Compass Group sees a 7.1% rise in profit in full-year 2018
Compass Group, the world’s largest catering firm, reported the fourth quarter of fiscal 2018 this week, demonstrating a strong underlying business that was seeing better profitability thanks to cost-cutting measures and a more lucrative pricing strategy. It also announced that it was positive about the coming year, and expected 2019 to deliver organic growth in the middle of a 4% to 6% range.
Investors liked what they saw in full-year 2018 and sent the share price up this week
Source: Yahoo Finance
Compass Group said that organic revenue grew by 5.5% to £23.24 billion against full-year 2017. Operating profit, meanwhile, rose by an impressive 7.1% against the previous year – a clear indication that the Group’s cost-cutting initiatives and higher price points are paying off. When it came to earnings per share, Compass Group outperformed by an even greater degree, delivering 77.6 pence per share. That met analysts’ expectations, and is a 12.5% beat against the previous year’s earnings. Operating margin remained flat, but free cash flow rose by 17.1% from 2017.
Compass, which serves more-than 5.5 billion meals a year in over 50 countries, said that its North American business outperformed, driving its business by returning 7.8% organic revenue growth year on year. In that region, the company counts Google, Coke, Shell, and Nike, as customers. In the UK – its domestic market – things weren’t quite as positive.
The company managed a strong showing financially – Compass doesn’t break it out, but for Europe as a whole, the company saw revenue growth of 2.1% year on year, and it said that new business in the UK spurred that on. However, it said it had “identified a potential impact” on its food supply chain and labour force ahead of the UK’s exit from the European Union (Brexit). Compass said that it was “taking actions to assess and mitigate any impact” that Brexit could cause.
The Group’s CEO, Dominic Blakemore, made the following comments in a statement over the results: “Compass had another very strong year. Revenue growth was healthy, driven by excellent growth in North America, an acceleration in Europe and good progress in Rest of World. […] Our expectations for FY2019 are positive. […] In the longer term, we remain excited about the significant structural growth opportunities globally, the potential for further revenue growth and margin improvement, combined with further returns to shareholders.”
Dominion holds Compass Group in its Global Trends Managed Fund.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
- Click here to print this story: Print
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.