27th Mar 2014 10:08
LONDON (Alliance News) - Compass Group PLC Thursday said it expects organic revenue growth for the first half of the year to be just over 4%, with an operating profit margin of around 10 basis points, boosted by new business wins and strong growth.
The Food and support services company warned, however, of a hit to the sterling results of its overseas operations from the strength of the pound.
In a trading statement ahead of its half-year results on May 14, the group said it has had a good start to the year, and its expectations for the full year remain positive and unchanged, although it warned that trading results from its overseas operations has been hit by the strength of the sterling against major currencies.
"In the first half of 2014, sterling has continued to strengthen against many of the group's key currencies. For the half year, we expect a negative currency impact of approximately 5.5%, or GBP486 million on revenue, and 5.7% or GBP37 million on underlying profit," it said.
Compass said that if the current spot rates were to continue through the second half of the year, it would expect a negative currency hit of 5.9%, or GBP1.03 billion, in full-year reported revenues, compared to 2013, and a hit of 6.2%, or GBP78 million, in full-year underlying profit.
Compass said the underlying trends in its three regions continue to show strong growth in North America and the Fast Growing & Emerging region, as well as signs of stabilisation in Europe & Japan. It also said that the pipeline of new contracts has been encouraging.
The group said that in the first half of the year in North America, it saw high levels of new business, particularly in the Healthcare & Seniors and Education sectors, and good organic growth in Business & Industry. It said it expects organic revenue growth for the first half to be around 6%.
The group said the organic revenue growth of just over 4% includes a benefit of approximately 0.4% from the timing of Easter, which it said will reverse in the second half of the year.
It said economic conditions in Europe & Japan continue to stabilise, and it has seen good levels of new business, particularly in UK & Ireland, France, Spain and the Nordic region, as well as an improvement in underlying retention. It said that on a comparable working days basis, organic revenue is expected to have declined by just under 2.5% in the first half.
Compass said it expects organic revenue growth in the first half in the Fast Growing and Emerging region to be around 9%, driven by strong levels of new business as the structural shift to outsourcing accelerates. It said it has seen good performances in Brazil, Turkey, India and China, despite some economic challenges in some countries, including the continued slowdown in the Australian mining sector.
Shares in the FTSE 100 group were trading 0.1% or 0.62 pence lower at the open Thursday at 928.38p per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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