TIDMCPG
RNS Number : 8036Z
Compass Group PLC
29 September 2009
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29 September 2009
Compass Group PLC
Trading Update
This statement updates investors on the Group's progress in the current year,
ahead of the announcement on 25 November 2009 of its results for the year to
30 September 2009.
Group
Compass is performing well in the fourth quarter, with margin growth of around
70 basis points expected in the fourth quarter and approximately 60 basis points
in the full year. Continuing management of the flexible cost base and
accelerating cost efficiencies have more than offset a modest decline in
revenue. We expect a favourable impact of GBP120 million on operating profit
from the movement of our key currencies compared with last year - translating
the profits of last year to this year's actual exchange rates. On a constant
currency basis, underlying earnings per share are expected to grow by around
14%. Cash flow conversion remains strong.
In line with the expectations we set at the Interim Management Statement in
July, constant currency revenue growth, including acquisitions, is expected to
be around 1% for the full year and organic revenue growth, which is the
combination of net new business and like for like revenue growth, is expected to
be broadly flat. Encouragingly, throughout the year the level of new contract
wins and underlying retention has remained strong across the business at levels
consistent with last year. As expected, in the more cyclical Business & Industry
(B&I) and Sports & Leisure sectors, like for like volumes continue to be
impacted by reduced levels of employment and lower levels of client
discretionary spend. Like for like volumes in the Education, Healthcare and
Defence, Offshore and Remote Site (DOR) sectors have remained solid throughout
the year.
North America
All sectors have continued to deliver strong growth in new business, high levels
of retention and further efficiency savings throughout the year. In the fourth
quarter we have mobilised considerable new business in the Education sector and
enjoyed a healthy increase in the number of students on site. Healthcare
continues to grow well and we have won a number of important new contracts in
both food and support services. In Sports & Leisure the strong pipeline has
converted into a series of prestigious wins, for example a new contract with the
United Center, home to the Chicago Bulls and Chicago Blackhawks.
Overall, for the full year we expect organic revenue growth of around 1.5% and
an operating margin improvement of around 50 basis points.
Continental Europe
We continue to deliver a solid stream of new business. In B&I we have secured
exciting new contracts with Ford in Germany, Societe Generale in Paris and a
major multi-services contract in Spain with Coca-Cola. In Education we have
secured good new business in France, Spain and Italy and in Germany we have won
our largest ever Education sector contract for public schools in Offenberg in
Baden-Wuerttemberg. The pipeline in Healthcare is developing and we have
recently won a number of important contracts for hospitals and senior living in
France.
We expect organic revenues to be around 1% lower than last year for the full
year. With the continued focus on cost efficiency, we expect an increase in the
operating margin of around 20 basis points for the full year.
UK & Ireland
New business is encouraging across all sectors, for example we have recently won
important new business in B&I with BSkyB and we have renewed contracts with
Heinz and JohnsonDiversey. In DOR we have renewed our multi-services contract
with the Royal Military Academy Sandhurst. Building on the recent acquisition
of a number of McColl's food and retail outlets, we continue to make good
progress in extending our retail offer to the Healthcare sector, opening over 50
new sites since the start of the year. The Education business continues to
perform well and we have secured a number of new contracts which are now being
mobilised.
For the full year we expect revenues to be around 5.5% lower than last
year. However, we have driven significant cost efficiency in the second half of
the year and as such we expect to deliver around 60 basis points of operating
margin improvement for the full year.
Rest of the World
We continue to make good progress in our Offshore and Remote Site activities and
in the fourth quarter have won a number of new mining sites and projects in
Australia, Brazil and Chile. In Japan we are making further progress in the
margin as well as driving good levels of new business. For example, we have
secured contracts with Fujifilm Corporation and Nikkei Inc. The business in
Brazil is growing well, including new contracts with Petrobras, Brazil's largest
energy company, and Noble, marking our entry into the Offshore market.
We expect organic revenue growth of around 2% for the full year with an
improvement in operating margin of approximately 100 basis points.
Strategy and Outlook
The Group's core strategy remains focused on food and increasingly the delivery
of support services. In the short term, the prevailing economic conditions are
likely to continue to impact organic revenue growth. In the medium term, the
Group is set to enjoy the combination of structural growth in outsourcing and,
as the global economies recover, a cyclical upswing in demand. In parallel, the
continued management of the flexible cost base and ongoing focus on the MAP
efficiency programme should deliver further margin progression. In addition to
this, the strength of the cash flow and balance sheet is enabling us to reward
shareholders and to accelerate growth through value-creating infill
acquisitions.
Note to Editors:
(a) Compass Group is the world's largest foodservice company with annual
revenues in 2008 of over GBP11 billion operating in 55 countries. For more
information visit www.compass-group.com
(b) MAP (Management and Performance) is a simple, but clearly defined Group
operating framework. MAP focuses on five key value drivers, enabling the
businesses to deliver disciplined, profitable growth with the focus more on
organic growth and like for like growth.
The five key value drivers are:
+---------------------------------------+
| MAP 1: Client sales and marketing |
+---------------------------------------+
| MAP 2: Consumer sales and marketing |
+---------------------------------------+
| MAP 3: Cost of food |
+---------------------------------------+
| MAP 4: Unit costs |
+---------------------------------------+
| MAP 5: Above unit overheads |
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(c) Organic revenue growth, a term used throughout the announcement, is
calculated by adjusting for acquisitions (excluding current period acquisitions
and including a full period in respect of prior period acquisitions), disposals
(excluded from both periods) and exchange rate movements (translating the prior
period at current period exchange rates) and compares the current period results
against the prior period.
(d) Operating profit, a term used throughout this announcement, includes share
of profit of associates and is wholly consistent with the presentation in the
Group's 2008 Annual Report and Accounts.
(e) This Press Release contains forward looking statements within the meaning of
Section 27A of the Securities Act 1933, as amended, and Section 21E of the
Securities Exchange Act 1934, as amended. These statements are subject to a
number of risks and uncertainties and actual results and events could differ
materially from those currently being anticipated as reflected in such forward
looking statements. The terms 'expect', 'should be', 'will be', 'is likely to'
and similar expressions identify forward looking statements. Factors which may
cause future outcomes to differ from those foreseen in forward looking
statements include, but are not limited to: general economic conditions and
business conditions in Compass Group's markets; exchange rate fluctuations;
customers' and clients' acceptance of its products and services; the actions of
competitors; and legislative, fiscal and regulatory developments.
A copy of this release, together with all other recent announcements can be
found on Compass Group's website at www.compass-group.com. Copies of the
presentation given to institutional investors and analysts are also available at
this site.
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| Enquiries: | | |
+------------------------+----------------------------+----------------------+
| | | |
+------------------------+----------------------------+----------------------+
| Investors / Analysts | Sarah John / Kate Messum | +44 (0) 1932 573000 |
+------------------------+----------------------------+----------------------+
| Media | Chris King | +44 (0) 1932 573116 |
+------------------------+----------------------------+----------------------+
+------------------------+---------------------------------------+
| Website: | www.compass-group.com |
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This information is provided by RNS
The company news service from the London Stock Exchange
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