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Despite what looks like a period of treading water for Johnson Matthey, Charles Stanley is expecting the company to whack the interim dividend up from 15.7p last year to 22.2p this. "This would not be too surprising. At the release of its preliminary results for the year ended March 31st Johnson Matthey announced a special dividend payment of 100p per share, in addition to a final dividend payment of 40p per share. The rationale behind the special dividend payment was continuing strong growth in both profits and cash flow and the belief that the group has 'ample resources' to fund these expenditures," writes Rae Ellingham of Charles Stanley. Johnson Matthey is a world leader in emissions control technologies, e.g. catalytic converters, so it does have exposure to the struggling French motor car industry, which might persuade the board to be a bit more careful with the divi.
Contract caterer Compass will give investors food for thought on Wednesday when it releases full-year results. The market has pencilled in a figure of £16,869m for revenue, which is a lot of sausage rolls and crudités in anyone's language. Profit before tax is expected to break through the billion-pound barrier to £1,074m. Earnings per share are tipped to be around 42.37p, with the full-year dividend roughly half that amount at 21.18p. Strong showings in North America plus Fast Growing & Emerging regions should compensate for soft markets in Europe and Japan. Panmure Gordon is hoping for an update on plans to return additional cash to shareholders and believes the market would "welcome a commitment of a further £500m" by the end of fiscal 2013, which, if done in the form of buy-backs, would enhance earnings per share by around two or three per cent. Platinum refiner Johnson Matthey's half-year results are expected to see the company unveil a 1.5% decline in revenue to £5,810m while operating profit is predicted to be virtually flat at £213.5m.
Compass Group: Investec raises target price from 740p to 800p, buy recommendation kept.
Compass Group: Deutsche Bank raises target price from 740p to 760p, buy recommendation remains unchanged.
Catering giant Compass (CPG) reports finals on Wednesday, and after a year of solid performance and growth the big question is whether this can be maintained. Broker Oriel Securities expects that the results will show the good progress that has driven the share price continuing, with outperformance from North America and Emerging markets contrasting with difficult trading in Europe. The broker also says the shares offer solid attractions and should continue to perform well, so while Compass will almost certainly get the benefit of any doubt regarding the European underperformance, it will need to show that the consequential restructuring in the region is yielding or will yield an improvement.
In a report issued yesterday analysts at Charles Stanley downgraded their view on shares of contract caterer Compass Group, to hold from buy. Thus, they pointed out how: “Over the last 12 months the Compass Group share price has risen by 30% and is near record highs. “Compass Group will be publishing its FY12 results on 21st November and today, it has issued a trading update for the year ended 30 September 2012. As expected, the Group has delivered a good performance in quarter four and for the year organic revenue growth of about 5.5% is as expected with strong performances in North America and Fast Growing & Emerging regions offsetting a weak performance in Europe & Japan.
Compass, the world’s largest catering company, has proved an impressive investment through the financial crisis, with the shares up almost 200 per cent from their 2008 lows, but even this most defensive of companies cannot escape the fallout from the Eurozone debt crisis. Compass has responding by saying it will shrink its European business to maintain profitability, but the unit is relatively small. The group’s trading update was very positive. Compass said that it expected organic revenue growth of 5.5 per cent for the full year ending September 30. This was a touch ahead of analysts’ expectations following growth of 8 per cent in North America and 12 per cent in emerging markets. There was, however, negative like-for-like growth in some parts of Europe. The caterer also said it had a strong pipeline of potential new contracts. The shares certainly aren’t cheap, trading on a 2013 earnings multiple of 14.9 times and yielding a prospective 3.5 per cent in 2013. However, they trade at a discount to French peer Sodexo, at 16.7 times. Compass’s increase in its dividend over the last few years has also outpaced the wider market. Management continues to deliver in tough times, the group’s geographical footprint is impressive and the outsourcing trend is supportive. However, given the market backdrop, the shares are now a hold, The Telegraph´s Questor team says.
Seymour Pierce has turned less positive on Compass Group, despite the contract caterer's fourth quarter numbers coming in ahead of expectations. "Compass reported organic revenue growth of over 6% in the quarter and of around 5.5% for the twelve month period to September 30th 2012 driven by good levels of new business wins and high contract retention rate. With the impact of acquisitions this is expected to result in constant currency growth of 8% which is in-line with our expectations," Seymour Pierce's Kevin Lapwood writes. "Group margin improved slightly and, as a result operating profit is expected to be up by around 8%. This is in-line with our current estimate," Lapwood added. According to the broker's calculations, the company's £0.5bn budget to buy back shares should be blown by the end of the year, at which point the questions becomes: "is there more to come?" Although the net debt to equity ratio is still healthy, by the broker's reckoning, at less than 30%, the need to spend money to sort out Southern Europe may make the company more cautious over announcing a further buyback. The group has announced a restructuring of its Southern Europe operations which should yield £95m of cost savings a year a couple of years down the line. The restructuring will lead to exceptional cash charge of £150m over two years and a non-cash exceptional charge of £195m. The broker is making no change to its forecasts for the current financial year, which puts the shares on an earnings multiple of 15.5.
