Sodexo expands in slow market

Sodexo’s acquisition of Morris Corporation has pushed it up the ranking of big facilities management companies in Western Australia at a time when its competitors have been battling with the slowdown in large projects in the Pilbara.

Sodexo is the fourth largest business on the listing of Facilities Managers and Caterers in the BNiQ Search Engine, with 2,400 staff in WA (see page 25).

The global business added 600 WA workers (and 1,200 nationally) early this month when it bought Brisbane-based Morris Corp, which counted Fortescue Metals Group among its major clients.

This deal added to strong growth across the Sodexo business, notably through the 10-year contract it secured last year to run all of Rio Tinto’s mine camps.

It is topped by Spotless and Delaware North, which have large numbers of casual staff to support their Perth-focused catering operations.

Number one on the list is ESS Support Services Worldwide, which includes Chevron, Woodside and BHP Billiton among its clients.

ESS has experienced a tough two years, with its WA staffing falling from a peak of 5,000 to about 3,000.

Its UK-based parent company Compass Group said its Australian offshore and remote business (i.e. ESS) suffered a 28 per cent fall in revenue for the six month to March 2017, as contracts moved from the construction to production phase.

It also cited ongoing pressures of site closures and lower volumes.

However, ESS told Business News it had retained 100 percent of the business it aimed to keep, including its Chevron contract for Barrow island, the Wheatstone platform and Wheatstone onshore, which has been extended for five years.

ESS also won significant new business in 2017 including for Transocean, Talison Minerals and Dacian Gold.

ISS Facility Services, which has Australian revenue of $730 million, noted similar pressures.

In its 2016 annual report, it said two large contract losses and downsizing in the resource sector led to notably negative organic growth in Australia.

Similarly, Spotless said lower volumes across mining camps affected its earnings in the year to June 2017.

ISS and Spotless both lost work at Rio Tinto after Sodexo’s big contract win.

One of the positives noted by Spotless was growth in its public private partnership (PPP) division.

Its work in this sector includes the Eduwest consortium, which is contracted to build and maintain eight schools across WA for 25 years.

The new schools are due to open between 2017 and 2023.

Its major competitors include Delaware North, which holds contracts at Domain Stadium, the WACA Ground and Perth Airport.

The loss of AFL football to the new Optus Stadium will be a blow to Delaware North

Optus Stadium operator VenuesLive is set to become a major player in the Perth catering market.

As well as looking after its own needs at the stadium, which has multiple function rooms, VenuesLive plans to seek external catering contracts.

VenuesLive will have about 80 full-time staff and a pool of 2,300 casuals when the stadium opens next year.