Compass Group IMS

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 issued their third quarter IMS today stating that organic revenue growth for the quarter was 4.0% and 3.9% for the nine months.  In addition the operating profit margin, has increased by 10 bps in the quarter and for the nine months.

 

Organic revenue growth by territory was:

 

North America - 3rd quarter +6.5% nine months +6.4%

 

Europe & Japan -  3rd quarter -1.2% nine months -1.8%

 

Fast Growing & Emerging - 3rd quarter +6.5% nine months +8.4%

 

The stand out number here is the decline in growth in the Fast Growing and Emerging markets.  At the interim stage Compass was reporting growth of 9.7%.  They attribute this decline to an acceleration in the slowdown of the Australian offshore and remote sector.

 

Their overall expectations for the full year remain positive and unchanged, notwithstanding the translation of ongoing movements in foreign currencies.  They have stated that if the current foreign currency spot rates were to continue for the fourth quarter and, the average for this year were applied to last year, then revenues and profits would have declined by 6.9% and 7.3% respectively.

 

A reasonable update, but with two negative issues to consider - the slow down of the Australian offshore and remote sector and foreign currency headwinds.