien, where we are standardizing processes, strengthening supply capabilities and scaling our operating model across regions. Once fully deployed, these initiatives are expected to contribute more than 50 basis points of margin improvement. Key point to keep in mind is the timing. Fiscal '26 and '27 are investment years. From fiscal year '28 onwards, we expect to benefit increasingly from the return of those investments. And this is exactly what is reflected in the margin bridge on the next slide. So before I walk you through the bridge, let me start with fiscal '26 as it is a financial starting point of the plan. The 3.2% to 3.4% guidance reflects operational challenges, additional investment and the impact of the asset and contract review. Fiscal '26 represents the low point of the plan. It is a deliberate reset that establishes a clean starting point for the years ahead. First phase of the plan is about rebuilding competitiveness. Fiscal '27 is a year of transformation than a year of margin recovery. We first benefit from the nonrecurring of several negative items that impacted fiscal year '26. At the same time, we continue to invest in commercial capabilities, in tech, in supply. And the final bucket combines several offsetting effects. We begin to capture the first benefit from shift and growth through supply, organizational simplification, workforce productivity. However, those benefits remain only partial at this stage and are offset by the initial impact of our more competitive pricing approach and the normal ramp-up of new contracts. So as a result, we expect underlying operating margin to remain broadly in line with fiscal '26. From fiscal '28 onwards, we enter the acceleration phase. By then, the transformation is largely deployed, while the investment made during the first phase begin to generate recurring benefits. The first driver is supply. We expect structural improvements in margin as we deploy our new operating model, increase purchasing compliance and leverage our scale more effectively. The second and the largest driver is the workforce transformation. We expect meaningful productivity gains and structurally more efficient cost base as we simplify the organization and improve workforce productivity. And the third bucket combines several offsetting effects. We naturally benefit from positive operating leverage as growth accelerates. At the same time, part of the productivity gains generated by the plan are deliberately reinvesting to strengthen our commercial competitiveness. And we also benefit from the normalization of the investment made earlier in the plan. And taken together, these drivers support a progressive improvement in profitability, leading to an underlying operating margin of more than 5% by fiscal 2030. You can see our capital allocation framework on the slide, articulated around three priorities. First, investment in the business. We'll continue investing in commercial capabilities, in tech, data, in competitiveness. We will also expect capital expenditure to increase to our 2.5% to 3% of revenue across the cycle, as I mentioned before. Second, dividends. Our policy remains unchanged with a 50% payout ratio of the underlying net income. And we believe that this is the right balance, sharing value creation with shareholders while preserving the capacity to invest in the business. Third, M&A. Our approach remains targeted and disciplined, focused on bolt-on acquisition. Every investment case will strengthen our capabilities or reinforce our position in priority markets. And it is expected to deliver a return on capital employed of above 15%. As we move through this investment phase, leverage is expected to increase to around 2.6x in fiscal '26 and to remain between 2.6x and 2.8x in fiscal '27. And this reflects front-loaded investment and temporarily lower profitability. But our business remains resilient, cash generative, capital-light and our medium-term objective remains unchanged to return below 2x leverage by 2030. As growth accelerates, margins improve and investments mature, we expect a sequential improvement of the return on capital employed along the plan. And this is supported by a disciplined approach to liquidity management, combining significant liquidity sources and a proactive management of debt maturities. We have already repaid the maturity that came due in April and June '26 and the EUR 800 million April 2027 bond will be refinanced in due course. We are committed to remaining a solid investment grade. And let me conclude by bringing everything together with our midterm financial guidance, which represents our commitment to investor. You saw this trajectory earlier with Thierry. What I wanted to explain today is how it is built. stronger growth supported by a strengthened commercial engine, progressive margin improvement driven by labor productivity, supply and simplification and improving returns supported by disciplined capital allocation. These are not stand-alone financial targets. They are the direct consequence of the operational choices and investment we have discussed today. At the end of the day, our plan will be judged by one thing, execution. Today, our objective is not simply to set out an ambition plan. Our objective is to continue demonstrating that we can deliver quarter after quarter on the commitments we make. That is how we intend to build confidence over time. Thank you, and back to you, Thierry.

