Compass Group PLC Trading Update and European Action Plans
This statement updates investors on the Group's progress in the current year, ahead of the announcement of its results for the year to 30 September 2012 on 21 November 2012.
Strong fourth quarter; full year expectations remain positive and unchanged
- Full year constant currency revenue growth expected to be c.8%; organic revenue growth of c.5.5%
- Operating profit increase of approximately 8%; margin slightly ahead of last year
North America and Fast Growing & Emerging generating excellent growth
- Full year organic revenue in North America expected to be up over 8% and Fast Growing & Emerging over 12%; strong pipeline of new contracts
- Ongoing efficiencies being reinvested to drive growth and delivering margin expansion in North America
Acceleration of cost actions across Europe to drive long-term competitiveness
- Economic conditions, particularly in Southern Europe (4% of Group revenue), have continued to worsen
- Fundamentals of the business are solid; programme to unlock further efficiencies to manage challenging economic conditions and position us for future growth
- Southern Europe restructuring to streamline the operations and re-base the business
- £95m of annual cost savings by 2014 from £150m exceptional cash charge over two years and a non-cash exceptional charge of £195m, mainly in Southern Europe
Prospects of the Group remain strong; no change to 2012 and 2013 expectations
- Positive outlook in North America and Fast Growing & Emerging, combined with European action plans, underpin expectations for 2013
- Well placed to exploit significant growth opportunities in food and support services globally
- Maintain expectation of further margin progression over the medium term
Richard Cousins, Group Chief Executive, said:
"Trading in the fourth quarter has been good and, in line with our expectations, organic revenue growth will be around 5.5% for the full year. The positive trading momentum in North America and Fast Growing & Emerging has continued and the outlook in both regions is encouraging. The fundamentals of the European business remain solid, but we are taking decisive action to protect profitability in the immediate future and improve operational efficiency over the medium term. Overall, the prospects for the business around the world are good and I remain confident that we will continue to drive revenue and margin growth."
