Good morning, and welcome to the Sodexo Nine Months Fiscal 2019 Revenues Conference Call. Today's conference is being recorded. At this time, I would like now to hand the conference over to the Sodexo team. Please go ahead.
Thank you. Good morning, everyone. Welcome to our nine months fiscal 2019 revenues call. On the call today are Denis Machuel, CEO, and Marc Rolland, CFO. As usual, the slides and press release can be downloaded from the website. The webcast will remain available for the next 12 months. The call is being recorded and may not be reproduced or transmitted without our consent. I remind you that this presentation contains statements that may be considered as forward-looking statements, and as such, may not relate strictly to historical or current facts. These statements represent management's views as of the date they are made, and we assume no obligation to update them. You are cautioned not to place undue reliance on our forward-looking statements.
I just want to ensure that you all have the date for the full year results announcement, which will be on November the 7th. The 7th of November. Please note it in your diaries because the date has changed. Thanks. I now turn the call over to Denis Machuel. Denis?
Thank you very much, Virginia, and good morning, everyone. Thanks a lot for joining us for this first nine months fiscal year 2019 revenue call. Let's go straight to slide number five, where you will see that we have delivered a 3.5% organic growth, and this is better than expected. The on-site organic growth for the first nine months was at +3.2%, with the U.S. improving, each quarter from 0.2% in Q1 to 2.4% in Q2, and 3% in Q3. Outside North America, organic growth was 4.4%, benefiting from continued strong performance in the developing economies and a very solid Europe. Benefits and Rewards also performed well with Europe, taking up the slack to cover the expected lower growth in Brazil. I'll now pass you to Marc Rolland, our CFO, for the detail of the revenue figures. Marc?
Thank you, Denis, and good morning, everyone. I'm very pleased to be here with you this morning. Please note that as usual, we have defined all alternative performance measures in the appendix. Let's turn to slide seven. Slide seven shows how we got to the EUR 16.7 billion for the first nine months. Total growth was 7.7%, helped by an M&A contribution of 3% and currencies of 1.3%. The M&A is principally the impact from Centerplate in the first four months of the year, and the smaller acquisition made this year. We now expect the M&A impact to be around 2.5% for the full year. The modest but positive currency impact is due in particular to the strength of the U.S. dollar, compared by the negative impact of the weakness in the Brazilian real.
Organic growth was 3.5%, with on-site services up 3.2%, thanks to a very strong Q3, and Benefits and Rewards up 9.7%, despite the fact that Brazil had a much stronger comparative base, as Q3 was a period in which the business started to pick up strongly last year. As you can see on slide nine, North America is doing much better, up 1.8%. This was 1.2% at the end of H1, up 3% in Q3. Europe is sturdy at 3.4%. The Africa, Asia, Australia, LatAm, and Middle East businesses are still growing fast at + 6.8%, despite the base becoming much more significant. The organic growth of on-site services outside North America remains strong at 4.4%. On slide 10, you will find business and administration, which I remind you represents 56% of our on-site services revenues. B&A organic growth was up 3.2%, when restated for inter-segment reclassifications.
North America, which represents 26% of B&A, was up 2.1%, as the effect of a major one of Energy and Resources contract in Q1 last year is diluted. This was a really good performance from corporate services, driven by same-site sales growth, new contracts, and solid retention. As I have now said for the last quarters, government and agencies activities impacted by the renewal of the Marine Corps at lower comparable unit sales. However, the segment has improved a bit in Q3 due to better volumes. The organic growth at Centerplate is now included in the figures. The team has successfully completed a major round of renewals. Most contracts have been renewed successfully and often extended to new services, while some less profitable ones have been exited. In Europe, which represents nearly half of B&A revenues, organic sales growth was steady at +2 .3%.
Corporate services remain helped by cross-selling in most countries. After an excellent start to the year from the third quarter, sports and leisure is impacted by the loss of a significant contract in France in the tourism segment, which impacts particularly the third and fourth quarters. Government and agencies, on the other hand, benefited from an easier comparative base now that the exited British Army contracts are no longer in the base. Energy and Resources performance in the North Sea is stabilizing. Organic growth has continued to be strong in Africa, Asia, Australia, Latin America, and Middle East at + 5.8%, thanks to same-site sales and net new business wins in corporate services, particularly in Brazil. Energy and Resources remains impacted by the end of several large construction projects and the lack of new ones to replace them. Moving on to healthcare and seniors in slide 11.