Seymour Pierce has turned less positive on Compass Group, despite the contract caterer's fourth quarter numbers coming in ahead of expectations. According to the broker's calculations, the company's £0.5bn budget to buy back shares should be blown by the end of the year, at which point the questions becomes: "is there more to come?" Although the net debt to equity ratio is still healthy, by the broker's reckoning, at less than 30%, the need to spend money to sort out Southern Europe may make the company more cautious over announcing a further buyback. The group has announced a restructuring of its Southern Europe operations which should yield £95m of cost savings a year a couple of years down the line. The restructuring will lead to exceptional cash charge of £150m over two years and a non-cash exceptional charge of £195m. The broker is making no change to its forecasts for the current financial year, which puts the shares on an earnings multiple of 15.5.
Positive Points Trading in the fourth quarter was summarized as "good." Positive trading momentum for its North American and Emerging Market regions had continued. For North America, management highlighted that "the outsourcing culture is vibrant and we have excellent momentum in the business there." In the Emerging Markets, organic revenue continued to grow at a fast pace, driven by good new business wins and like for like revenue growth across most countries. While trading, particularly in Southern Europe, had deteriorated, actions to try and counterbalance the decline were being taken. Group diversification continues to provide a key ingredient, with a 'balanced portfolio' of client industries – both cyclical and defensive – combined with a wide geographical spread playing a significant part in the group’s business model. Management retains a tight rein on costs, with the group's efficiency programme ongoing. Small bolt-on acquisitions are being pursued, while management also continues to push the group's services into non-food support services. Compass has invested £200 million in acquisitions in the financial year to date. Investor returns continue to be increased. A £500 million share buy-back programme is currently being pursued. Hopes that additional share buy-back scheme(s) will be announced persist. A progressive dividend policy is being followed. A 10.8% increase in the half year dividend was previously announced.
Negative Points Trading for the group's Europe & Japan business remains challenging. Management highlighted increasingly negative like for like volume trends, which had accelerated in the second half, and are now running at minus 2% to 3%. Within this, the Southern European countries of Italy, Spain and Portugal had seen like for like volume declines of around 5%. The challenging European conditions were also putting some modest pressure on contract retention, with a small increase in client closures seen. While the recovery in Japan was highlighted as "ongoing", management also noted that "prior year comparatives were now becoming stronger." Food cost inflation has previously been highlighted by management. The printing of money by many Central Banks across the world has arguably pushed up soft and hard commodity prices across the board. Unseasonal weather is also creating volatility. Volatility in currency markets can work against the company. Competition across the global industry remains intense.
Financial Highlights: Organic revenue growth of 5.5% expected. In the fourth quarter, organic revenue growth is expected to be around 6%, up from 5.7% in the third quarter. Operating profit increase of approximately 8% forecast. Profit margin expected to be slightly ahead of last year. Its Europe & Japan business had seen increasingly negative like for like volume trends, which had accelerated in the second half and are now running at minus 2% to 3%. The accelerated efficiency programme across Europe will incur an exceptional cash cost of £100 million in 2012 and £50 million in 2013.
Full year trading update: Compass cuts its European operations. Management highlighted a 'good' fourth quarter, with positive trading momentum in North America and the Emerging Markets having continued. As such, and in line with the board’s own expectations, organic revenue growth is expected to be around 5.5% for the full year. Organic revenue in North America is expected to be up over 8% for the period, and over 12% for the Emerging Markets. On the downside, management pointed to 'worsening' economic conditions in Southern Europe (4% of group revenue). As such, the business is being cut, with revenues from its business in Southern Europe expected to reduce from £800 million to approximately £600 million. £95 million of annual cost savings by 2014 are now being targeted in order to help counterbalance the reduced activity. Nonetheless, the Chief Executive noted that "overall, the prospects for the business around the world are good and I remain confident that we will continue to drive revenue and margin growth." In all, defensive attributes, strong cash generation and favourable geographical positioning continue to be valued, with consensus analyst opinion currently denoting a strong buy........but always dyor first
Compass Group is an international food and support services company. It operates in around 50 countries, employs over 470,000 people and serves over 4 billion meals every year. The Company specialises in providing food and a range of support services across the core sectors of Business & Industry, Defence, Offshore & Remote Site, Healthcare, Education, Sports & Leisure and Vendin
Jimro8 - this link may help http://moneyterms.co.uk/share-buy-back/
Compass Group Buy 04-Sep-12 £21,038.70 Susan Murray 3,000 @ 701.29p
What does it mean "share buy back for cancellation". And is it a food thing for us who own shares in Compass ?
