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UPDATE 1-Compass upbeat as North American work drives profit
November 21, 2012 / 7:41 AM / 5 years ago

UPDATE 1-Compass upbeat as North American work drives profit

* FY operating profit up 9 percent to 1.2 bln stg

* Revenue up 8 pct to 16.9 bln stg

* FY div up 10 pct to 21.3 pence

* New 400 mln stg buyback announced for 2013

* Says confident in meeting 2013 market expectations

LONDON, Nov 21 (Reuters) - Compass Group, the world’s biggest caterer, posted a 9 percent rise in full-year profit and said a strong pipeline of new contracts in North America and emerging markets would help it deliver expectations for 2013.

The group, which operates in over 50 countries and serves 4 billion meals a year, on Wednesday also announced another 400 million pound share buyback for 2013, following on from a 500 million pound buyback expected to be completed this year.

Underlying operating profit rose 9 percent to just under 1.2 billion pounds ($1.91 billion) in the year to Sept. 30, in line with a company compiled analyst consensus. Revenue grew 8 percent to 16.9 billion pounds.

Compass, which provides catering and support services to companies, schools and sports venues, said new work at its North American business - worth almost half of group revenue - had driven group profit, with an improvement in its operating profit margin and revenues up 10 percent.

Revenue in its emerging markets division grew by 13.7 percent, with Europe, a weak spot for the firm, up 0.4 percent.

In September Compass announced it would cut its southern operations by a quarter, exiting contracts and non-core activities in countries like Spain, Italy and Portugal, where tough economic conditions have hit hard.

“The combination of strong trading in North America and the Fast Growing & Emerging markets, together with the European action plans, underpins our confidence in delivering against 2013 market expectations,” the firm said in a statement.

French rival Sodexo has also moved to counter poor European markets, this month announcing plans to lower costs and cut jobs to help meet its mid-term targets.

Shares in the FTSE 100 firm closed at 709 pence on Tuesday, up 26 percent on a year ago, valuing the business at around 13 billion pounds. ($1 = 0.6284 British pounds)

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