Compass holds year outlook despite currency hit
LONDON, March 27
LONDON, March 27 (Reuters) - Compass, the world's biggest catering firm, forecast first-half underlying revenue growth of about 4 percent and said its expectations for the full year were unchanged, though it anticipated a translation hit from currency movements.
The group, which employs more than 500,000 people to feed office workers, soldiers and schoolchildren in over 50 countries, also forecast on Thursday an increase in its operating profit margin of around 10 basis points in the six months to March 31.
Compass said it was encouraged by its pipeline of new contracts.
During its first half, the British pound continued to strengthen against many of the currencies in the firm's key overseas markets, such as the U.S. and Canadian dollars, euro, yen, Australian dollar and Brazilian real.
For the first half the firm expects a negative currency impact on the translation of overseas revenues into sterling of approximately 5.5 percent, or 486 million pounds ($805 million), and 5.7 percent, or 37 million pounds, on underlying profit.
It said if current spot rates were to continue through the second half it would expect a negative currency impact on revenue of 5.9 percent, or 1.03 billion pounds, and 6.2 percent, or 78 million pounds, on full-year underlying profit.
Compass said first-half revenue growth was driven by continued high levels of new business, stable retention rates and positive like-for-like revenue growth.
It said the underlying trends in its three regions had been consistent throughout the first two quarters, with strong growth in North America, its largest market, and its Fast Growing & Emerging region, and signs of stabilisation in Europe & Japan.
Shares in Compass, up 13 percent over the last year, closed on Wednesday at 929 pence, valuing the business at 16.5 billion pounds.