Compass upbeat as strong US, emerging markets continue

Contract caterer Compass said expectations for the full year remain unchanged after a strong performance in the fourth quarter as its US and emerging markets continue to underpin growth.

In an update ahead of its annual results, Compass said constant currency revenue growth for the year to September 30th 2012 is expected to be around 8% and organic revenue growth should be 5.5%. Operating profit is expected to increase 8%.

Full year organic revenue in North America is expected to be more than 8% while Fast Growing & Emerging should rise over 12% after a strong pipeline of new contracts.

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In contrast the group has accelerated cost cuts across Europe to drive long-term competitiveness as economic conditions, particularly in Southern Europe, which makes up 4% of group revenue, continues to worsen.

Around £95m of annual cost savings are expected by 2014 from £150m exceptional cash charge over two years and a non-cash exceptional charge of £195m, mainly in Southern Europe.

Chief Executive Richard Cousins said: "Trading in the fourth quarter has been good and, in line with our expectations, organic revenue growth will be around 5.5% for the full year."

"The positive trading momentum in North America and Fast Growing & Emerging has continued and the outlook in both regions is encouraging. The fundamentals of the European business remain solid, but we are taking decisive action to protect profitability in the immediate future and improve operational efficiency over the medium term."

Overall, Compass believes the prospects for the business around the world are good.

CJ