Compass starts 2015 strongly after Japan and Europe return to growth

5th Feb 2015 08:14

Caterer Compass reported a good start to its new financial year, with organic revenue up more than expected in the first quarter thanks to a return to growth for Europe and Japan.Analysts have upgraded their full year forecasts already after the FTSE 100 group unveiled organic revenue growth of 5.7% in the three months to the end of December, up from the 4.1% growth rate last year.Like-for-like revenue also increased in the quarter, which management said was due to modest pricing and some volume improvement."Our focus on organic growth continues to drive strong levels of new business and good retention rates across all regions," the company announced ahead of its annual general meeting.The recovery in Japan and Europe was driven by good levels of new business wins and better retention, with like-for-like volumes still negative but improving.North America continued to trade strongly, with "good levels" of new business wins, "unusually high" retention rates and an improvement in like-for-like revenues in some sectors.Its "Fast Growing & Emerging" segment saw double-digit organic growth in emerging markets, driven by the encouraging continuation of the trend to outsourcing, offset volume pressures in some countries due to a mixed macroeconomic backdrop, and the expected decline in the Australian offshore and remote sector.Although exchange rate movements were reported as having a negative £2m impact on profit in the quarter, recent exchange rate movements in January have resulted in an increased expected net benefit for the full year.Looking forward, Compass maintained its positive expectations for the full year but acknowledged that the economic environment was "uncertain in some of our markets, and lower oil prices may impact our oil extraction related offshore and remote business".Broker Numis said the earlier-than-expected recovery in Japan and double-digit first-quarter growth in fast growing and emerging had led it to upgrade its full year earnings per share forecast by 2% to 55.8p.