27th Mar 2008 07:02
Compass Group PLC27 March 2008 Compass Group PLC: Trading update 27 March 2008 This statement updates investors on the Group's progress in the current year,ahead of the announcement on 14 May 2008 of its half year results for the sixmonths to 31 March 2008. Group Trading in the first five months of the current financial year has been ahead ofour expectations and the strong performance seen in the first three months asdetailed in the interim management statement on 8 February 2008 has continuedinto the second quarter. We expect organic revenue growth to be just over 5% forthe half year and, with the MAP (Management and Performance)(1) programme moredeeply embedded throughout the whole organisation, expect to deliver around 50basis points of margin improvement compared with the same period last year. Cashflow conversion remains very good with ongoing success in driving workingcapital improvements and careful control of capital expenditure. We are continuing to be successful in our management of the impact of input costinflation through rigorous application of the MAP framework, as reflected in thecontinued improvement in margins, particularly in the key areas of purchasingand supply chain efficiencies, unit cost efficiencies (including menu planning)and both client and consumer pricing. Overall, we expect a favourable impact of around £6 million on operating profit(2) from the movement of our key currencies for the six months to 31 March 2008compared with the same period last year(3). North America In North America trading remains strong and we again expect good organic revenuegrowth for the half year of around 7%. Positive like for like revenue growthtogether with good management of input cost inflation and ongoing operatingefficiencies throughout the businesses are expected to deliver further marginimprovements of 50 to 60 basis points. Continental Europe The organic revenue growth rate in Continental Europe continues to improve andfor the half year is expected to be around 5%, with good performances in Spain,Turkey, Eastern Europe and the Nordic countries. We are achieving goodconversion of incremental revenues through to operating profit and expect to seemargin growth of 60 to 70 basis points. UK In the UK, as anticipated, we expect revenues and margins to be broadly in linewith last year. The Education sector continues to make solid progress and theBusiness and Industry and Healthcare sectors are performing in line with thesame period last year. We are making good progress with unit labour and overheadefficiency plans and food cost is being well managed through supply chainefficiencies, menu planning and price increases. Rest of the World We expect to see around 9% organic revenue growth for the half year in the Restof the World, driven by positive trends in South America, UAE and our remotesite businesses. Margins are expected to show an improvement of 80 to 90 basispoints. Our Japanese business continues to make good progress. Brazil Acquisition The Group has now completed the acquisition of the remaining 50% stake in GRS.A., our Brazilian contract catering business, for a total cash considerationof 305 million Brazilian Reals (£90 million). The operational and managementintegration of the business into the Group is proceeding well and we areoptimistic about the growth opportunities. Share Buy Back Programme The Group's £1 billion share buy back programme is now complete. Between 1October 2007 and 19 March 2008, the Group repurchased for cancellation 89million ordinary shares for a total consideration of £280 million. This bringsthe total number of shares repurchased since the share buy back programme beganin 2006 to 328 million for a total consideration of £1 billion. Full Year Outlook We have had an encouraging start to the year with a continuation of the positivetrading momentum seen over the last 18 months. Looking forward, a combination ofgood market growth from a diversified geographical and sector base, improvingworking capital management, capital expenditure control and clearly identifiedcost efficiencies, leaves us confident that this trend will continue through thesecond half of the year. ENDS Enquiries: Analysts Andrew Martin 01932 573000Media Chris King 01932 573116 Website: www.compass-group.com Note to Editors: Compass Group is the world's leading foodservice company. We specialise inproviding food, vending and related services to our clients' premises and wegenerated annual revenues of over £10 billion in the year to 30 September 2007.The company operates across the following core sectors of Business and Industry(B&I), Defence, Offshore and Remote, Education, Healthcare, Sports and Leisure(S&L) and Vending with an established brand portfolio. For more informationvisit www.compass-group.com. This Press Release contains forward looking statements within the meaning ofSection 27A of the Securities Act 1933, as amended, and Section 21E of theSecurities Exchange Act 1934, as amended. These statements are subject to anumber of risks and uncertainties and actual results and events could differmaterially from those currently being anticipated as reflected in such forwardlooking statements. The terms 'expect', 'should be', 'will be', 'is likely to'and similar expressions identify forward looking statements. Factors which maycause future outcomes to differ from those foreseen in forward lookingstatements include, but are not limited to: general economic conditions andbusiness conditions in Compass Group's markets; exchange rate fluctuations;customers' and clients' acceptance of its products and services; the actions ofcompetitors; and legislative, fiscal and regulatory developments. A copy of this release, together with all other recent announcements can befound on Compass Group's website at www.compass-group.com. (1) MAP is a simple, but clearly defined Group operating framework. MAP focuses on five key value drivers enabling the business to deliver disciplined, profitable growth with the focus more on organic growth and like for like growth. The five key value drivers: - MAP 1: Client Sales and Marketing - MAP 2: Consumer Sales and Marketing - MAP 3: Food Cost - MAP 4: Unit Costs - MAP 5: Above Unit Overheads (2) Operating profit, a term used throughout this announcement, includes share of profit of associates and is wholly consistent with the presentation in the Group's 2007 Annual Report and Accounts. (3) The main exchange rates used to translate the results of subsidiaries reporting in foreign currency were: Average exchange rate for the Five months to Six months to 29 February 2008 31 March 2007 US Dollar 2.02 1.95 Euro 1.38 1.49 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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