Compass Group PLC is issuing a trading update ahead of its Annual General Meeting to be held at 12:00 noon today in the Live Room, Rugby Football Union, Rugby House, Twickenham, Middlesex TW2 7BA.At this meeting, shareholders will be provided with the following update on the Group’s performance since 30 September 2016.
Compass’ organic revenue for the first three months to 31 December 2016 grew by 2.8%, in line with our expectations. We continue to see strong levels of new business wins and good retention rates. Like for like revenues increased modestly, with some pricing offsetting weak volumes in our Offshore & Remote sector.
Our operating margin moved forward slightly, as efficiencies generated through our management and performance (MAP) programme more than offset cost inflation and our investment in the exciting growth opportunities we see around the Group. In addition, the end of the restructuring programme in our Offshore & Remote business also contributed to the improvement in the operating margin in the quarter.
Organic revenue in North America increased by 7%, with very good growth across most sectors. Our core Business & Industry, Vending and Higher Education sub-sectors performed particularly well, whilst trading in our oil & gas business continued to be tough. In Europe, organic revenue was flat as expected. Net new business trends were in line with the last months of FY2016, and like for like revenues were unchanged as pricing offset weak volumes in the North Sea and France. Organic revenue in the Rest of the World declined by 6.5% due to the expected weakness in our commodity related business and a challenging environment in Brazil.
Currency movements, compared to the same quarter last year, had a positive translation impact on revenues and profit in the quarter of £924 million and £74 million respectively. If current spot rates were to continue for the remainder of the year, foreign exchange translation would positively impact 2016 revenue by £2.3 billion and operating profit by £186 million.
Our outlook for 2017 remains positive and unchanged. Growth in North America is strong, and both Europe and Rest of World are performing as expected with growth weighted to the second half. We continue to focus on driving efficiencies throughout the business and our margin expectations are also unchanged. In the longer term, we remain excited about the significant structural growth opportunities globally and the potential for further revenue and margin growth.