The story remains the same for catering heavyweight Compass (CPG): business in North America is booming, emerging markets are growing fast, and Europe and Japan are recovering. Group revenues fell last year, but this was due to the strength of sterling. Adjusting for this and the impact of certain acquisitions and disposals, underlying revenues grew 4.1 per cent, buoyed by like-for-like growth of 2.1 per cent. That reflected "modest" price increases as well as slightly higher volumes in emerging markets.
Reported pre-tax profits soared last year, but only because of a big goodwill charge in 2013. Underlying operating profits grew 6 per cent on a constant currency basis. The operating profit margin edged up 10 basis points to 7.2 per cent, reflecting the group’s continued efforts to boost efficiency. Management said it expects the operating margin to improve this year, too. That will allow them to invest in fast-growth markets like Brazil, India and China, offsetting falling volumes in Europe.
That markets in Europe and Japan - which together account for a third of group revenues - are showing some signs of bottoming out. Revenues from the two regions dipped 5.3 per cent to £5.7bn last year. But at constant currencies the decline was closer to 1.5 per cent - half the rate of the previous financial year.
North America, which provides nearly half of group revenues, painted a different picture. While volumes were broadly flat last year, new business wins and good customer retention rates helped sales rise more than 7 per cent (at constant currencies) to £8.2bn. Most of that growth fed through to the bottom line, with operating profits up £49m to £666m.
Compass also upped its annual dividend by 10 per cent. Given the special dividend in May and an ongoing £500m share buyback programme, that means more than £1bn was returned to shareholders last year.
Analysts at Numis expect pre-tax profits of £1.21bn for the current financial year, giving EPS of 54.5p, up from £1.16bn and 48.7p respectively.
| COMPASS (CPG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,073p | MARKET VALUE: | £17.9bn | |
| TOUCH: | 1,073-1,074p | 12-MONTH HIGH: | 1,078p | LOW: 888p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 110p* | NET DEBT: | 126% | |
| Year to 30 Sep | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 14.5 | 0.91 | 35.3 | 17.5 |
| 2011 | 15.8 | 0.96 | 36.4 | 19.3 |
| 2012 | 16.9 | 0.79 | 32.1 | 21.3 |
| 2013 | 17.6 | 0.72 | 23.3 | 24.0 |
| 2014 | 17.1 | 1.14 | 48.8 | 26.5 |
| % change | -3 | +58 | +109 | +10 |
Ex-div: 22 Jan Payment: 23 Feb *Includes intangible assets of £4.58bn, or 274p per share | ||||
