Compass Group warns of European struggles as profits dip
Compass Group on Tuesday reported a drop in full-year profit as it warned that European volumes have fallen amid "hesitation" in the region.
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The catering and hospitality specialist reported statutory profit before tax of £1.47bn for the year ended 30 September, a decline of 4% on the year before, as the impact of cost action charges offset turnover growth and the benefits of foreign exchange.
Compass proposed a dividend of 40.0p per share, up 6.1% from 2018.
Organic revenue grew by 6.4%, above the company's target range of 4-6%, while operating margin was maintained at 7.4% following strong performances in North America, Turkey, India and Latin America.
However, the FTSE 100 company said deteriorating business and consumer confidence in Europe had impacted its and industry volumes, new business activity and margin, leading it to take cost-cutting measures.
For the current year, Compass said it expected overall organic revenue growth to be around 5%, with the company anticipated to maintain its "strong" margin as it seeks to mitigate the expected volume pressures through further cost actions.
Chief executive Dominic Blakemore said: "Our expectations for the group in 2020 are positive although we remain cautious on the macro environment in Europe. The pipeline of new contracts in North America is strong and rest of world is growing well, although we are seeing some hesitation in decision making in Europe.
"Thanks to the group's geographic and sectoral diversity, we are nevertheless confident of continued progress."
At 1000 GMT, the shares were down 5.7% at 1,953p.