Feeding hungry Americans, and a growing appetite for its services in emerging markets, helped boost organic revenue at catering heavyweight Compass (CPG) by over 4 per cent last year. Operating profit before hefty write-downs and restructuring costs rose 8 per cent to £1.27bn, and a larger than expected £500m share buy-back for 2014 encouraged the shares to a record high.
That’s Compass’ reward for getting the operating profit margin above 7 per cent for the first time. North America, which now accounts for over 46 per cent of sales, grew organic revenue by 8 per, driven by new contract with Ascension Health and Texas A&M University. Profit there grew even faster, to £657m, and both US healthcare and education remain a huge opportunity for Compass. Strip-out a currency hit and profit in fast growing and emerging markets grew 7 per cent to £242m, despite the slowdown there. Compass could even make money in China next year and Brazil is generating double-digit growth. Even in Europe and Japan operating margins grew 60 basis points as cost-cutting offset another fall in like-for-like volumes.
Broker Numis Securities expects adjusted pre-tax profit of £1.26bn in 2014, giving adjusted EPS of 51.9p (from £1.19bn/47.7p in 2013).
COMPASS (CPG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 948p | MARKET VALUE: | £17.0bn | |
| TOUCH: | 947-948p | 12-MONTH HIGH: | 959p | LOW: 712p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 41 | |
| NET ASSET VALUE | 155p* | NET DEBT: | 43% | |
| Year to 30 Sep | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 13.8 | 0.77 | 29.5 | 13.2 |
| 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 |
| % change | +4 | -9 | -27 | +13 |
Ex-div: 22 Jan Payment: 24 Feb *Includes intangible assets of £4.5bn, or 251p per share | ||||