Sebastien, thank you. All right. Let me close with one final thought. What we presented today is a focused turnaround built on actions that are already underway, a plan that converts operational improvements into stronger growth, higher margins and greater cash generation over time. We believe Sodexo has everything it takes to create significant value over the long term. We operate in attractive and resilient markets. We have leading position in food and facilities management. We have long-standing client relationships. We have a unique combination of global footprint of capabilities and talent, and we have established leadership in sustainability and positive impact. Together, these strengths increasingly differentiate us from -- with clients. Today, we also have a clear strategy, a disciplined execution plan and importantly, a renewed leadership team fully aligned behind the plan. Together, these strengths provide a strong foundation for sustainable value creation. Transformation takes time. We know there is still a great deal of work ahead of us. But what gives me confidence is what I see happening across the organization. Leaders are taking ownership. Decisions are moving faster. Commercial intensity is back and teams are fully focused on clients, execution and performance. So these are early signs. They are the signs of an organization that is changing, gaining momentum and on the move in the right direction. Pierre Bellon has built this company around a simple idea, serving clients well, developing our people, fostering entrepreneurship and putting growth and positive impact at the center of everything we do. That is what Shift & Grow is about, returning to the fundamentals that have made Sodexo successful for decades. Turnarounds are not built on promises. They are built on execution. That execution has started. We look forward to showing you our progress over the years ahead. But again, for today, thank you for joining us. I'll invite now all the speakers to join me on stage for the Q&A session, okay?

Thank you. We will now open the floor for questions. [Operator Instructions]

Almost ready. All right. How do we do that? Should we go ahead? You're #1? We can get closer, but we're not hearing.

Jamie Rollo from Morgan Stanley. Two questions on the margin, please. It's clearly a pretty big increase from the sort of low 3% next year to 5%. Should we assume a sort of fairly even cadence of sort of 50 basis points over those 3 years? Or would it be more sort of back-end weighted, do you think? And then secondly, again...

Nothing related with [indiscernible], you blew up the mic.

On the margin bridge, the 100 basis points from workforce productivity, you said that's nothing to do with operating leverage on the new wins. Obviously, you're not looking for higher volume growth. So can we infer that is simply a reduction in labor costs. So you must be looking to, I assume, have fewer people or to reduce your labor costs over time. I didn't sort of see that mentioned explicitly in the presentation. So maybe I misunderstood that.

So just maybe a word on the first question and then the second one, I'll -- Sebastien will elaborate. That's for sure that if the objective is to look at FY '27 as a period where we are intensifying the investments that's the reason for I think the margin where we see it by '27. For '28, then certainly, it has to pick up. We know that over the 3 years to get to 5% will require more or less the same level of jump every year, right?

It's a good assumption. I mean you can take really a linear improvement from '27 to 2028. And then on the labor productivity. So as I said, mostly of the investment, I mentioned the EUR 400 million investment on labor productivity, fiscal year '26, fiscal year '27 will be booked below [ UP ] in OIE. The cash out will be in '26, '27 and '28. I mean, as you know, there is a lag between booking the provision and the cash out. So we'll get the benefit from that, again, and we started already to have some benefit from that this year. It will be progressive '27, then '28 and then '29, okay? And then as I explained, we get definitely this margin improvement, and then we reinvest part of it in terms of pricing, our pricing strategy, okay? So this is not fully -- it doesn't flow doesn't flow directly in terms of margin. Part of it, obviously, it's [ kept ] But then you have also part of it that is reinvesting in growth.

