Compass Group FY profit rises 33%

10:28, November 26, 2009      

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Compass Group Plc, the world's biggest caterer, reported a 33 percent rise in full-year pretax profit, at the top end of market expectations, on the back of new business wins, a weak pound, and cost cutting.

The British company, which feeds office and factory workers, soldiers and schoolchildren, said yesterday underlying pretax profit for the year to end September reached 784 million pounds ($1.3 billion), up from 589 million the year before.

Market expectations had ranged between 715 million pounds and 788 million, with the consensus at 764 million, according to a Thomson Reuters poll of 18 analysts.

Compass shares, which rose to a more than seven-year high of 415.2 pence earlier this month, jumped 3 percent to 414 pence at the start of trade.

Compass, which counts Chelsea Football Club and London's 02 arena among its clients and provides catering services to 17 of the 20 biggest banks in the City of London, said full-year revenue totaled 13.4 billion pounds, up 17.5 percent or 1.3 percent on a constant-currency basis.

Stripping out the impact of acquisitions and disposals, revenue was flat and the group indicated it expects that trend to continue.

"Whilst in the short term the prevailing economic conditions are likely to continue to impact organic revenue growth, the pipeline of new business looks strong," said CEO Richard Cousins.

"Furthermore, the consid-erable potential to deliver ongoing efficiencies underpins our expectation of further progress in the margin," he added.

Compass generated savings of 161 million pounds during the period and lifted its underlying operating margin by 70 basis points to 6.5 percent.

The group said it would pay a final dividend of 8.8 pence per share, making a total for the year of 13.2 pence, up 10 percent.

Shares in Compass closed on Tuesday at 402 pence, valuing the business at 7.45 billion pounds.

Bank of America Merrill Lynch reiterated its "buy" rating and lifted its price target to 470 pence from 410 pence.

"We expect volumes to grow and lost business to revert to normal levels as the economy recovers and see no structural reason as to why organic sales growth cannot return to historic 5-6 percent levels over time," analysts at the investment bank said in a research note.

Source: China Daily
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