Catering giant Compass has posted robust annual results despite some weakness in the European business sector.
Over the year to 30 September, the British group’s underlying revenue grew by 6.4% to £25.15bn, while operating profit rose 4.7% to £1.88bn.
Strongest performance came in its North America unit with organic revenue growth of 7.7%. In Europe, revenues rose 4.1% as good performances in the UK defence and sports & leisure sectors offset volume weakness in business & industry markets.
Meanwhile, its Rest of World division delivered growth of 4.3%, driven by strong performances in Turkey, India and Latin America.
Whilst praising “another strong year”, Compass Chief Executive Dominic Blakemore highlighted that the business was “not immune to the macro environment”.
He said: “Deteriorating business and consumer confidence in Europe has impacted our Business and Industry volumes, new business activity and margin.
“Given these trends, we are taking prompt action in Europe and certain Rest of World markets to adjust our cost base. As well as offsetting short-term margin pressures, by taking this action from a position of strength, we will be better placed to capitalise on future growth opportunities.”
Blakemore added: “Our expectations for the group in 2020 are positive although we remain cautious on the macro environment in Europe. The pipeline of new contracts in North America is strong and Rest of World is growing well, although we are seeing some hesitation in decision making in Europe.
“Thanks to the group’s geographic and sectoral diversity, we are nevertheless confident of continued progress. As such we expect organic growth to be around the mid-point of our 4-6% range whilst maintaining our strong margin as we mitigate the expected volume pressures through our cost actions.”
NAM Implications:
- Direct competitors can benefit from like-with-like comparisons with Compass geographies…
- …and for each difference, pondering why?
