Friday, 6 February 2015

Compass Group trading update

Compass Group

Provides contract food, catering and support services to a wide range of commercial businesses and government departments operating in over 50 countries.  I have a holding in my income portfolio (epic code: CPG).

Compass Group released a first quarter trading update yesterday stating that revenue on an organic basis grew by 5.7% for the quarter.  This compared to organic growth for the whole of last year of 4.1%. 

By region - North America - saw trends seen in the second half of 2014 continued into the first quarter of 2015.  Europe & Japan returned to growth, driven by good levels of new business wins and better retention.  In Fast Growing & Emerging, there was double digit organic growth in emerging markets that offset volume pressures in some countries, due to a mixed macroeconomic back drop and the expected decline in the Australian offshore and remote sector. 

Currency movements, compared to last year, had a negative translation impact on revenues and profit in the quarter of £40m and £2m respectively.

For the year management stated "...We maintain our positive expectations for the full year.  However, the economic environment is uncertain in some of our markets, and lower oil prices may impact our oil extraction related offshore and remote business..."

Based on the their outlook for the year with respect to the oil industry and the comments on Australia, I would expect that organic growth might pull back to a 3-4% range for the year.  Still a core income portfolio holding for dividend growth (14% over the past 5 years), rather than yield (2.6% prospective).

No comments:

Post a Comment