Compass Group insists it “continues to have a good year” after giving a third quarter trading update that revealed organic revenue grew 5.6% for the nine months to 30 June 2016.
The contract catering giant said that its focus on growth is driving strong levels of new business wins and retention remains good across all regions. Organic revenue grew by 5.2% in the third quarter, reflecting strong net new business in North America, good growth in Europe, and a challenging environment in the rest of the world.
The company noted that it has been taking restructuring actions to offset the impact of challenging market conditions in its Offshore & Remote business and in some emerging markets.
Overall, the operating margin for the nine months to 30 June 2016 was flat before restructuring costs and down 10 basis points including restructuring costs.
Performance in the North American region continues to be very good, with organic revenue growth of 8.3% in the quarter and in the nine months to 30 June 2016, while in Europe the trends seen in the first half of the year continued in the third quarter.
Organic revenue growth was 3.7% in the third quarter and in the nine-month period to 30 June 2016. “We continued to deliver efficiencies which allowed us to invest further in sales and retention,” the company stated. “Margins increased slightly in the nine months to 30 June 2016.”
In the rest of the world, organic revenue grew by 0.2% on a nine-monthly basis and declined by 2.8% in the third quarter. Trading in its Offshore and Remote business remained challenging, with revenues down 9% in the quarter as large construction projects in Australia are coming to an end.
Its non-commodity related business grew by 4% in the third quarter, with good rates of net new business across the region partially offset by continued weakness in Brazil.
Summarising its results, Compass said that it had enjoyed a good third quarter and overall its expectations for the full-year remain unchanged, though it did warn that despite being pleased with the recovery in Europe, the macroeconomic outlook has become increasingly uncertain.
“We remain focused on costs and efficiencies, which combined with the expected restructuring savings, will allow us to deliver a flat operating margin for the full year including restructuring costs,” Compass said.
“Looking to the longer term, we remain excited about the significant structural market opportunity globally and the potential for further revenue growth, margin improvement and continued returns to shareholders.”