LONDON: Compass Group Plc., the world's biggest caterer, shrugged off a 5 million pound ($8 million) hit from the earthquake and tsunami in Japan to report a better-than-expected first-half operating profit.
Compass, which feeds office workers, the armed forces and schoolchildren, said on Wednesday it had made a good start to the year, delivering strong organic revenue growth and a further improvement in its margin.
"After absorbing the expected profit impact of the tragic events in Japan, our expectations for the full year remain unchanged," Chief Executive Richard Cousins said.
The FTSE 100 group, which also provides catering services at major sporting events and entertainment venues, said its underlying operating profit for the half year to end March rose 11.8 percent on a constant currency basis to 567 million pounds ($923 million) versus an average forecast of 558 million, according to a Thomson Reuters poll of five analysts.
Compass said the earthquake and tsunami in Japan knocked 5 million pounds off its earnings, affecting the last three weeks of the period, and the group estimates it will result in a reduction in second-half profit of 20 million pounds.
The group, whose clients include London's 02 Arena, the Bank of England and Chelsea Football Club, said its operating margin improved by 20 basis points to 7.2 percent as it focused on cutting food costs by streamlining its product and supplier base and reducing waste.
Compass, which serves 4 billion meals each year in over 50 countries, said it was targeting expansion in emerging markets having spent 300 million pounds on acquisitions this year.
The group is paying an interim dividend of 6.5 pence, up 30 percent, France's Sodexho the world's No.2 caterer, last month raised its full-years sales target on the back of a healthy order book and stronger-than-expected first half.
Shares in Compass closed on Tuesday at 579 pence, valuing the business at 11.1 billion pounds.
Liberum Capital said Compass had produced a good set of results, slightly ahead of forecasts.
"Compass is delivering in terms of good organic growth compounded by the ability to fund acquisitions out of annual cash generation which can add 4 to 5 percent to the group's turnover," said Liberum analyst Nigel Hicks.
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