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Compass upbeat on work prospects as first half profit rises
May 15, 2013 / 6:51 AM / in 5 years

Compass upbeat on work prospects as first half profit rises

LONDON, May 15 (Reuters) - Compass Group, the world’s biggest caterer, posted an 8 percent rise in first half profit and said a strong pipeline of new work in North America and emerging markets gave it confidence for its full-year prospects.

The firm, which operates in some 50 countries and serves 4 billion meals a year, said on Wednesday underlying pretax profit for the six months to March 31 rose 8.1 percent to 611 million pounds ($932 million) on revenues up 4.1 percent to 8.8 billion pounds, in line with analysts’ consensus forecast.

The strong performance enabled the group to raise its interim dividend 11 percent to 8.0 pence per share.

The group, which provides catering to everyone from schools and hospitals to offshore rigs and the Wimbledon tennis, said revenue growth had been driven in particular by new contracts and retentions in its core North American market and in Australia’s oil and gas industry.

As expected, in Europe, where the firm is cutting loss-making contracts and selling businesses in the south to offset weak markets, revenue fell at constant currency, although its operating profit margin increased due to cost savings.

The firm, which makes 35 percent of revenue in its Europe and Japan division, said it had started to see hospitality budgets being squeezed in countries like Sweden and the Czech Republic, while France has worsened in recent months.

Last month world No.2 catering firm Sodexo forecast flat operating profit this year and expanded cost cutting plans after conditions in Continental Europe worsened.

Compass said group organic revenue growth was 4.1 percent including the negative impact of Easter timing, or 4.8 percent on a comparable working days basis, in line with forecasts.

Shares in Compass closed at 870 pence on Tuesday, up 38 percent on a year ago and valuing the business at around 16 billion pounds.

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