Compass Group’s “new” CEO delivers solid set of results
2018 started badly for Compass Group. The company’s CEO, widely respected and very popular Richard Cousins, died tragically in a plane crash on New Year’s eve. It was a reflection of shareholders’ trust in him – not the absence of trust in his replacement – that saw the company’s share price wobble. Now, however, new CEO Dominic Blakemore is showing himself to be a cautious driver delivering stable results in what can only be described as an unstable world.
Compass Group’s share price is up by 7% over the past 3 months
Source: Yahoo Finance
Compass Group serves over 5.5 billion meals a year across 50 countries. It’s been plagued by stagnant revenue and declining margins, but Blakemore is looking to change things up. Saying that Compass Group had seen a “slight drop” in operating margins over the past nine months, he said that cost-cutting moves would lead to a “modest rise” in margins by the end of the year. The costs that will be cut include food, labour and overhead.
The British firm said that organic revenue in Europe rose by 1.4%, while that in North America (its biggest market) rose by 7.2%. These figures refer to the first nine months of the year, and are reported against performance in the first nine months of the previous year. Margins fell slightly in Europe, stayed stable in the U.S., and rose by about 60 basis points in the rest of the world.
In a statement, the company said: “The benefits from the cost actions taken to offset above average inflation in the UK are starting to come through with an improving run rate. However, these were offset by a more challenging volume and cost environment in the UK.”
Dominion holds Compass Group in its Global Trends Managed Fund.
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