Compass hands back £1 billion to shareholdersWednesday 14 May 2014 09.01
Compass, the world's biggest catering firm, said it would return £1 billion to shareholders through a special dividend as strong business wins in North America helped push first-half profit up 5.7%.
The British group employs over 500,000 people to feed office workers, soldiers and school children in some 50 countries.
It said today that adjusted pretax profit for the six months to March 31 rose to £608m versus £604m forecast by analysts.
A potential payout at Compass had been flagged by some analysts due to the firm's strong cash generation and preference for organic growth alongside small bolt-on acquisitions.
The firm, which is already in the middle of a £500m share buyback programme, said the move would put net debt to EBITDA at a ratio of around 1.5 times, supporting its policy of maintaining strong investment grade ratings.
On top of the £1 billion pound payout, which takes returns to shareholders since 2006 to £6 billion, Compass also raised its interim dividend by 10% to 8.8 pence per share.
Chief executive Richard Cousins said its full-year expectations remained unchanged and that an encouraging pipeline of new contracts left it confident of a good second half.
"Looking forward, the outsourcing proposition remainscompelling and I'm positive about the opportunities for furtherrevenue and margin progression," Cousins said in a statement.
First-half revenue grew 4.2% to £8.7 billion, led by North America, its largest market worth almost half of group turnover, where it signed new deals with universities, hospitals and firms such as L'Oreal, DreamWorks and Nomura.
Revenue in its smaller Fast Growing & Emerging markets region also grew strongly, with demand in Brazil, Turkey and China offsetting slowing sales in Australia's resources sector.
The group said it had also seen signs of improving economic conditions in Japan and Europe, where it has exited weak contracts and cut costs.