Compass Group PLC today issues a trading update ahead of its Annual General Meeting to be held at 10:30am 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 2019.
Compass’ organic revenue for the three months to 31 December 2019 grew by 5.3%, driven by strong levels of new business wins and good retention rates, particularly in North America.
The cost action programme, which was announced in November, is progressing as expected and the benefits are offsetting the anticipated impact of lower Business & Industry volumes in Europe.
Organic revenue in North America increased by 7.5%, with particularly strong growth in Business & Industry, Healthcare and Education.
In Europe, as anticipated, organic revenue was flat year on year as it was impacted by the expected volume softness in Business & Industry and a less favourable Sports & Leisure calendar. These headwinds were offset by a good performance from Turkey and our Central and Eastern European region.
Organic revenue in Rest of World increased by 4.7% supported by good levels of growth in Australia and LATAM.
Currency movements, compared to the same quarter last year, had a negative translation impact on revenues and profit in the quarter of £71 million and £6 million respectively. If current spot rates(1) were to continue for the remainder of the year, foreign exchange translation would negatively impact 2019 revenue by £745 million and operating profit by £61 million.
Acquisitions and disposals
In the first quarter the Group spent £40 million on acquisitions. Our strategy is to make targeted and disciplined bolt-on acquisitions, focused on our core food offering, which strengthen our capabilities. There continues to be a pipeline of opportunities across the Group.
Following approval from the EU Competition Commission, we completed the acquisition of Fazer Food Services on 31 January 2020 for an initial cash consideration of approximately €420 million.
We also continued to make progress with the disposal programme and have recently sold 50% of our Japanese Highways business for a consideration of £55 million, with agreement to sell the remainder over the next three years. We expect to make further progress with disposals throughout the year.
We have had an encouraging start to the year and our outlook for 2020 remains unchanged with organic growth around the mid-point of our 4-6% guidance range whilst maintaining our strong margin(2). In the longer-term, we remain excited about the significant structural growth opportunities globally, and the potential for further revenue and profit growth combined with further returns to shareholders.
(1) As at 31 January 2020
(2) Pre IFRS16