Compass Group ‘encouraged' by 1.5% decline in Europe & Japan
Compass Group said it was "encouraged" by the expected 1.5% fall in business in Europe & Japan for the 12 months to 30 September 2014, which is half the rate of decline of the year before.
Conditions in the division have continued to improve throughout the year, the caterer said in a trading update ahead of its full financial announcement expected on 26 November.
Increasing rates of net new business and a healthy sales pipeline reflected the investments Compass has made in its sales and retention teams, it said, while contract exits related to the 2012 cost reduction programme have now been completed.
Meanwhile the company's global business is expected to achieve 4% organic revenue growth at constant currency for the full year, driven by strong growth in its North America and Fast Growing & Emerging regions.
Around £115m has been committed to infill acquisitions in the financial year to date and in the third quarter, Compass received around $40m (approximately £23m) relating to the disposal of a small non-core support services business in North America.
The £500m are buyback programme announced last November was resumed on 31 July 2014 following the completion of the £1b Return of Cash. As of last week, 18.4 million shares had been bought for cancellation for £174.5m and Compass said the programme remains on track to complete next year.
"Compass has had a good year, delivering solid organic revenue growth and further margin progression. Our expectations for the full year therefore remain positive and unchanged, notwithstanding the translation impact of ongoing movements in foreign currencies. For the full year, we expect North America and Fast Growing & Emerging to deliver healthy levels of organic growth and we are encouraged by the improvement seen through the year in Europe & Japan," the update said.
"Looking to the longer term, we remain excited about the significant structural growth opportunities in our markets globally and the potential for further revenue and margin growth."
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