Simon LeChipre from Jefferies. First of all, on business development and I mean, net new, what are the KPIs you are monitoring to sort of control the quality of the contracts, which are retained and signed? And are these KPIs part of the incentive framework for sales? Secondly, what is the current mix in terms of commercial development between first-time outsourcing and share gains? And how do you see this evolving as net new accelerate? And lastly, as a follow-up on margins. Basically, you expect operating leverage to pick up from '28, but it should also likely be the period where the growth momentum also accelerate. And we have seen in the industry that growth acceleration usually comes with some dilutive impact with start-up costs with a ramp-up period. So basically, how can we reconcile this growth acceleration while basically bringing margin above the prior peak at more than 5%?

So the first point is about, I guess, the retention, right? You're wondering what do we -- what are the KPIs to track the progression on retention. So we -- David, do you want to take that one?

Yes. So what we look at is we look at renewal conversion rates as well as proactive renewals. I think your question is more along the lines of the quality of the contract and making sure that the pricing to win doesn't impact negatively those. So what we do when we look at price, we look at both value creation and the cost to the client. So it's a dual equation. We try to increase the value that we're doing while not necessarily having to reduce the cost too much to get to the price to win. We also, as Sebastien mentioned, have financial discipline around these contracts where we're still going through a pretty detailed review process. We are making specific strategic choices to invest while simultaneously maintaining the portfolio mix and making sure we're not impacting the margin overall.

Regarding your question number 2 about first-time outsourcer, I think what we are observing is that we have about 50% of our new wins that are FTOs. And we are seeing this continuing, right? So no major change here. If we look at first-time outsourcing, there's, for sure, the huge potential of just harvesting relationship with the client and hoping that the investment we're going to make in account management, will put us in a position to continue to grow this. But there's also a new opportunities for us to go after companies that have not outsourced yet and where we are actually gearing up for the -- at the moment to be ready to go with a specific strategy for going after these clients. And so that's going to be a new opportunity that we have not leveraged yet. On the point number three about the margin. So maybe one comment I would make on the impact. And if I'm not covering it, you'll complete the question. It is clear that when you are going with a large deals, there's a possibility that in the first month, you have some transition costs and so on that are impacting your margins. And so that's why for me, the value of our strategy is to create repeatable success because that's the power of the portfolio to have several deals with a different level of maturity where at any moment in time, some are actually in transition time, while others are starting to pick up in terms of margin so that we can manage it. It becomes very difficult when it happens only once in a while and suddenly boom, you have something that really bring your margin down. I want to mention one point, though, is that our conviction is that as you are growing large relationship, very, very significant volume business, right, with a client, you should have a different way at the margin. Do not look at the margin as gross profit level only. These accounts become almost P&L in themselves. And a lot of the cost of SG&A and so on are actually reflected in there because those accounts need to have their own structure supporting the account. So at the end of the day, between that and possibly a lower cost of sales, the level of margin on those deals is certainly not more dilutive than anything else.

I have 2 questions. The first one is whether you could tell us more about cash generation, which after all is a classic target to have in those medium-term plans. We can do some math with the leverage targets. We can do some math with the CapEx. But assuming we're not good at math, what sort of cash can this business generate while you turn it around? And then what can it generate once the bulk of the investments are behind you, please? And then on the 160-plus contracts that you're reviewing, could you clarify if there's overlap with the contracts and asset review that you started earlier or if that's completely new? And if it's completely new, does it also start with a review with provisions? Or is that not the approach that you batch?

Okay. So I'll take the second one, and you'll come back on the cash. So it's -- so one, it's the follow-up of the step one, right? What we did 3 months ago was to really review our contract and make sure that we are -- we know where they stand in terms of profitability and that we have no hidden losses or situations where we would have to take provisions now, which is what we've done at the end of the first half. What we're doing going forward is we have a situation that is some accounts are highly profitable, some are less. And how do we work on those accounts. By the way, sometimes some profitable can be even more profitable and some not profitable cannot be improved. But that's -- the purpose of the stream around our loss-making contract or low-margin contracts is to really use patterns that we are observing here and there to drive a more proactive actions on those projects to improve their margin. So it's -- you should not expect that from those activities, it will result into additional loss, which is what I might suspect you have in mind, but it's more really how to drive just margin improvement on these contracts, okay? On the cash.