Compass Group has reported third-quarter sales growth of 4%, buoyed by strong performances in the US and emerging markets.
However, the catering giant admitted economic conditions in Europe and Japan “remained difficult”. It said sales fell 3.4% in the region in the three months since 31 March.
“While we continue to see good levels of new business in some countries, the retention rate has been impacted by the cumulative effect of our planned exit of certain uneconomic contracts and business closures,” the company said in a trading update.
“However the actions we have taken to reduce cost have enabled us to offset the impact on profitability. This cost reduction plan together with the on-going efficiency programme has enabled us to deliver an increase in the operating profit margin in the third quarter of over 50 basis points compared to the same period last year,” it added.
Trading was buoyant in North America, with sales growth of 7.7%. In Fast Growing & Emerging markets, such as Australia and Turkey, sales grew by 10%.
“As we look out to the remainder of the year, our overall expectations for the full year remain positive and unchanged,” Compass added.
“The pipeline of new contracts in North America and Fast Growing & Emerging remains healthy and we expect to see good performances in these regions. The pressure we have seen on like-for-like volumes in Europe & Japan is expected to continue, but we remain confident that the actions we are taking on cost will enable us to manage this.
“Looking to the longer term, we remain very optimistic about the structural growth potential of this market and Compass’s strong position in that,” the company added.
No comments yet