Compass Group, the international caterer, says it expects to report a 4% rise in organic revenues in the year to 30 September after a “good performance” in Q4, despite a 3% fall in organic revenues in the Europe & Japan division.
Including the contribution from acquisitions, revenue growth is expected to be towards 4.5%, Compass said. Operating profit margin for the full year is expected to be over 7% for the first time, and 20 basis points higher than last year. Free cash flow conversion “remains strong”.
Like-for-like volumes are expected to be broadly flat in North America, negative in Europe & Japan and positive in “Fast Growing & Emerging” markets.
Regarding Europe & Japan, Compass said: “Trading in the fourth quarter has continued in line with our expectations and the trends across the region are largely unchanged.
“Whilst we continue to see good levels of new business in some countries, including France, Spain and the Nordics, the retention rate has been impacted by the cumulative effect of our planned exit of certain uneconomic contracts and business closures.
“Challenging economic conditions continue to impact like-for-like volumes, in particular in Southern Europe. Overall, we expect organic revenue growth for the full year to decline by around 3%. The cost reduction plans announced in September 2012 have progressed well and are on track to deliver the planned savings in the year.”
Compass said it has generated further efficiencies in the region, which has resulted in an expected 50 basis point improvement in the full year margin compared to last year.
