(Reuters) - Compass Group Plc beat expectations with a 6.9 percent rise in organic first-quarter revenue helped by sporting and music event contracts, sending shares in the world’s largest caterer to lifetime highs.
Compass shares were up 4.48 percent to 17.72 pounds in London at 1127 GMT, having hit an all-time high of 17.77 pounds.
“An excellent start to the year. But it’s only a quarter,” Chief Executive Officer Dominic Blakemore said.
The result topped a Jefferies forecast of 5 percent growth while analysts at Morningstar said, given waning European economic conditions, Compass’ 6.4 percent organic growth there was “a shock”.
The provider of 5.5 billion meals a year for office workers, soldiers and school children in more than 50 countries said it expects organic growth for the year to be slightly above the middle of its 4-6 percent guidance.
“We remain a touch cautious and conservative in the outlook,” Blakemore said, noting factors including Brexit, the aftermath of the U.S. government shutdown and street protests in France.
(Graphic: European caterers seek much-needed respite link: tmsnrt.rs/2UJQoKv).
Compass has been cutting food, labour and overhead costs and has raised prices to help safeguard its margins.
Regarding Britain’s pending departure from the European Union, Blakemore said: “We’re seeing higher inflation. We’re seeing a slowdown in some client decision-making and hiring freezes ... weakened consumer sentiment (is) resulting in negative volumes, which have continued through the first quarter in the UK.”
A bright spot was North American sporting and music events, a sector in which it saw organic revenue growth of 8 percent in the first quarter.
Interim Finance Chief Palmer Brown said Compass did not expect a material impact from the U.S. government shutdown which ended on Jan. 25 or its aftermath.
“It’s not a lot (of business for Compass), Brown said.
Reporting by Samantha Machado, Noor Zainab Hussain and Sangameswaran S in Bengaluru; editing by Arun Koyyur and Jason Neely