Compass profits up on emerging markets

 
City A.M. Reporter
Compass Group, the world's biggest caterer, has posted a rise in full-year profit and given an upbeat view of its prospects after growth in North America and emerging markets helped offset tough economic conditions in Europe and the earthquake in Japan.

Compass, which provides meals for office workers, members of the armed forces and schoolchildren across the world, made an underlying operating profit of £1.09bn, up nine percent and in line with forecasts, according to a company-supplied poll of 12 analysts.

The group said North America, which accounts for nearly £7bn of its £15.8bn total revenue, remained its biggest growth engine with operating profit up 9.6 per cent.

"The US culture is open to outsourcing and the current economic climate is resulting in some increased activity. We have an excellent pipeline of new business, high retention rates and ongoing opportunities to drive efficiencies," it said in a statement.

Compass said it took a £15m hit in the year from the impact of the Japanese earthquake in March and had £15m of restructuring costs relating to acquisitions.

But it was positive on the outlook and its possibilities for expansion.

"The group continues to make excellent progress, despite the headwinds of food cost inflation, an uncertain economic backdrop in parts of the world and the impact of events in Japan," chairman Roy Gardner said.

"The strength of our cash flows enables us to increases investment in the business to drive organic growth, as well as investing in high-quality infill acquisitions."

Compass, which also provides catering services at major sporting events and entertainment venues such as the O2 Arena and Stamford Bridge in London, saw opportunities for further outsourcing in its core catering market, while support services offered new opportunities for growth.

"We are also placing greater emphasis on the fast growing and emerging markets, where we see real opportunity for further expansion," Cousins said.

And it announced the appointment of Dominic Blakemore as finance director and Gary Green and Andy Martin as chief operating officers.

It is initiating a new management structure with Green having responsible for North America, Martin focusing on Europe & Japan and Cousins focusing more on emerging markets.

Including Japan, restructuring and other exceptional costs, operating profit was up 2.7 per cent to £1.02bn.