Compass Group reports revenue growth in third quarter

24th Jul 2013 07:23

Foodservice and support services company Compass Group said its expectations for the full year remain "positive and unchanged" following a strong third quarter.Organic revenue growth in the three months to end of June was 4.0% on a comparable working days basis, as robust performance in North America and emerging markets offset difficult economic conditions in Europe and Japan.In North America, the company achieved a year-on-year organic revenue increase of 7.7% on a comparable working days basis, which included a 2.0% contribution from Ascension Health and Texas A&M contracts."The ongoing focus on generating efficiencies has resulted in a 10 basis points increase in the operating profit margin in the third quarter compared to the same period last year," the group said in a trading update. Economic conditions across Europe and Japan remained challenging with organic revenue falling by 3.4% on a comparable working days basis. Like-for-like volume declined in line with expectations. Compass has taken action to reduce costs to offset the impact on profitability, as announced in September. The cost reduction plan and ongoing efficiency programme, has led to an increase in the operating profit margin in the third quarter of over 50 basis points compared to the same period last year. In fast growing and emerging markets, organic revenue remained strong, driven by new business wins and like-for-like revenue growth. Despite a modest slowdown in some emerging markets and the natural resources industry in Australia, businesses continue to perform well, particularly in Brazil and Turkey.For the third quarter, organic revenue growth in emerging markets was 10.0% on a comparable working days basis. Compass invested around £80m in acquisitions in the financial year to date. During the period, the group continued with its £400m share buyback programme. As at July 23th, 27.1m shares have been purchased for cancellation for £223.7m, and the programme remains on track to complete within the calendar year. Since the end of the third quarter, the company signed an agreement to draw $500m of new debt through a private placement with US institutional investors. The funds will be used to repay existing debt on maturity and for general corporate purposes. Moody's changed its credit rating outlook for Compass to 'positive' from 'stable'. RD