Compass Group trading update

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 released a trading update today ahead of its interim close.  Management stated that they are having a strong first half, with expected organic revenue growth towards 5.5% and operating profit margin improvement of around 10 basis points.  Organic growth for the first quarter was 5.7% and 4.1% for the whole of last year.

 

North America's organic growth is expected to be 8% and operating margins should improve by 5bps.  Europe & Japan organic growth 0.5% and operating margins improved by 10bps. Fast Growing & Emerging organic growth 8% and operating margins deterioration by 10bps.

 

Management indicated that currency movements, compared to last year, are expected to have a positive translation impact on half year revenue and profit of £35m and £5m respectively.  If current spot rates continue for the remainder of the year, it is expected that foreign exchange translation would benefit full year revenues by £323m and profits by £31m.

 

The company states that expectations for the full year remain positive and that they are excited about the significant structural growth opportunities globally and the potential for further revenue and margin growth.

 

This is a positive statement from Compass and the share price was up 1% on the day close to its 52 week high.