logo-loader

Compass Group Serves Up Increased Margin Growth and Earnings for full year

Published: 18:16 29 Sep 2009 AEST

no_picture_pai

International catering firm Compass Group (LSE: CPG) updated investors ahead of its full year results in November. The statement highlights an encouraging fourth quarter with increasing margin growth and favourable currency exchange factors. Compass is expecting to achieve a 14% increase in earnings per share.

According to Compass, cost management and accelerating cost efficiencies have offset a modest decline in revenue. Through the year the level of new contract wins and underlying contract retention remained strong across the business.

In North America all sectors continued to deliver strong growth in new business, high levels of retention and further efficiency savings throughout the year. Highlights of the new contracts include Chicago’s flagship sports stadium, the United Center, which is home to the Chicago Bulls. Overall, for the full year organic revenue growth is expected to be 1.5%, with an operating margin increase of around 50 basis points.

In Continental Europe, Compass added several contracts, for Ford, Societe Generale and a major multi-services contract with Coca-Cola.

Compass continues to focus cost efficiency in its European operations and expects an increase in the operating margin of around 20 basis points for the full year. However organic revenues are expected to be around 1% lower compared with last year.

In the UK, Compass won a new contract to service BSkyB, while business retention has also been strong with key renewals with Heinz, JohnsonDiversey and the Royal Military Academy Sandhurst. The UK based revenues were the most affected, revenues are expected to be 5.5% lower than 2008. Compass has driven significant cost efficiency in the second half of the year, with operating margin improvement for the full year expected to be around 60 basis points, it said.

Compass continues to make progress in the Offshore and Remote Site activities and in the fourth quarter has won a number of contracts to service mining sites and projects in Australia, Brazil and Chile.

According to today’s statement, the strong cash flow and balance sheet enables Compass to reward shareholders and to accelerate growth through value-creating infill acquisitions.

In the short term, the prevailing economic conditions are likely to continue to impact organic revenue growth, however in the future, Compass is set to enjoy a combination of structural growth in outsourcing and a cyclical upswing in demand.

The group's strategy remains focused on food and increasingly the delivery of support services, the continued management of the flexible cost base should deliver further margin progression.

Australian Strategic Materials signs US$600 million LoI

Rowena Smith, CEO and managing director of Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF), joins Jonathan Jackson in the Proactive studio to discuss the company’ s Dubbo Project, in Central West New South Wales. This project aims to extract and process critical minerals and rare earth...

13 hours, 58 minutes ago