Compass's profit hit by Japan, sales strong

28th Jul 2011 08:04

Catering giant Compass has maintained its expectations for the full year after "another good performance" in the third quarter, after absorbing the impact of the tragic events in Japan.Revenues at constant currency grew by over 8% in the three months ended 30 June (including the contribution from acquisitions), while organic revenues rose by 4.5%. This surpassed the 3.7% rise that Credit Suisse was expecting, as the Swiss broker had anticipated a Japan-related slowdown and tougher comparatives than the second quarter.While the group is seeing "modest signs of recovery" in Japan, it has been able to limit the impact on profit to £20m in the second half after reducing costs.However, after absorbing this Japanese impact, operating margins fell by 60 basis points in the third quarter. Excluding Japan, operating margins grew by 20 basis points.Despite the continuing impact on revenues from the events in Japan, the group achieved organic revenue growth of 7.9% in the 'Rest of the World', driven by strong growth in Australia and the emerging markets in Latin America and Asia.North American revenues increased by 6.8%, while sales in continental Europe rose by 1.7%. UK & Ireland revenues, however, fell by 1.5% due to "difficult economic conditions".Revenues for the first three quarters were 5.3% ahead of 2010."The good performance seen in the first half of the year has continued into the third quarter, delivering both good organic revenue growth and a further improvement in the underlying operating margin," the firm said.Shares edged 0.43% lower to 579.50 in early trading.BC