Compass Group PLC Reports 15 Percent Gain In Half Year Profit

Compass Group PLC reported a higher profit for its first half, boosted by strong revenue growth, mainly in North America and rest of the world markets. The company also announced a 30 percent increase in interim dividend, and backed its full year expectations, including the impact of tragic events in Japan.

Six-month pre-tax profit increased 15 percent to 528 million pounds (about $857.39 million) from 459 million pounds last year. Underlying pre-tax profit, which excludes certain items, grew 14.9 percent to 531 million pounds from prior year's 462 million pounds.

Underlying earnings per share grew to 20.3 pence from 17.9 pence in the previous year.

In the first half, revenue increased 10.8 percent to 7.87 billion pounds from 7.10 billion pounds in the year-ago period. The revenue growth was 9.9 percent in constant currency. Organic revenue growth was 5.7 percent, adjusting for the impact of acquisitions and disposals and normalizing the impact of additional working days in North America.

Revenues from North America rose 12.8 percent from last year, reflecting good net new business and some like for like revenue recovery. The growth was a mere 1.6 percent in Continental Europe as economic conditions in some countries remain challenging. In UK & Ireland, revenues were 8.9 percent higher, including the impact of the acquisition of the VSG Group.

The growth was 20.6 percent in rest of the world, with strong results mainly in India and Australia. The company noted that the earthquake and tsunami in Japan has caused disruption to parts of the country's manufacturing base, and volumes in offices at the company's client sites have been impacted by 10 to 15 percent.

Chief Executive Officer Richard Cousins said in a prepared statement, "In addition to good organic growth, infill acquisitions are now making an important contribution to the top line and we have committed £300 million to M&A so far this year. This includes a significant investment in expanding our business in emerging markets."

Further, the company announced a 30 percent increase in interim dividend to 6.5 pence, to be paid on August 1, to shareholders on the register on July 1.

Looking ahead to the second half, the company said it is encouraged by the pipeline of new business and the ongoing opportunities to generate further efficiencies. The company also said its expectations for the full year remain unchanged, after absorbing the expected profit impact of the tragic events in Japan.

The company expects that the events in Japan would reduce profit in the second half by around 20 million pounds.

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