Compass, the world’s largest foodservice group, has warned that it expects full year organic revenue across its UK & Ireland operations to decline by around 1%, as difficult economic conditions are resulting in “modest contraction in like-for-like volumes”.
The company, which supplies food services to businesses, schools and leisure centres in c.55 countries, said that it expects overall organic revenue growth to be over 4% for the fourth quarter and up around 5% for the full year.
Overall for the year, it expects like-for-like volumes to be broadly flat, which it said reflected marginally positive growth in the first half and marginally negative like-for-like volumes in the second half of the year.
It said that organic revenue growth in the year had been driven by string levels of new business wins, an improvement in underlying rate of retention to around 94% and modest inflationary price increases.
In North America the company expects organic revenue growth to be around 7% for the full year, while it Continental Europe it expects a rise of around 1%. For the rest of the world, the group said that organic revenue growth is expected to be around 9%.
Approximately £600m of Compass' existing debt is due to mature in May 2012. In line with this, the company said it had raised $1bn (c.£640m) of new debt during the fourth quarter through a private placement with US institutional investors at a lower annual coupon than the existing debt.
It said that these new funds would be applied to repay the existing debt on maturity. The company also said that whilst the early refinancing will result in a short term increase in the interest charge, this impact will reverse once the existing debt is repaid.
The company said that despite the current economic uncertainty, it remained “very positive about the opportunities to grow the business”.
It said that its primary focus remained on driving organic growth, but that it continued to evaluate infill acquisition opportunities in its core food and fast growing support services markets in both developed and emerging countries.
The group also said it was well placed to capitalizes on “the significant structural growth opportunities in both food and support services around the world” and encouraged by its pipeline of new business.
