Revenue for the Group increased by 6.4% to £25.15 billion on an organic basis, which was above its target range of 4-6%. In North America the Group said its performance was “excellent” with broad based organic revenue growth of 7.7%. There was a growth of 4.1% in Europe with strong performances in the UK Defence and Sports & Leisure, offsetting Business & Industry volumes due to deteriorating business and consumer confidence in Europe, whilst the rest of the world grew 4.3% driven by strong performances in Turkey, India and Spanish-speaking LATAM.
Underlying operating profit increased by 4.7% (£84 million) on a constant currency basis. Operating profit margin remained at 7.4%.
The Group says its position for the future “remains strong” and expects 2020 organic growth around the mid-point of its 4-6% guidance range whilst maintaining its strong margin.
Against the backdrop of a deteriorating macro environment in Europe Compass has said it is taking ‘prompt action” to adjust its cost base. These actions, which have also been extended to certain Rest of World markets, result in non-underlying cash charges of around £160 million over 2019 and 2020, and a non-cash charge of £140 million.
Dominic Blakemore, Group Chief Executive,commented: “Compass has had another strong year. Organic revenue growth was 6.4%, ahead of our target range, thanks to excellent growth in North America and an improving performance in Rest of World. There was good growth in our European business with strong performances in UK Defence and Sports & Leisure offsetting weak volumes in Business & Industry. The Group margin during 2019 was maintained despite this more challenging trading environment in Europe.
“We are making good strategic progress through disciplined focus on our Performance, People and Purpose priorities and have continued to reshape our portfolio. Disposal proceeds have been reinvested in bolt-on acquisitions to further strengthen our food service offer and subsector approach, and in June we announced the proposed acquisition of Fazer Food Services, a leading food service business in the Nordics, which is a strong strategic fit with Compass.
“Despite this good performance, we are not immune to the macro environment. Deteriorating business and consumer confidence in Europe has impacted our Business & 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.
“In the longer term, we remain excited about the significant structural growth opportunities globally, the potential for further revenue and profit growth, combined with further returns to shareholders.“