Upbeat Compass lifts revenue estimate

28th Jul 2010 07:40

Contract caterer Compass has upped its forecast for sales growth this year to 2.5% after an uptick in new business and an improvement in contract retention."The rate of organic revenue growth has accelerated to 5.5% in the third quarter (2.0% for the nine months to 30 June 2010). This strong growth has been driven by increased new business wins across the group and a slight improvement in the rate of retention," Compass said.Like-for-like volumes in the Business & Industry and Sports & Leisure sectors remain challenging but are now broadly level with the same period last year.Margins have also improved by 35 basis points in the third quarter of the year over this period last year. Free cash flow conversion remains strong, the firm said.Organic revenue growth accelerated in the third quarter to 7.6% in North America. Europe grew by 1.3%, the UK and Ireland by 2.1% and 10.4% in the rest of the world.Overall conditions remain "challenging," but "Looking forward to the full year, we now expect organic revenue growth to be over 2.5%. The ongoing focus on operating efficiency should, after re-investment, enable us to deliver further progress in the operating margin compared to the same period last year".