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25 September 2018
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COMPASS LOOKS BEYOND FALL IN FIRST-HALF PROFIT TO GROWTH OPPORTUNITIES

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Operating profit fell by 2.7 per cent © iStock

10 May 2018 | Herpreet Kaur Grewal


Catering group Compass has reported that its operating profit decreased by 2.7 per cent, according to interim results for the year ended 31 March 2018.

 

Underlying operating profit increased by 4.5 per cent on a constant currency basis, said the group’s statement.

 

It added: “We have maintained our focus on MAP 3 (cost of food) with initiatives such as menu planning and supplier rationalisation, as well as continually optimising MAP 4 (labour and in unit costs) and MAP 5 (above unit overheads).

 

“These efficiencies combined with modest price increases were offset by inflationary pressures and cost of change actions in the UK, and as a result our operating profit margin declined by 10bps. On a statutory basis, operating profit decreased by 2.7 per cent, which included the impact of 5.3 per cent of adverse foreign currency translation.”

 

But the group also reported that Europe organic revenue was up by 0.5 per cent driven by good growth in the UK and in the rest of world grew by 3.4 per cent – a significant improvement on the 3.8 per cent decline in HY 2017, it said.

 

Dominic Blakemore, group chief executive, said: “Compass had another strong half with good revenue growth. North America continues to make excellent progress with broad-based growth across sectors. Performance in Europe was mixed, with good growth in the UK, offset by subdued trading in Continental Europe. Notably, the performance in our Rest of World region is improving.

 

“Our continuous focus on efficiencies and pricing was offset by inflation and cost of change actions in the UK. As a result, our group-operating margin declined slightly in the half. However, the benefits of these actions will come through in the second half. The business is trading well and our full-year expectations are unchanged, with organic growth above the middle of our 4-6 per cent range, and modest margin progression. I want us to drive performance by focusing on our core food business. We are increasing our intensity around our MAP framework, with the systematic roll-out of best practices and technology.

 

“At the same time, we are reviewing the portfolio to strengthen our capability and simplify the business. People are key to our success and we are working hard to continue to attract, develop and retain the very best talent. In addition, we will integrate our social and environmental ambitions more fully into our strategy and day-to-day operations. I am excited about the significant structural growth opportunities globally and the long-term potential for further revenue growth, margin improvement, as well as continued returns to shareholders.”