Organic growth was 2.7% for the first nine months. In North America, which represents 63% of the business, growth was + 2.2%, improving quarter after quarter due to solid comparable unit growth helped by some inflation pass-through and cross-selling. Our prudence on retention last quarter has now been validated with the loss of several mid-size contracts and one large contract, which together account for about EUR 200 million of annualized lost revenues. This will start to impact the performance in the fourth quarter progressively. Development has not been enough to cover the lost contract in the coming quarters, you should expect a weak Q4. In Europe, organic growth was + 1.4%, supported by inflation pass-through in France. The end of the ramp-up of the hospital win in Benelux, the negative net new business in the Nordics, and lack of bid opportunities in the U.K. are hampering growth.
Growth in Africa, Asia, Australia, Latin America, and Middle East remains very strong at + 16.8%, reflecting many new contract startups in Brazil, India, and China. Looking now at slide 12 and education. Revenues for the first nine months rose 4% on an organic basis. North America, which accounts for three-quarters of the education segment, was up 1.4%. This would have been + 3%, excluding the IFRS 15 impact. I remind you that the IFRS 15 impact for the group is minimal, but it does impact universities in North America because of the commission and concessions adjustments required under IFRS 15. While net new business from last year's selling season was neutral, same-site sales growth has been solid, helped by inflation pass-through and extra working days in school in the third quarter. In Europe, organic growth was + 12.4%.
This very strong performance is driven by wins in the U.K., the new schools contract in the Yvelines in France, which started in January, and extra school days. On the working days, beware, there were two extra days in Q3 in France, which will reverse out in Q4. In Africa, Asia, Australia, Latin America, and the Middle East, organic growth remains strong at + 9.2%, despite an ever higher comparable base, resulting from the opening of several new school and university contracts in China and India. Turning to Benefits and Rewards. If you remember from a previous slide, organic growth was + 9.7%. I just want to point out that in BRS, we had a significant currency effect of -5.1% due to the weakness of the Brazilian real and the Turkish lira. The Brazilian real has stabilized in the last quarter.
You can see this impact, which is predominantly in the employee benefits chart. Going back to organic growth, employee benefits organic growth was 10.4% compared to total issue volume up 8% due to improved growth in Europe and Asia and solid growth in Brazil despite a tougher comparable base. Services diversification was up + 7.2%, with strong double-digit growth in mobility and expenses and rapid development in corporate health and wellness products. Momentum in incentive and recognition remains weak. Organic revenue growth in Latin America is 9.6%, reflecting a strong recovery in activity in both the traditional meal and food card, as well as a fuel card in Brazil from third quarter fiscal 2018. The growth rate slowed in the third quarter after four strong quarters. Combined with the loss of one big client, this should slow further in Q4.
However, momentum, in particular in Mexico and Chile, was strong. In Europe, Asia, and the U.S.A., organic growth in revenues is strong at +9.9%, particularly in the fourth quarter. Those results are due to solid performance in Western Europe, double-digit growth in Eastern and Southern Europe, Turkey, and India. Incentive and recognition activities were weak during the period. On the other hand, Rydoo, the end-to-end travel and expense management system, is growing very strongly, as are the health and wellness offers. The increase in financial revenue of 11.3% was better than the operating growth of 9.6%. This is a result of the exceptionally high issue volume in Romania in Q4 last year, and particularly strong growth in Turkey in the third quarter, where interest rates are high. Before I hand over to Denis, I would just like to remind you of the key elements for modeling for the year ahead.
You will find all this in the appendix of the slide deck. Other income and expense for the full year should be in the region of EUR 140 million. This is made up of restructuring costs, which I have said will be around EUR 40 million, but in fact, they will be more like EUR 40 million-EUR 45 million this year. Around EUR 40 million of recurring amortization of client relationships and around EUR 40 million of non-cash impairment of assets. Net financial expenses, no change. This will be about double the first half number. Finally, the tax rate is still expected to be between 28%-30%. Thank you for your attention. I now pass you back to Denis for the rest of the presentation.
