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'Softening' in B&I and 'less-favourable' sporting calendar stall European growth for Compass

06 February 2020 by
'Softening' in B&I and 'less-favourable' sporting calendar stall European growth for Compass

An "expected softening" in B&I and "less-favourable" sporting calendar have seen contract caterer Compass report flat year-on-year revenue in Europe in the last quarter.

Strong growth in North America, Turkey and Central and Eastern Europe offset the slump to see organic revue increase by 5.3% across the global business in the quarter, however Compass has warned that currency translations could have a negative impact of £61m on overall 2019 operating profit.

The latest trading update covers the three months until 31 December 2019.

North America saw organic revenue increase by 7.5% with growth in the B&I healthcare and education sectors while Australia and the Latin American markets helped drive Rest of World organic revenue to an increase of 4.7%.

However, currency fluctuations have impacted revenue and profit to the tune of £71m and £6m respectively, compared to the same quarter in 2018. If these currency rates continue it would mean 2019 revenue would be down by £745m and operating profit down by £61m, compared to 2018.

Compass said: “We have had an encouraging start to the year and our outlook for 2020 remains unchanged with organic growth around the mid-point of our 4-6% guidance range whilst maintaining our strong margin. In the longer-term, we remain excited about the significant structural growth opportunities globally, and the potential for further revenue and profit growth combined with further returns to shareholders.”

The group plans to make targeted acquisitions. On 31 January the EU Competition Commission approved its €420m (£356m) purchase of Nordic catering business Fazer Food Service.

Earlier this year Paul Walsh announced he would step down as chairman and director of Compass after six years in the role.

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