Catering giant Compass Group has reported a 6.4% increase in global revenue to £25.15bn (€29.4bn) in 2019, with operating profit up to £1.88bn (€2.2bn).
The company said that the growth, which was ahead of its target range, came despite weak volumes in business and industry catering in its European business.
That decline was offset by better performances in its UK defence and sports and leisure businesses. There was also strong 7.7% revenue growth in its North America business, as well as improvements in the rest of the world.
Organic revenue growth in Europe was 4.1% although it slowed in the second half of the year. The business had revenue of nearly £5.9bn (€6.9bn) in 2019, with underlying operating profit of £368m (€430m), down from £395m (€461.6m) the year before. New contract wins in Europe during the year included developer Landsec in the UK, Cercle National des Armées in Paris, and Hôpitaux Robert Schuman in Luxembourg. Contract extensions include Chelsea Football Club in the UK.
While Europe accounts for 23.3% of Compass Group’s revenue, North America is a much bigger business and now generates a 62.4% share. It had revenue of £15.7bn (€18.4bn) in 2019, with profit rising to almost £1.3bn (€1.5bn). Unlike in Europe, there was strong growth in the business and industry sector, with new contract wins including the Canadian Imperial Bank of Commerce, American Airlines headquarters and Humana Inc. The group also enjoyed strong growth in the healthcare sector.
Group chief executive Dominic Blakemore said: “Despite this good performance, we are not immune to the macro environment. Deteriorating business and consumer confidence in Europe has impacted our business and industry volumes, new business activity and margin. Given these trends, we are taking prompt action in Europe and certain rest of world markets to adjust our cost base. As well as offsetting short-term margin pressures, by taking this action from a position of strength, we will be better placed to capitalise on future growth opportunities.
“Our expectations for the group in 2020 are positive although we remain cautious on the macro environment in Europe. The pipeline of new contracts in North America is strong and Rest of World is growing well, although we are seeing some hesitation in decision making in Europe. Thanks to the Group’s geographic and sectoral diversity, we are nevertheless confident of continued progress. As such we expect organic growth to be around the mid-point of our 4-6% range whilst maintaining our strong margin1 as we mitigate the expected volume pressures through our cost actions.”