Thank you, Marc, Let's move now to slide 18, where I'd like to give you an update on our Focus on Growth strategic agenda. If we look at the client and consumer-centric pillar on the top left part of the slide. I'd like to talk about Rydoo, which is our end-to-end solution to manage business travel and expenses, which we launched one year ago in June 2018. With Rydoo, our objective is to eliminate administrative tasks which are time-consuming for our clients and don't add value. We offer a unique and innovative end-to-end solution, combining travel and expense management. Rydoo helps create the most seamless flow for all involved, from booking trips to expensing and reimbursement. Employees and organization get the best of both worlds, enjoying a best-in-class experience. Rydoo is a very intuitive app.
The adoption rate by employees is 93% in the first month, compared to traditional solutions, which have a 50% adoption rate. The reduction in processing time is 87%. For expense reports, for example, employees on the go take a picture of their receipt and send it for approval. Rydoo operates in more than 60 countries. It's a full SaaS application and supports more than 550,000 users. The launch of this end-to-end solution has attracted market interest and is performing very well with +50% organic growth in the first nine months of fiscal year 2019. Rydoo already has 6,500 corporate clients, including Deloitte, Lavazza, Brussels Airlines, Mövenpick, mytheresa.com, et c. We signed a worldwide contract with one of the leaders in the strategy consulting industry. Internally, the Rydoo team has grown from 150 to 300 employees and has opened two new hubs in Lisbon and Manila.
The independent global B2B software evaluation organization has also acknowledged Rydoo in their 2019 top 100 leading softwares. Let's talk now about operational efficiency in the top right corner. Part of our Fit for the Future program is the shared services project to centralize our European accounting in Porto, Portugal. At the same time, move to standardized, digitized, and cloud-based solutions. In January, we successfully transferred the U.K. activity, which included some team members moving from Manchester. In June, we went live for the Netherlands accounting transfer, along with the implementation of a series of new IT enablers, such as, of course, leveraging Rydoo to manage travel and expenses. The transition has been very smooth. We have also implemented a ticketing tool to support the communication between the service center and the countries and to provide a dashboard to monitor the proper KPIs.
The next transition will be Germany. If we now talk about our nurturing talent pillar, I can say that we've now launched Aspire, which is a new simplified performance development framework to accompany our renewed culture of performance through empowerment and accountability. Starting in September, all managers will have the majority of their objectives on an individual basis linked to their specific positioning within the organization. The objectives are directly related to their challenges each year and based on step KPIs. To ensure that these objectives are actively pursued and regularly monitored throughout the year, a continuous dialogue and feedback is being put in place. As well as the development of competencies and skills to grow individuals. In addition, we have a newly designed compensation policy aimed at rewarding individual contributions to our success. For the past year, through the annual bonus, and for the future, through performance share grants.
In the latest plan for 2019, performance shares have been allocated to more than 2,100 managers around the company. Finally, in terms of anchoring corporate responsibility, the bottom right corner of the slide. I'd like to focus on one very interesting example, the recent tenure extension of the Drake University contract, which demonstrates how anchoring corporate responsibility supports growth. In June, we announced a tenure extension with our longtime partner, Drake University, based in Des Moines, Iowa. The implementation and promotion of sustainability initiatives, which include recycling cooking oil, composting food and paper products, offering biodegradable straws and utensils, and providing reusable to-go containers, were key elements of our current contract, and we committed to pursue our efforts even further, particularly on food waste reduction, which was also a differentiator. We're very proud of this renewal.
It is one example amongst many others of how we are proactively developing services and initiatives that our clients and the consumers we serve value and want to engage in as part of our shared sustainability journey. We are absolutely convinced that fully embedding sustainability in the services that we offer is key to our growth. If we move now to slide 20, I'd like to mention now several evolutions that I've made within the group executive committee, after roughly a year and a half into my mandate. To strengthen the group's go-to-market strategy, I have appointed Sylvia Metayer as Chief Growth Officer effective September 1st. Since she joined Sodexo in 2006, Sylvia has delivered growth in her successive roles by forging very strong client relationships within the corporate services segment, giving her a direct view into the needs and aspiration of both clients and consumers.
