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Bigger piece of US pie helps Compass deliver appetising full-year results

The catering group’s offshore and remote business was still under pressure from low commodity prices, though
a frying pan in a kitchen
Compass Group is a multinational contract food services company

Catering firm Compass Group PLC (LON:CPG) saw revenues and profits rise in the past 12 months, as its offerings continue to gain traction across the pond.

Operating profits were up almost 6% to £1.45bn (2015: £1.37bn) in the year to end September, on revenues of £19.9bn a year-on-year increase of 5% (2015: £18.7bn).

North America enjoyed the strongest levels of growth across the Surrey-based company and now accounts for 56% of Compass’ total underlying group revenue.

Revenue in that region soared to £11.2bn from £9.36bn in 2015, driven by new business wins and high retention rates, Compass said.

“Performance in North America continues to be excellent, and we are pleased with our progress in Europe,” said chief executive Richard Cousins.

“In the Rest of World, the performance is mixed, with the impact of the cyclical downturn in our commodity related business offsetting reasonable progress elsewhere.”

As Cousins alluded to, Compass’ offshore and remote business – which supplies services to, among other sectors, those in the oil and gas sector – had been hit hard across the globe as commodity prices remain low.

The FTSE 100-listed group reorganised this division last summer to try and reduce the cost base, with the associated restructuring costs totalling £51mln in the past year.

Despite these troubles, Compass was happy with the broader performance of its businesses as it saw strong organic growth of 5%.

As a result, it upped its full year dividend by 7.8% to 31.7p per share.

It hopes to do the same in a year’s time, adding that its expectations for 2017 are “positive” with the new contracts pipeline looking healthy.

Shares opened lower on Tuesday Morning at 1,350p.

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