Proactive Investors - Run By Investors For Investors

Compass serves up full year profit growth, driven by growth in North America

Compass said expectations for fiscal year 2018 are "positive" with growth and margin improvement weighted to the second half
Compass
Compass caters for US companies Google and Twitter

Catering giant Compass Group PLC (LON:CPG) served up an 18% increase in full year profit as a strong performance in North America boosted revenues.

Pre-tax profit in the year to 30 September 2017 increased to £1.6bn from £1.3bn last year and revenue rose to £22.9bn from £19.9bn.

READ: Compass Group posts solid third-quarter organic revenue growth boosted by strong performance in North America

Shares, however, fell 3.08% to 1,542p in morning trading. 

In North America, where the company caters for companies including Twitter and Google, revenue rose 7% on a constant currency basis.

Sales in Europe edged up 1.5% but fell 2.5% in the “rest of the world” division, which includes China, India, Brazil and Australia.

Offshore remains challenging but revenue declines slow

Revenue at the group’s commodities-linked offshore business, which providers catering an cleaning at remote oil and gas extraction and mining sites, fell 14% in the second half of the year,

Compass said the oil and gas sector "remains challenging", though the rate of decline in offshore has slowed in recent months and the company expects this trend to continue into 2018.

Following the completion of a restructuring of the offshore business, the operating margin improved by 20 basis points to 7.4%. 

“Compass had another strong year,” said chief executive Richard Cousins, who is stepping down in March to be replaced by internal candidate Dominic Blakemore.

“North America continues to deliver excellent growth, we are continuing to make progress in Europe and in Rest of World, with trends in our commodity related business improving.”

The group’s total dividend for the year increased by 5.7% to 33.5p as free cash flow increased 7.3% to £974mln. Compass returned £1.6bn to shareholders via ordinary and special dividends and share buybacks.

Fiscal year 2018 expectations 'positive' 

“Our expectations for FY2018 are positive, with growth and margin improvement weighted to the second half,” Cousins said.

“The pipeline of new contracts is encouraging and our focus on organic growth, efficiencies and cash gives us confidence in achieving another year of progress.”

Nicholas Hyett, equity analyst at Hargreaves Lansdown said "you can see why CEO Richard Cousins has decided that now is a good time to hand over the reins at Compass", pointing to the improvement seen in the offshore business. 

He added: "In a company employing over 500,000 people at tens of thousands of sites, keeping a firm grip on costs and efficiency is both challenging and vitally important. With margins expanding again this year, Compass continues to show that’s a challenge it’s more than able to handle.”

View full CPG profile View Profile

Compass Group Timeline

Related Articles

Oil pollution
July 03 2018
A name change might be in order if PCG pulls the trigger on two investments it is mulling
Garden Route
Wed
The luxury travel specialises in bespoke holidays and holds over 3,500 hotel and agency contracts around the world
Theme Park
March 29 2019
Canaccord Genuity upgraded its rating for accesso to ‘buy’ from hold’ following the e-ticketing and guest experience firm’s recent full-year 2018 results

© Proactive Investors 2019

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use