Working with Bruno Vanhaelst and Belen Moscoso del Prado, Sylvia will have responsibility for aligning strategy, marketing, and sales around a cohesive client and consumer-centric go-to-market strategy. All of that powered by digital. Sunil Nayak will succeed Sylvia as Chief Executive Officer for Corporate Services Worldwide, joining the group executive committee. Sunil joined Sodexo in 2009 as the entrepreneurial CEO of RKHS in India at the time of its acquisition by Sodexo, and he was then given the reins of Sodexo On-site Services India. As CEO of Corporate Services in Asia Pacific since 2015, Sunil drove significant growth, positioning the region as the third largest for Corporate Services after France and North America. I'm convinced he will bring his dynamic both to global Corporate Services segment and to the executive committee. Simon Seaton is appointed CEO, Energy and Resources Worldwide, joining the group executive committee.
Simon succeeds Nicolas Japy, who is retiring after 28 impactful years with Sodexo. Simon joined Sodexo in 2012 as Chief Operating Officer for remote sites for the United States and the North Sea countries. In 2015, he was appointed CEO, Onshore Energy Worldwide, and in 2017, assumed additional responsibility as head of the Middle East. Simon will bring his years of unique experience in the oil and gas and remote sites sector, and his particularly strong track record in health and safety. Damien Verdier, who was previously in charge of strategy, will focus now on being the Chief Corporate Responsibility Officer. He will thus dedicate his substantial experience and knowledge to help us further anchor our corporate responsibility policies and actions for the benefit of our clients, consumers, employees, shareholders, and society at large.
This is an important role, as corporate responsibility is one of the pillars of our Focus on Growth strategic agenda and is at the core of the services we offer. These changes are invigorating for me, for the executive committee team, and for the organization. This team is increasingly diversified, with one-third women and half of its members coming from countries other than France, including the U.S., Canada, India, Australia, Belgium, and the U.K. Now, on slide 22, I'd like to conclude the presentation on the guidance for the year. As you've understood, our growth in the first nine months of fiscal year 2019 at +3.5% was above expectations, thanks to Businesses and Administration, and Healthcare and Senior segments. Education and Benefits and Rewards were in line with our expectations.
However, the comparable base in the fourth quarter is more challenging due to some contract losses, particularly in North America and sports and leisure globally. As a result, the group expects organic revenue growth for the full year to be around 3%, the top end of the guidance. The action plans that we are putting in place are delivering, and the investments to reinvigorate growth are continuing. As a result, the underlying operating profit margin for the year, excluding the currency impact, is expected to be around 5.5%, the bottom end of the guidance. Our Focus on Growth strategic agenda is aimed at delivering market-leading growth. As I have often said on a regular basis, the first step must be to achieve organic growth sustainably above 3%.
Margin improvement will come with the right levels of growth, the objective being a return to an underlying operating margin sustainably above 6%, ideally in fiscal 2021. I now open the call for your questions. Operator, can you please open the Q&A session? Thank you.
Thank you. Ladies and gentlemen, we now begin the question- and- answer session. If you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please press star and one if you wish to ask a question. The first question is coming from the line of Jarrod Castle. Please go ahead, sir.
Thank you. Good morning. Just firstly, you talk about 3% organic and 6% + margin. My understanding was this was hopefully achievable in 2020, but now sounds like 2021. If you could expand on why the change. Secondly, can you just talk about what you're doing to improve retention, especially in the healthcare business, given the losses? Related to the healthcare business, what does this mean for 2020 organic growth as the impact finds its way through? I'll leave it at that. I've got some other questions, but I'll let some other analysts ask. Thanks.
Thank you, Jarrod. Hello. We've said that we wanted to be above 3% sustainably. I would say that I'm confident for next year. We've said that our objective would be to be sustainably above 3%. I think we are very confident for this year to be at the top end of our guidance. I remain confident for next year. On the 6% operating margin, I've never said that it would be in 2020. I've said in the capital market there, that it would be ideally in 2021, and I said that again today, ideally in 2021. It's true that we've repeatedly said that we have to be sustainably above 3% to really see a margin improvement coming up. In terms of your second question, I think I can tell you that the team in healthcare, particularly in North America, is really all hands on deck.
