Compass foodservice growth driven by North American operations

Multinational contract food service provider Compass Group plc (LON: CPG) posted healthy growth in the third quarter, which the company attributed to strong performance by its North American operations.

The Company said that revenue growth of 8.5% in its North American business would help it deliver on its 4-6% full-year revenue guidance for the full year. Overall, organic Group revenue grew 6.3% during Q3, and in addition to its American business, Compass noted improving performance in its ‘Rest of the World’ operations. Revenue growth for the first three quarters of FY19 was 6.5%.

The Company said they were still focused on delivering efficiencies in management and performance, and said its margin for the first three quarters was in line with the margin for the first three quarters of FY18.

Compass statement

Looking forward’s the Company’s statement provided the following outlook,

“Compass continues to perform strongly. Revenue growth in North America is excellent and Rest of World is improving. Better than anticipated margin improvement in Rest of World and the mix effect of North American growth is offsetting the more difficult volume environment in Europe.”

“We now expect full year organic growth at the top of our 4-6% range and therefore the margin is expected to be in line with the prior year*. We remain mindful of the macro uncertainty in parts of Europe and its impact on the business.”

“We continue to be excited about the significant structural market opportunity globally and the potential for further revenue, margin and profit growth combined with further returns to shareholders over time.”

Investor notes

The Company’s share price has rallied 2.91% or 57.14p to 2,021.64p a share 25/07/19 14:58 BST. Liberum Capital and UBS analysts reiterated their respective ‘Buy’ stances on Compass stock, while Shore Capital retained its ‘Hold’ stance.

Elsewhere, there have been updates from other food and drink retailers; SSP Group PLG (LON: SSPG), Dominos Pizza Poland (LON: DPP), Premier Foods Plc(LON: PFD) and Hotel Chocolat Group Plc (LON: HOTC).

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.