11th May 2016 12:04
LONDON (Alliance News) - Compass Group PLC on Wednesday reported growth in profit in the first half of its financial year and said it has positive expectations for the full year.
The catering and support services business said pretax profit in the six months ended March 31 grew to GBP666.0 million from GBP621.0 million in the same period the year before, as revenue rose to GBP9.54 billion from GBP8.94 billion.
Like-for-like revenue grew by 2.3%, reflecting modest price increases and some volume improvements in parts of North America and Europe, Compass said. New business wins rose by 9% and Compass said its client retention rate for the half was 94.5%, including a deal extending its contract providing food services to HSBC Holdings PLC, the global lender, to 2021.
Geographically, revenue in North America grew by 15%, driven by new business wins and "continuing excellent retention rates", with like-for-like volume improvement across most of the business, with the exception of the offshore and remote sector where volume pressure and price weakness continue.
In Europe, revenue rose by 1.2% driven by improving rates of new business and "slightly positive" like-for-like revenue, the former reflecting accelerating levels in the UK, Benelux and Southern Europe. Compass noted its exposure to the oil and gas market in the North Sea continues to moderate like-for-like volumes while it continues to face a tough economy in France, but said momentum remains positive in Germany and the UK.
Finally, in rest of world, revenue dropped by 9.2% but would have grown by 1.5% on a constant currency basis. Compass said stronger performances in Japan, India and the Middle East were offset by challenging macroeconomic conditions in Brazil, a less buoyant economy in China, and pricing pressures, site closures and lower volumes in the offshore and remote business in Australia.
Compass Group will pay an interim dividend of 10.6 pence, which is up 8.2% year-on-year.
"Our expectations for financial 2016 are positive and unchanged. Our pipeline of new contracts is encouraging and our focus on organic growth, efficiencies and cash gives us confidence in achieving another year of delivery," Chief Executive Richard Cousins said in a statement.
"In the longer term, we remain excited about the significant structural growth opportunities globally and the potential for further revenue growth, margin improvement, as well as continued returns to shareholders through dividends and ongoing share buybacks," he added.
Shares in Compass Group were trading up 0.1% at 1,263.00 pence on Wednesday afternoon.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Compass Group