In the H1 call and different meetings, I've mentioned that we were at risk in retention, particularly in healthcare. Essentially linked to the fact that we had some operational issues two, three years ago with our clients that were causing, in part, the difficulties that we had 18 months ago. There was a risk from the clients who went through these difficulties in our operational efficiency. Some clients decided to go to bid, and we couldn't keep all our clients. We've done everything we could. In some cases, we wanted also to protect our margins, so we decided not to go below some levels to secure our margins. I can tell you the rest, apart from this contract that we lost, I think the team is doing very good work. It's a renewed team, as you know, in healthcare. They're doing all their efforts to keep the clients.
I must say that we have a good dynamic. Even though retention is a big impact, Marc mentioned the EUR 200 million of impact for next year. That's of course significant. Apart from that, I must say that the development dynamic is improving. Same for sales also. It's going to be, of course, difficult to fully offset this EUR 200 million losses. Apart from that, I'm reasonably positive on the dynamic that the team is delivering on the rest of the portfolio.
Okay. Thanks very much.
Thank you, Jarrod.
Thank you. The next question is coming from the line of Vicki Stern. Please go ahead.
Oh, yeah. Morning. Hi. Just sort of following through on some of those themes, actually. Thinking about the phasing into 2020, I guess the question really is how much of that Q4 deceleration is coming from the seasonality, the comp, versus how much should you think flow through to the 2020 full year? If you can give some color around the shape of that, H1 over H2. Sticking also with margin progression, just to clarify, with the sort of expected levels of growth at this stage, is it therefore fair to assume something more in the order of a flat margin for next year rather than any growth? Thanks.
Yeah. Hi, Vicki. Well, of course, having a weaker Q4 compared to the first three quarters that we had will have us enter 2020 with not as a flamboyant Q1. I think the phasing you would see more, I see probably a stronger growth more in the H2 than in H1. I think that's what you can expect. In terms of margin progression, we will talk more about this. We do not give any guidance on margins for next year until we publish the results on November 7th. You have to wait a little bit in terms of what we say in terms of margin progression.
Just coming back on the organic growth piece, yeah, I sort of see the shape should be more skewed to H2. In terms of the implied exit rate that we are thinking about for Q4, should that low level persist already into Q1 and Q2? You think, already we could start to see Q1 and Q2 look quite a bit better than the exit in Q4?
There are some timing and seasonal and base effects, as you mentioned. For instance, if I take the large sports and leisure contract in France, the biggest quarter was Q3 and Q4, a bit in Q1, but then it will dilute a little bit. We have also in BRS, there was a lot of base effects, which will normally continue in Q1. Last year, for instance, U.S. Marine Corps, it was renewed and from November, there will be no base effect on the pricing. We have also the evening schools, which will restart in September. Last year, we didn't have them. Right now, there are lots of balls in the air. We can expect Q1 to be slightly better than Q4 at the start of the year.
Also some of the losses in healthcare will not kick in before months two or three, in the coming year. Maybe a more balanced Q1 than Q4.
Thank you. Just one other on like for like. It seems like you keep referring to quite strong volume and price dynamics. Just perhaps a little bit more color on that in your key geographies. Any evidence of any softening of volumes or indeed anywhere where those are sort of particularly strong right now?
The same-store sales actually been pretty strong and much stronger than last year. We showed you at H1, we had made an improvement versus last year, and it confirmed in Q3.
The growth KPI which has suffered is retention, because of healthcare, and a little bit of sports and leisure. Other than that, development is improving and growth is improving. The dynamic is still there. I would not want to call it a blip, but we really had this impact in healthcare in North America. We knew about it. Actually, we thought it will come and kick in Q3, and it will rather be more in Q4 and Q1. We know there was a lot at stake in healthcare North America. I would say the retention of the rest of the business is good.
Okay. Thanks very much.
Thank you. The next question is coming from the line of James Ainley. Please go ahead.
Good morning, everybody. Three questions from me, please. Just kind of reflecting back onto the sort of weakness in the margin in the first half, recovery in the second half. Are you happy that you've made all the investments you need to in growth initiatives, and that we've now reached a more sustainable level of margin or sustainable base for the margin? Secondly, could you give us an updated view on CapEx guidance for the year, please? Third, could you just comment in a bit more detail around what you're seeing on the ground in Brazil, given the economic challenges there, sort of volume and employment trends? Some color on that would be helpful, please.
