26th Sep 2013 07:52
LONDON (Alliance News) - Compass Group said Tuesday it expects to report organic revenue growth of over 4% for the year following good performances in the fourth quarter, retaining its positive expectations for full-year results.
The food and support services company said that, including contributions from acquisitions, revenue growth is slated to be towards 4.5%, with operating profit margin for the full year expected to tip 7% for the first time, up 20 basis points on last year.
Compass attributes its latest encouraging organic revenue growth to new business wins, good retention rates and modest inflationary price increases. The company predicts that its full-year results will demonstrate positive like-for-like volumes in its 'fast growing and emerging' locations, with North America expected to report broadly flat volumes and negative figures are likely from Europe and Japan.
The company notes that Europe's difficult economic environment has driven it to generate further efficiencies during the year. Compass hopes that these measures will help to facilitate reinvestment to capture potential growth opportunities, as well as underpinning further progress in its operating margin.
Contract wins in North America have supported a 2% rise in organic revenue for the region; Compass predicts revenue growth of around 7.5% and a 10 basis point improvement in its operating margin figures. Europe and Japan's fourth quarter figures have remained in line with the company's expectations, and while Compass has seen good levels of new business in some localities, it predicts that organic revenue growth for the full-year will contract by around 3%. Compass reports that while its 'fast growing and emerging' regions, such as Brazil, Turkey and India, have seen a modest slowdown, it expects a 10% rise in organic growth for the full-year, driven by new business wins and like-for-like revenue growth.
The company has committed around GBP105 million on acquisitions in the financial year so far. During this period, the group says it has continued with its GBP400 million share buyback programme. As of Thursday, 35.5 million shares have been purchased for cancellation for GBP296.3 million, and the programme remains on track to complete within the calendar year, according to Compass.
In a statement, the firm said, "We remain very positive about the opportunities to grow the business and we are well placed to capitalise on the significant structural growth potential in both food and support services globally. We also expect to deliver further cost efficiencies which will help to support future growth and enable us to make further progress in the operating margin. As a result we remain confident in our ability to continue to create significant value for our shareholders."
Compass will release its full-year results on Wednesday 27 November.
Shares in the food services firm were up 0.72% to 836.00 pence Thursday morning.
By Alice Attwood; [email protected]; @AliceAtAlliance
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