Catering group Compass had a barnstorming third quarter, underscoring its defensive credentials in turbulent times. There was even an acceleration in organic growth to please investors, with like-for-like sales rising 5.7 per cent compared with 5 per cent in the first half of the year. Analysts had been expecting a fall to about 4.8 per cent. America and emerging markets grew strongly, with several large new contracts starting up. Although no figures were released in Thursday’s trading update, Compass said its operating profit margin was slightly above the same period last year. The group’s balance sheet remains strong and the company’s buy-back continues. In the period, Compass bought back 40m shares with a value of £256m. Food price inflation is back with us but Questor is relatively unconcerned, the group has shown over the past few years that it can manage price spikes by changing its menus. The shares were last tipped as a buy on April 1 at 655p and, trading on a December 2012 earnings multiple of 15.6, falling to 14.3, the rating remains buy, says The Sunday Telegraph´s Questor team.
Positive Points Overall, the operating profit margin in the third quarter was slightly above the same period last year. Free cash flow conversion was strong according to management. Good trading momentum for its North American and Emerging Market regions was again reported. Group diversification continues to provide a key ingredient, with a 'balanced portfolio' of client industries - both cyclical and defensive - combined with a wide geographical spread playing a significant part in the group's business model. Management retains a tight rein on costs, with the group's efficiency programme ongoing. Small bolt-on acquisitions are being pursued, while management also continues to push the group's services into non-food support services. Compass has invested £189 million in acquisitions in the financial year to date. Investor returns continue to be increased. A £500 million share buy-back programme is currently being pursued. A progressive dividend policy is being followed, with a 10.8% increase in the half year dividend announced.
Negative Points Economic difficulties in Europe again dragged on performance. Organic revenue for the region declined by 0.9%. Food cost inflation has previously been highlighted by management. The printing of money by many Central Banks across the world has arguably pushed up soft and hard commodity prices across the board. Unseasonal weather is also creating volatility. Volatility in currency markets can work against the company. Competition across the global industry remains intense.
Financial Highlights: Including the contribution from acquisitions, constant currency revenue increased by 7.8%. Q3 Organic revenue growth of 5.7%. Organic revenue growth of 5.3% for the nine months to 30 June 2012.
Third quarter update: The group once again underlined its credentials for defensive growth. Generating approximately two thirds of company revenues, growth for its North American and Emerging Markets divisions led the way. Overall group organic revenue growth of 5.7% was reported (5.3% for the nine months to 30 June 2012), with North America growing by 9% and the Emerging Markets at 12.2%. The roll out of its Ascension Health multi-services contract assisted in North America, while strong growth in Australia, driven by the energy and extraction sector, assisted its Emerging Markets business. On the downside, its combined European and Japanese division suffered an organic revenue decline of 0.9%, impacted by the tough economic environment in Europe. In all, defensive attributes and favourable geographical positioning continue to be valued,
Compass Group is an international food and support services company. It operates in around 50 countries, employs over 470,000 people and serves over 4 billion meals every year. The Company specialises in providing food and a range of support services across the core sectors of Business & Industry, Defence, Offshore & Remote Site, Healthcare, Education, Sports & Leisure and Vending.
From providing finger food to the Welsh Assembly to serving strawberries at Wimbledon, Compass’s operations make it the largest catering group in the world. Last week’s interim numbers not only showed the defensive nature of the business but the cash-generating ability that makes its shares attractive. In the first half, underlying free cash flow rose 5.4 per cent to 368m pounds. This is an important measure of financial performance as it is from this pot that dividends and buy-backs come from. The company has been focusing on cutting costs, although the operating margin was flat in the first half at 7.2 per cent. An improvement is likely in the second half. The US is shaping up nicely and the company generates about 44 per cent of business from the region. Emerging markets are also likely to continue to grow, with organic growth in the segment jumping 12.4 per cent in the first half, more than making up for a 0.4 per cent fall in like-for-like in Europe. Indeed, revenue from fast-growing markets is now almost half the revenue generated from Europe. Trading on a September 2012 multiple of 14.3, falling to 13.1 in 2013, compared with a historical forward , earnings average of 16.7, the shares are a buy, Questor says.
Richard Cousins, Group Chief Executive, said: "Compass has had a positive start to the year, delivering revenue growth of nearly 9% and organic growth of 5%. We have continued to see high levels of new business wins and retention across the Group, with particularly good trading momentum in our North America and Fast Growing & Emerging regions. We are continuing to generate cost efficiencies, which are enabling us to invest in the many growth opportunities we see across the Group, with increasing emphasis on emerging markets. Looking forward, whilst we are not immune from the current economic difficulties in Europe, the fundamentals of the business are strong and I remain excited about the opportunities for future growth and margin progression." Sir Roy Gardner, Chairman, said: "These results demonstrate that the business continues to make good progress in delivering quality, sustainable growth. Despite the ongoing headwinds of food cost inflation and challenging economic conditions in Europe, we have achieved good rates of revenue and profit growth. We remain committed to rewarding shareholders at the same time as investing in the future of the business, and we have therefore increased the interim dividend by 11%."