Hi, James. In terms of the margin and the investments, we continue to make investments. We absolutely have to make these investments. We said that we concentrate in sales, in marketing, in digital, in IT. We have significant efforts to make in those areas. They are ongoing. We are really re-engineering our marketing approach. You heard me say in the past, we also have to work on our brands and accelerate the digital transformation of the group. It's true in On-site. It's also true in Benefits and Rewards. I think we will continue to invest in those at more or less the same level as we've had for the past two years because it's absolutely critical to our future. Regarding CapEx, Marc, maybe.
The trending CapEx is still there. We've seen some CapEx in Q3. We are still aiming at 2%, around 2%, to be honest. The timing of some CapEx will be critical, but let's assume about 2%.
Regarding Brazil, there are two things. I think, of course, we are very cautious on the economy. We see some macro indicators that are not so favorable. So far, I think Benefits and Rewards has done very well, particularly in the development of small and medium enterprises as clients. I think we're quite satisfied on that. It's true, and Marc mentioned it, we lost one big contract. It's more of an impact on the volumes than on the margins, because the margins were tight on this big contract. Still, we'll see the impact. It's not massive, but we'll see it. It's true that we are cautious on the economy. There were, I think, more positive expectations with the new government. It seems that it doesn't turn into positive outcomes. We remain cautious on Brazil.
Thanks very much.
On-site is doing pretty well, both in Corporate Services and Healthcare. I think it's a good sign. It's a sign also that the outsourcing rate. We have some leeway there. We have some space. There is appetite for outsourcing. I'd say I'm positive on the trend in On-site. Overall, it's always linked to the health of the economy.
Okay. Very good. Thank you.
Thank you, James.
Thank you. The next question is coming from the line of Jaafar Mestari. Please go ahead.
Hi, good morning. Two questions from me, please. Firstly, on U.S. healthcare, you're still cautious. It seems to be materializing a little bit more with that large contract in particular, EUR 200 million is a big number. I was wondering if you could maybe quantify the volume of revenue that is up for renewal in the next 12 months, for example. That would sort of help us get a sense of the risk there. Secondly, you just mentioned that part of the investments were going into your work on brands. Some of the new appointments have been around marketing. When should we expect you to maybe communicate on an updated brand strategy? Is that something we could hear about around your full-year results?
It's definitely a big number when you talk about EUR 200 million, as Marc mentioned, it's not only one contract, but within this EUR 200 million, there is one significant one. I would say that the volume up for renewal the next 12 months is less than we had for this half of the year, which we anticipate would be a difficult moment. Again, this will have an impact, the development is encouraging. The same-store sales, as Marc mentioned, is also pretty good. I think the team is doing a good job. I warned everyone at the beginning of the year and in the H1 call that we're at risk, this is a confirmation. I'd say I'm more positive for the next 12 months. Regarding the brands, I think we are entering into an exercise, as I've said.
I think you will hear about that. I don't know if it's exactly at the full-year result or during, definitely during fiscal year 2020, you'll hear much more about our new brand strategy.
All right. Thanks very much. More to come on this.
Thank you, Jaafar.
Thank you. The next question is coming from the line of Stuart Gordon. Please go ahead.
Yeah, good morning. Just looking into next year, how confident are you on hitting that organic growth without the Rugby World Cup? I think that was around about a 75 basis point tailwind at the 2015 World Cup, and I think you've got this year's as well. Also, could you remind us what margin tailwind that provided? I think it was around about 10 basis points or so in 2015. Thanks.
Thank you for your question, because we wanted to give you some numbers about the Rugby World Cup. First, it's in Japan, so it's a little further away from the rugby world. We are not expecting the same volume that what we had in the U.K. Currently, we estimate the volume at around EUR 75 million for next year. The margin we enjoyed in the U.K., we are not too sure yet exactly what it means, rugby, in Japan. We believe it's going to be neutral on the margin, and it's not going to be accretive.
Okay. Thank you very much.
Thank you. Once again, if you wish to ask a question, please press star and one on your telephone. The next question is coming from the line of Julien Richer. Please go ahead.
Yes. Good morning, everyone. One quick question for me, please. Could we have an update on the education segment in North America? How do you see the recent tender and what the outcome for 2020 please?
