Compass has reported on the six months to 31 March 2013, identifying the stronger trading and prospects in North America and the Fast Growing and Emerging regions, whilst Europe continues to be problematic as it retreats from its Southern European operations.
In the UK, the negative trends in like for like volume in some sectors were more than offset by an increased number of sporting events in the first half, notably the Autumn Internationals at Twickenham.
Financials
Underlying Year on year change Reported
Revenue £8.8 billion +4.1%3 £8.8 billion
Operating profit £650 million +6.6% £615 million
Profit before tax £611 million +8.1% £575 million
Earnings per share 24.5 pence +10.9% 23.1 pence
Free cash flow £386 million +4.9% £343 million
Interim dividend per share 8.0 pence +11.1% 8.0 pence
Good start to the year with continued revenue growth and further efficiencies
− Reported revenue up 4.4% year on year, on a constant currency basis, including impact of acquisitions and disposals.
− Organic revenue growth of 4.1% (including negative Easter impact); 4.8% on a comparable working days basis.
− Operating profit margin increased by 15 basis points to 7.3%.
North America and Fast Growing & Emerging generating excellent growth; European
action plans on track
− Organic revenue growth in North America of 8.2%; Ascension Health contract
expanded and Texas A&M fully mobilised.
− Fast Growing & Emerging organic revenue growth of 10.5%, driven by strong levels
of new business and like for like revenue.
− Good progress on European action plans to manage difficult economic environment.
Future prospects remain encouraging; overall expectations for the full year are
Unchanged
− Healthy pipeline of new business in North America and Fast Growing & Emerging.
− Further operational progress in Europe & Japan to manage economic challenges.
− Longer term, Compass remains well placed to capitalise on significant structural growth opportunities in food and support services globally.
Richard Cousins, Group Chief Executive
“Compass has started the year well. We have generated organic revenue growth of over 4%,
reflecting the strength of the performance in North America and Fast Growing & Emerging.
Economic conditions in Europe & Japan remain challenging but we are executing the action plans
we announced last year and improving our operating efficiency significantly. This, combined with
ongoing efficiencies across the business, has delivered a 15 basis points increase in the operating
margin. Looking forward, I remain positive about the significant structural growth opportunities in
our markets and the potential for further revenue and margin growth”.
Sir Roy Gardner, Chairman, said:
“With good levels of organic revenue growth and a further increase in the margin, these results are
testament to the ongoing commitment and hard work of everyone at Compass. Our cash flow also
remains excellent, which has enabled us to continue to invest in the business, make acquisitions
and reward shareholders. I’m pleased to announce that the interim dividend has been increased by
11% and we remain on track to complete the £400 million buyback by the end of this calendar
year.”
Group overview
“Reported revenue has grown by 3.0% in the first six months to 31 March 2013, or 4.4% on a constant currency basis. After adjusting for the impact of acquisitions and disposals, organic growth has remained strong at 4.1% for the period (including the negative impact from the timing of Easter of c. 0.7%). On a comparable working days basis, organic revenue growth was 4.8%.
“During the half, we delivered new business growth of 8.8%, driven by a good performance in MAP 1 (client sales and marketing) in North America and Fast Growing & Emerging. Our retention rate also remained high at 94.0%, despite an increase in the number of business closures in Europe and our decision to exit certain contracts that have become uneconomic.
“Like for like revenue growth of 1.3% reflects modest price increases and slightly negative like for like volume overall. Like for like volume continues to be broadly flat in North America, modestly positive in Fast Growing & Emerging and negative in Europe & Japan. We have retained our focus on increasing consumer participation and spend through MAP 2 (consumer sales and marketing) initiatives, developing innovative and exciting consumer propositions, and training our people.
“Underlying operating profit increased by 6.6% in the first half on a constant currency basis, with the underlying operating profit margin increasing by 15 basis points to 7.3%. We have continued to generate efficiencies through embedding the MAP framework deeper into the business. We have maintained our focus on MAP 3 (cost of food) initiatives such as menu planning and supplier rationalisation, as well as MAP 4 (labour and in unit costs) and MAP 5 (above unit costs). These efficiencies are, in part, being reinvested in exciting growth opportunities around the world and helping us to manage the difficult economic conditions in Europe. They are also enabling us to deliver the further improvement in the operating profit margin.”