Compass Group Sees Slower Sales Growth in Europe, UK

Compass Group says it expects to deliver strong first half earnings despite slowing sales from key markets in Europe and the United Kingdom.

The world's biggest catering group said in a trading update that total revenue growth is expected to be around 8.5% in the first half of the year, with organic growth - which excludes acquisitions - of around 5%, driven mostly by further good performances in North America and emerging markets.

The figures trail the pace of advance for last year, however, as "the current economic uncertainty is likely to continue to put pressure on like-for-like volume in some regions" the group said in Tuesday's trading update.

Operating profit margin is expected to be at the same level as the first half of last year and Compass continues to see good levels of free cash flow conversion.

Looking forward into the second quarter, while the current economic uncertainty is likely to continue to put pressure on like-for-like volume in some regions, the group remains positive about the opportunities to grow the business and it is encouraged by the pipeline of new business. It is well placed to capitalise on the significant structural growth opportunities in both food and support services around the world and it is increasingly expanding its presence in fast growing and emerging markets, which remain a focus for future growth.

The contract foodservice provider has continued to see good levels of new business wins and a consistently high level of retention across the group. Overall, like for like revenue growth is positive, although it is below the levels of the first half of last year, as challenging economic conditions continue to impact like-for-like volume in the UK and parts of Europe.