Compass raises dividend 11pc as profits surge

COMPASS Group, the world’s biggest caterer, posted an eight per cent rise in first half profit yesterday, and said a strong pipeline of new work in North America and emerging markets gave it confidence for its full-year prospects.

The firm, which operates in some 50 countries and serves 4bn meals a year, said underlying pretax profit for the six months to 31 March rose 8.1 per cent to £611m on revenues up 4.1 per cent to £8.8bn, in line with analysts’ consensus forecast.

The strong performance enabled the group to raise its interim dividend 11 per cent to 8p per share.

The group, which provides catering to everyone from schools and hospitals to offshore rigs and the Wimbledon tennis, said revenue growth had been driven in particular by new contracts and retentions in its core North American market and in Australia’s oil and gas industry.

As expected, in Europe, where the firm is cutting loss-making contracts and selling businesses in the south to offset weak markets, revenue fell at constant currency, although its operating profit margin increased due to cost savings.

The firm, which makes 35 per cent of revenue in its Europe and Japan division, said it had started to see hospitality budgets being squeezed in countries like Sweden and the Czech Republic, while France has worsened in recent months.

Compass said group organic revenue growth was 4.1 per cent including the negative impact of Easter timing, or 4.8 per cent on a comparable working days basis, in line with forecasts.