Compass share price: Catering firm lifts dividend after ‘another good year’

on Nov 26, 2014
Updated: Oct 21, 2019
Listen, Wednesday, November 26: Compass Group (LON:CPG) has lifted its annual dividend by over a tenth after delivering growth in both sales and profits.
The world’s largest catering firm, which serves around three billion meals a year, said in a statement today that pretax profits had risen 5.4 percent to £1.16 billion in the 12 months to September 30, while revenues had totalled £17.1 billion, up 4.1 percent on last year on an organic basis. Sales were 2.8 percent down on a reported basis due to the significant strengthening of sterling during the period. Nevertheless, organic growth had been driven by “good levels of new business wins and high retention rates”, Compass noted.
Regionally, the company said organic revenue growth in the US had been strong and accelerated in the second half of the financial year, while conditions in Europe and Japan had continued to improve and the group had achieved a 20 basis point margin improvement in these regions. It also reported accelerating growth in emerging markets as its push towards outsourcing continued.
Citing ‘another good year’ for the group, Compass lifted its annual dividend by 10.5 percent to 26.5p per share.

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CEO Richard Cousins stated: “We generated good levels of cash flow, which has allowed us to reinvest in the business and reward shareholders through a proposed increase in the dividend alongside our ongoing £500 million share buyback. We also optimised our balance sheet and returned a further £1 billion to shareholders through a special dividend announced in May.”
Looking ahead to next year, Cousins said that the pipeline of new contracts was ‘healthy’ and the company expected to see further good performances in all regions.
*h*Annual results fail to impress investors*h*
Despite today’s upbeat report, Compass’ share price has edged lower. As of 09:37 GMT, the stock was changing hands at 1,073.00p – 0.09 percent down on the day.
Of the 19 analysts projecting 12 month price targets for the FTSE 100-catering firm for the Financial Times, the median target is 1,070.00p, with a high estimate of 1,275.00p and a low of 950.00p.
According to the FT, as of 22 November 2014, the consensus forecast amongst 40 polled investment analysts covering Compass Group has it that investors should hold their position in the company.
As of 10:22 GMT, Wednesday, 26 November, Compass Group plc share price is 1074.50p.


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