Compass ups dividend after profits jump

CATERING group Compass yesterday reported strong full-year results with pre-tax profits up 18 per cent to £922m, beating consensus analyst forecasts of £904.5m.

Compass, which provides meals for UK schools, hospitals, hotels and the armed forces, saw net profits rise 15 per cent to £675m from £586m last year, also beating analysts’ expectations.

Revenues rose 7.6 per cent to £14.5bn while underlying operating profit increased 13 per cent to top £1bn for the first time.

The company said it would raise its full-year dividend 33 per cent from 13.2p to 17.5p per share, beating average estimates of 15p.

But chief executive Richard Cousins warned that “economic conditions remain challenging” and despite improvement in the UK and Ireland market, revenues for the region fell 2.6 per cent to £1.78bn.

Compass’ performance was driven by higher sales in north America, it said, where revenues increased 9.7 per cent to £6.39bn due to a culture that is “receptive to outsourcing.”

North America, which now accounts for 44 per cent of group revenues, saw profits rise 11 per cent to £491m, whereas UK and Ireland profits were comparable to 2009 at £114m.

The UK and Ireland accounts for 12 per cent of group revenues.

Compass is expanding into emerging markets, with 17 per cent of its business now in these economies.