Well, I think education in North America is improving. I'd say the schools segment is having a very good dynamic, and we're very proud of that. The universities part is more challenging. We are improving. We're not fully there yet at the level that I would like in terms of both retention and development. What you will see as for next year is us entering into more of a neutral net new loss. Nothing fantastic, but let's say we stop bleeding and we have a more solid business. Still, efforts have to be made in the universities. That's where we put many of our efforts because the school dynamic is very good.
Okay, thank you.
Thank you. The next question is coming from the line of Sabrina Blanc. Please go ahead.
Good morning. Sabrina Blanc speaking from Societe Generale. I have two questions. The first one is regarding the education segment. I think you have mentioned some positive impact in terms of calendar. Shall we have the reverse impact in the coming quarter? The second question is regarding the contract that you have mentioned in the leisure segment in France. Could we have an idea of the size of this contract, please?
Yeah. Good morning, Sabrina. In education, what I mentioned is that we had a couple of extra days in France in Q3. They were reversed out in Q4. You can expect a negative impact in Q4, but it's all factored in our guidance. The sports and leisure contract, the Q4 is the most significant contract, and most significant quarter, and I think we're talking about EUR 15 million a quarter, yeah for Q4.
15, you said?
Sorry?
You said 15? One, five.
15. one, five. Yes. 15, yeah.
Okay. Thank you very much.
On Q4. On Q4. Just to bounce back on Stuart's question on the rugby. Whenever we give guidance or whenever. Well, we don't give guidance for 2020, but whenever we give indications for 2020, it's not including the rugby. We've always been looking at without rugby and with rugby. Whatever we say is not including the EUR 75 million of rugby.
Thank you. The next question is coming from the line of Johanna Jourdain. Please go ahead.
Yes, good morning. Two questions for me, please. The first one is regarding your level of confidence to achieve flat margin guidance for the full year. What do you expect in H2, especially given the lower operating leverage that we should expect in Q4? My second question is regarding the perception on the M&A pipeline towards the end of the year and any potential additional shareholder return that you could announce by the end of the year. Thank you.
[Non-English content ], Johanna. I think regarding the margin guidance, we've been through the forecast process at this stage. What we know is that our margin will be tight, around 5.5%. It's true that our growth has been better than expected, but we could qualify our growth as imperfect because we believe that our retention is not good enough. We have to maintain our investments in growth. The developments to come will bear their fruits later on. I can tell you, all hands are on deck. The teams are managing their business very tightly, to meet the objectives and everyone's bonus depend on top line, of course, but also on the margin. I can tell you everyone is focused to secure the margin for the year.
On the M&A pipeline, there is nothing significant in our M&A pipeline. We have a few deals here and there. We are also active selling, so don't expect anything major. We have not planned any share buyback right now.
Thank you.
Thank you once again. If you wish to ask a question, please press star and one on your telephone. The next question is coming from the line of Jarrod Castle. Please go ahead.
Thank you. Just another question. You mentioned some loss of sports and leisure contracts in France. I'm just wondering, in terms of the competitive dynamics, have you seen any changes now that Elior is kind of solely focused on contract catering? Thanks.
No, I haven't seen any changes in Elior's behavior lately. The contract that we lost in sports and leisure, there are some contracts that we lost in France, also some contracts from Centerplate that we exited or that we lost and didn't want to retain because of profitability issues. I haven't seen any particular change in competitive behavior. No.
Thank you.
Thank you. Once again, if you wish to ask a question, please press star and one on your telephone.
Okay, maybe one last question. Not. Okay.
No more questions at this time. Sorry.
No more questions. Okay.
Please continue.
I'd like to thank all of you again, for attending this call. I want to confirm the confidence that we see in our capacity to continue on the growth path that we have started to generate. I think we've significantly improved our growth. Definitely, you understood we have a bit of a weaker Q4. Overall, the growth dynamic is there. We had anticipated that some of our contract could be lost in healthcare. It's happening, but the rest of the company has a strong dynamic. I'm confident into the way we will enter next year. We committed to really doing everything to achieve an organic growth sustainably above 3%. I'm confident that this commitment is achievable. Thank you very much. We will exchange again on November 7th for the full year results.
I wish you a very nice week and a very nice summer for those who are in the northern hemisphere.
Thank you. Bye-bye.
Thank you. Bye-bye.
That conclude our conference for today. Thank you for participating. You may all disconnect.