Compass sees global profits rise 8% despite sluggish Europe

15 May 2013 by
Compass sees global profits rise 8% despite sluggish Europe

Foodservice giant Compass Group has seen its pre-tax profit for the six months to 31 March rise 8.1% to £611m, driven by growth in North America and the emerging markets.

Revenues rose 4.1% to £8.8b over the same period.

Compass said it had a "healthy pipeline" of new business in North America and the fast-growing and emerging markets. Meanwhile, it claimed it had seen further progress in Europe and Japan to manage the economic changes in those regions.

Revenue in Europe and Japan totalled £3.1b for the first half of the year, a fall of 3.6% compared to the same period in 2012. But Compass pointed to important wins in the UK, including a contract to provide a range of services to the Ministry of Defence.

Economic conditions in many parts of Europe remain difficult. Overall, revenue in Europe & Japan for the first half totalled £3.1b (2012: £3.2b), an organic decline of 3.6% (a decrease of around 2.6% excluding the negative impact due to the timing of Easter). The group's retention rates in Europe have fallen slightly because of the increased number of business closures and the decision to exit uneconomic contracts.

Richard Cousins, group chief executive, said: "Compass has started the year well. We have generated organic revenue growth of over 4%, reflecting the strength of the performance in North America and Fast Growing & Emerging. Economic conditions in Europe & Japan remain challenging but we are executing the action plans we announced last year and improving our operating efficiency significantly. This, combined with ongoing efficiencies across the business, has delivered a 15 basis points increase in the operating margin."

Sir Roy Gardner, chairman, added: "With good levels of organic revenue growth and a further increase in the margin, these results are testament to the ongoing commitment and hard work of everyone at Compass. Our cash flow also remains excellent, which has enabled us to continue to invest in the business, make acquisitions and reward shareholders."

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