Sales growth accelerates at Compass

30th Sep 2010 07:12

Contract caterer Compass Group has upped its sales growth guidance again after a strong fourth quarter.Having said in late July that organic sales growth this year would be around 2.5% the company now thinks it will be closer to 3%, including the impact of acquisitions.Organic revenue growth for the second half of the company's financial year, which runs to the end of September, has exceeded 5%, a sharp acceleration from the 0.4% year on year growth seen in the first half.Organic revenue growth has been driven by increased new business wins across the group and a slight improvement in the rate of retention. Like for like (LFL) volumes in the Business & Industry and Sports & Leisure sectors remain challenging but, in the second half of the year, they have been broadly level with the same period last year.Favourable currency movements are likely to provide a £25m windfall to operating profit but even without these earnings per share are expected to grow by around 15%.In North America organic revenue growth has been driven by new business wins across all sectors, as well as high levels of retention and a gradual stabilisation of LFL volumes.Organic revenues have been broadly flat year on year in continental Europe, while in the UK & Ireland the group expects organic revenues in the second half to decline by around 1.5%, which is, at least, an improvement on the 5.7% fall-off in the first half.As for the rest of the world, the group has put in a good shift in Australia and Brazil, while the ongoing strength of the energy and extraction businesses around the world, has continued into the fourth quarter. Overall, the Rest of the World should deliver organic revenue growth of around 6% for the full year with an improvement in operating margin of around 90 basis points (nine-tenths of a percentage point)."In an environment where cost efficiency remains high on the agenda, we believe the benefits of outsourcing are clear. Furthermore, the ongoing focus on operating efficiency should enable us to continue to re-invest in growth whilst delivering further margin progression. In addition, the strength of the cash flow and balance sheet is enabling us to reward shareholders and to accelerate growth through value creating infill acquisitions," the company said.