Compass Group Strong organic revenue growth of 6.6%

Compass Group (LON:CPG) today announced Half year results for the six months ended 31 March 2019.

Strong organic revenue growth of 6.6%

· Excellent performance in North America with broad based organic revenue growth of 7.9%

· Strong Europe organic revenue growth of 5.5% driven by UK Defence contract wins and continuing good growth in Continental Europe

· Rest of World growth of 3.2% with continuing good performance in developing markets

Operating profit up 5.8% at £951 million

· Operating margin maintained at 7.5%

· Operating efficiencies offset higher mobilisation costs and investments to support strategic execution

Strong cash generation, earnings and dividend growth

· Free cash flow increase of 14% to £530 million

· Interim dividend up 6.5% in line with constant currency earnings per share growth

Executing our strategy

· Strengthened and simplified our portfolio – completed several disposals and spent £370 million on bolt-on acquisitions during the period

· Implementing best practice, initially in our largest markets, for our Performance strategic priority

· Good momentum behind our People and Purpose strategic priorities

Statutory results

· Revenue, operating profit and earnings per share growth on a statutory basis was higher than underlying mainly due to the positive impact of foreign exchange during the period

Chief Executive’s Statement

Dominic Blakemore, Group Chief Executive, said:

“Compass had a strong first half. Organic revenue growth was 6.6%, driven by excellent growth in North America, a strong performance in Europe, particularly in UK Defence, and good growth in Rest of World.

We maintained our strong margin whilst absorbing the increased mobilisation costs in Europe from the higher growth as well as strategic investments being made by the business. Our focus on efficiencies and pricing have continued to offset inflation and helped mitigate ongoing volume weakness in the UK and Continental Europe.

We have continued to invest in the business to support the exciting long term growth opportunities. During the first half we spent £370 million on bolt-on acquisitions, principally in North America. We have made further progress with our disposal programme and have now exited c. 2% of revenues of non-core businesses. This active portfolio management had a positive impact on the margin in the first half.

We are making good progress with our strategy of focusing on Performance, People and Purpose. In relation to our Performance priority we have codified our best practices around the Group and are now using our Management and Performance (MAP) framework to implement them across our larger markets. Increasingly, these initiatives are supported through technology and digital solutions which help drive efficiencies, optimise performance or improve the consumer experience. We have also begun the roll out of key People and Purpose initiatives.

Following the very strong first half performance we now increase our organic revenue growth guidance for the full year and expect to deliver organic revenue growth and margin progression similar to 2018. We remain mindful of the macro uncertainty in parts of Europe and its impact on the business.

In the longer term, we continue to be excited about the significant structural growth opportunities globally, the potential for further revenue, profit and margin growth, combined with further returns to shareholders.”