14th May 2014 07:40
LONDON (Alliance News) - Food and support services company Compass Group PLC Wednesday reported a higher pretax profit for the first half of its financial year, boosted by new business wins and a continued strong performance in North America and in what it calls the "Fast Growing & Emerging" region.
The group raised its interim dividend by 10% to 8.8 pence, and proposed capital return of GBP1 billion to shareholders via a special dividend and ongoing GBP500 million share buyback.
The caterer said that its expectations for the full year remain positive and unchanged, notwithstanding the translation impact of ongoing movements in foreign currencies.
"The pipeline of new contracts is encouraging and our focus on efficiencies gives us confidence in another period of delivery," the company said in a statement, adding: "In the longer term, we remain excited about the significant structural growth opportunities in both food and support services globally and the potential for further revenue and margin growth."
For the six months to March 31, Compass reported pretax profit of GBP595 million, compared with GBP575 million the prior year, when it booked GBP20 million in exceptional costs relating to a European exceptional and goodwill impairment.
Revenues on a reported basis for the first half of the year dipped to GBP8.66 billion, from GBP8.80 billion a year earlier, which Compass said was due to negative currency movements.
Organic revenue growth in the six-month period remained strong at 4.2%, supported by a slight benefit from the timing of Easter, it said.
Like-for-like revenue growth of 2.2%, was supported by modest price increase, while like-for-like volume continues to be broadly flat in North America, modestly positive in Fast Growing & Emerging and negative in Europe and Japan.
Compass said it delivered good levels of organic growth in North America and the Fast Growing & Emerging region, particularly in Brazil, Turkey, India and China, despite a continued slowdown in Australia's offshore and remote sector.
It also said that economic conditions and new business growth in Europe and Japan are starting to improve.
During the first half, Compass said it delivered new business growth of 8.5%, driven by a good performance in client sales and marketing in North America, Fast Growing & Emerging and parts of Europe and Japan. It said its retention rate also remained high at 93.5%, despite an above-average number of business closures in Europe and the planned exit of certain uneconomical contracts.
Compass shares were up 4.8% at 1,028.00 pence in early trading Wednesday, putting them atop the FTSE 100.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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