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Compass Group pre-tax profits soar to £721m

28 November 2013 by
Compass Group pre-tax profits soar to £721m

Contract catering behemoth Compass Group has reported a sharp rise in pre-tax profit of 9.2% to £721m after exceptional items for the 12 months to 30 September 2013.

Organic revenue growth was 4.3%, and the caterer saw a rise in new business of 8.8% driven largely by a strong performance in its North America and Fast Growing & Emerging segments. However like-for-like revenue growth was modest at 1.8%.

Richard Cousins, group chief executive, said that Compass maintained good momentum during the year, adding: "High levels of new contract wins in North America and Fast Growing & Emerging have driven good organic revenue growth of over 4% and our operating margin has increased by 20 basis points to over 7% for the first time.

"Economic conditions in Europe & Japan remain challenging but the actions we've taken have enabled us to manage these and improve profit and margins. Looking ahead, I remain positive about the exciting structural growth opportunities in all of our markets and the potential for further progress."

Europe and Japan together represent 34.4% (2012: 36.9%) of Group revenue. Overall, revenue for the two sectors was £6b (2012: £6.2b), representing an organic fall of 3%.

Compass said that it continues to win and retain good business across the regions, including UK retentions with the National Grid, the Jockey Club and Henley Royal Regatta. But the rate of retention was slightly reduced by the closure of uneconomic contracts and business closures.

Sir Roy Gardner, chairman, commented that he was pleased to report good levels of growth in organic revenue, margin and cash flow.

"That has enabled us to continue investing in the business, at the same time as rewarding shareholders," he said. "Given our confidence in the outlook for the Group, I'm pleased to announce that the full year dividend has been increased by nearly 13% and we've announced a further share buyback of £500m, which we expect to complete in the 2014 calendar year."

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