Compass points to return to growth in Europe

The company said yesterday organic revenue growth – which excludes acquisitions – in North America grew by 8.2 per cent, though it expected growth to slow to 6 per cent in the second half of the year.

“North America, which is obviously our flagship business, is doing particularly well growing by 8 per cent – that’s probably not quite sustainable but we think 6 per cent probably is,” said CEO Richard Cousins.

The company also reported Europe & Japan, which accounts for 31 per cent of group revenue, returned to growth for the first time since 2008.

“Europe has become the story for us, but we did have a tough few years and now we are accelerating. In the first half, we have grown by just under 1 per cent, in the second half, we will do better than that and in 2016 we think we will do better again,” said Cousins.

Compass said underlying group revenue rose to £9.1bn for the period ended March 31. It raised its interim dividend by 11.4 per cent to 9.8p.

Underlying pre-tax profit climbed 4.9 per cent to £637m, in line with analyst expectations. The company is expected to report full-year pre-tax profit of around £1.2bn, according to a poll of 20 analysts.

However, Compass said it remained cautious about the economic environment in some emerging markets and lower commodity prices impacting its Offshore & Remote business.

“The biggest ones would be Brazil and Turkey, both of which are suffering from an economic slowdown but an acceleration in inflation. So that’s a difficult environment,” Cousins said.

He added the strength of sterling against currencies such as the euro and US dollar was now expected to have a small negative impact on revenue.