Compass Group (LON:CPG) has announced its full year results for the year ended 30 September 2019.
Strong organic revenue growth of 6.4%, above target range of 4-6%
· Excellent performance in North America with broad based organic revenue growth of 7.7%
· Europe growth of 4.1% with strong performances in UK Defence and Sports & Leisure offsetting Business & Industry volume weakness
· Rest of World growth of 4.3% driven by strong performances in Turkey, India and Spanish-speaking LATAM
Operating profit of £1.9 billion; up £84 million or 4.7% on constant currency basis
· Operating margin was maintained at 7.4%
Strong balance sheet, earnings and dividend growth
· Free cash flow increase of 9.3% to £1.2 billion resulting in net debt to EBITDA ratio of 1.3x
· Full year dividend up 6.1% in line with constant currency earnings per share
Executing our strategy and focusing on our core food business
· Continued to strengthen and simplify our portfolio. Completed several acquisitions and disposals for net cash cost of £377 million, and agreed the proposed acquisition of Fazer Food Services in the Nordics for €475 million
· Good momentum behind our strategic priorities of Performance, People and Purpose
Positioning for the future
· The outlook for the Group remains strong. We expect 2020 organic growth around the mid-point of our 4-6% guidance range whilst maintaining our strong margin
· Against the backdrop of a deteriorating macro environment in Europe we are taking prompt action to adjust our cost base. These actions, which have also been extended to certain Rest of World markets, result in non-underlying cash charges of around £160 million over 2019 and 2020, and a non-cash charge of £140 million
· Statutory operating profit decreased by 5.4% as a result of the impact of the cost action programme offset by higher profits and foreign exchange benefit. Statutory earnings per share decreased by 1.8%
Dominic Blakemore, Group Chief Executive, said:
“Compass has had another strong year. Organic revenue growth was 6.4%, ahead of our target range, thanks to excellent growth in North America and an improving performance in Rest of World. There was good growth in our European business with strong performances in UK Defence and Sports & Leisure offsetting weak volumes in Business & Industry. The Group margin during 2019 was maintained despite this more challenging trading environment in Europe.
We are making good strategic progress through disciplined focus on our Performance, People and Purpose priorities and have continued to reshape our portfolio. Disposal proceeds have been reinvested in bolt-on acquisitions to further strengthen our food service offer and subsector approach, and in June we announced the proposed acquisition of Fazer Food Services, a leading food service business in the Nordics, which is a strong strategic fit with Compass.
Despite this good performance, we are not immune to the macro environment. Deteriorating business and consumer confidence in Europe has impacted our Business & Industry volumes, new business activity and margin. Given these trends, we are taking prompt action in Europe and certain Rest of World markets to adjust our cost base. As well as offsetting short-term margin pressures, by taking this action from a position of strength, we will be better placed to capitalise on future growth opportunities.
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. As such we expect organic growth to be around the mid-point of our 4-6% range whilst maintaining our strong margin1 as we mitigate the expected volume pressures through our cost actions.
In the longer term, we remain excited about the significant structural growth opportunities globally, the potential for further revenue and profit growth, combined with further returns to shareholders.”
Results presentation today
The results presentation for investors and analysts is being held today, Tuesday 26 November 2019, at 9.00 a.m. A live webcast of the results presentation will be broadcast today at 9.00 a.m., accessible via the Company’s website, www.compass-group.com. At the end of the presentation you will be able to participate in a question and answer session by dialling:
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|Ex-dividend date for 2019 final dividend||16 January 2020|
|Record date for 2019 final dividend||17 January 2020|
|Last day for DRIP elections||3 February 2020|
|Q1 Trading Update / Annual General Meeting||6 February 2020|
|2019 final dividend date for payment||24 February 2020|
|Half year results||13 May 2020|