World's biggest catering group reports 7% rise in full year profits, boosted by growth in US and emerging markets
Compass has been boosted by growing demand for its services in north America and emerging markets, and plans to return another £400m to shareholders, a figure slightly less than expected.
The world's biggest catering company reported a 7% rise in full year profits to £1.09bn and said it was in line to meet expectations for 2013. Almost half its revenues now come from across the Atlantic, and it has been cutting operations in Europe - particularly Spain, Italy and Portugal - as the region continues to struggle with its financial crisis. Chief executive Richard Cousins said:
We've seen particularly good trading in north America and fast growing and emerging markets, and the outlook in both regions is encouraging. Overall the prospects for the business around the world are good and I remain confident that we will continue to drive revenue and margin growth.
But the company's shares have been hit by a bout of profit taking, not least because the £400m buyback is around £100m less than the City had been hoping for, and have fallen 12.5p to 696.5p. Analysts remained positive, with Simon French at Panmure Gordon saying:
The future prospects of the group remain encouraging and the group is confident of delivery against market expectations in 2013. It has committed to returning another £400m to shareholders via a share buyback over the next 12 months, slightly shy of the £500m we were hoping for but should be well received nonetheless.
We think the stock is well placed to sustain relative outperformance given the operational momentum and cash returns to shareholders.
Overall, the FTSE 100 has slipped 5.06 points to 5743.04 after worse than expected UK borrowing figures. The market seems to have taken in its stride the fact that the eurogroup failed to agree - yet again - on how to solve Greece's financial crisis. Another meeting is due on Monday. Investors have also shrugged off US Federal Reserve chairman Ben Bernanke's warnings about the fiscal cliff, the forthcoming tax rises and spending cuts.
Johnson Matthey is leading the fallers, down 146p at £21.79 after it issued a cautious outlook statement. The company makes catalysts to control car emissions, and point to weak European and US markets - for trucks in particular.
But British Land has climbed 11p to 526p in the wake of Tuesday's results, with Morgan Stanley moving from equal weight to overweight.
A number of major companies have seen their shares go ex-dividend including Vodafone, down 2.1p to 160.2p, and Vedanta Resources, 16p lower at £10.67.
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