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Catering giant Compass Group (CPG) has posted a 5.2% rise in first quarter revenues, driven by strong performance in North American and new business wins.

Ahead of its AGM this morning, it said organic revenue in North America increased by 7.5%, with particularly strong growth in business & industry, healthcare and education.

However, in Europe organic revenue was flat year on year as it was impacted by the expected volume softness in business & industry and a less favourable sports & leisure calendar. These headwinds were offset by a good performance from Turkey and our Central and Eastern European region.

Organic revenue in Rest of World increased by 4.7% supported by good levels of growth in Australia and LATAM.

Compass Group’s cost action programme, which was announced in November, is progressing “as expected” and the benefits are offsetting the anticipated impact of lower business & industry volumes in Europe.

The group made £40m of acquisitions in the first quarter, while completing the acquisition of Fazer Food Services on 31 January 2020 for an initial cash sum of €420m, and said there “continues to be a pipeline of opportunities” for more bolt-on acquisitions.

It also recently sold 50% of its Japanese Highways business for a consideration of £55m, with agreement to sell the remainder over the next three years. It expects to make further progress with disposals throughout the year.

Compass said its start to the year has been “encouraging” and our outlook for 2020 remains unchanged with organic growth around the mid-point of its 4-6% guidance range whilst maintaining our strong margin.

“In the longer-term, we remain excited about the significant structural growth opportunities globally, and the potential for further revenue and profit growth combined with further returns to shareholders,” it stated.

Morning update

Sugar substitutes producer Tate & Lyle (TATE) has issued a third quarter trading statement for the three months ended 31 December 2019.

It said the underlying performance “ was consistent with the first half and in line with our expectations”, while maintaining guidance for the for the year ending 31 March.

Its food & beverage solutions saw strong adjusted operating profit performance in the quarter. Sales in all regions were ahead of the comparative period as we continued to drive good price and mix management, with volume overall broadly in line. Sales growth was slower in Asia Pacific and Latin America, but it saw solid growth in North America and Europe, Middle East and Africa.

Sucralose also had sales and adjusted operating profit ahead of the comparative period reflecting good operational performance and the phasing of shipments from the first half into the quarter.

Its primary products division “remains on track to deliver steady performance in the full year”. In sweeteners and starches, profit was higher than the comparative period with strong performance in manufacturing and supply chain and good cost discipline more than offsetting lower sweetener demand from joint ventures and continued industrial starch softness. In commodities, profit was ahead of the comparative period due to the earlier phasing of annual contracts.

Its guidance for the year ending 31 March 2020 remains unchanged and the company continues to expect earnings per share growth in constant currency to be broadly flat to low-single digit.

Stock Spirits Group (STCK) has issued a trading update for the period from 1 October 2019 to 6 February 2020, ahead of its AGM today.

It said it remains “on track for the year as a whole”. As anticipated, with effect from 1 January 2020, there was a 10% increase in spirits excise tax in Poland, and a 13.2% increase in spirits excise tax in the Czech Republic. As a result, its businesses in both markets experienced exceptionally strong demand from our customers as they built up inventory in the run up to these changes being implemented.

Overall, the performance in both markets to date has therefore been significantly ahead of the same period last year. However, based on previous experience of such changes, it expects the current quarter will see some consequential impact from the strong first-quarter.

In Poland, the total vodka market recorded an increase in value by 4.8% and an increase in volume 2.3% against the same period last year, growth from both the flavoured and clear vodka segments.

December 2019 was Stock’s 32nd consecutive month of volume share growth. Value market share at the end of December 2019 was up to 29.7% compared to 27.9% last year.

The Czech Republic’s total spirits market grew in value by 6.4% and volume by 4.9%) during the quarter. Stock’s market share remained stable, with value market share at the end of December 2019 of 33.8%.

In Italy, the categories in which Stock operates all declined slightly year-on-year. However, Stock grew market share in brandy, clear vodka and flavoured vodka, maintaining stable value share to 6.8% at the end of December 2019 versus 7.1% last year.

Stock recently won the tender for Beam Suntory distribution rights in Italy and expects to commence distribution in April 2020, subject to the negotiation of the final agreement. The acquisition of Distillerie Franciacorta has also provided it with enhanced access to key distribution channels and consumption occasions, and this has been instrumental to winning the tender for Beam Suntory’s premium spirits portfolio.

Anheuser-Busch InBev (ABI) has announced today that chief financial and technology officer Felipe Dutra will step down from his role.

Fernando Tennenbaum has been appointed CFO, David Almeida will become chief strategy and technology officer and Nelson Jamel has been appointed chief people officer.

The changes will be effective after AB InBev’s annual shareholders’ meeting, to be held on 29 April 2020. Felipe Dutra will remain with the company during a transition period of several months after the succession is effective.

Carlos Brito, CEO, stated: “Felipe’s departure is bittersweet. For nearly 30 years, he has been a champion of our company and a fantastic partner to me and the members of our Senior Leadership Team as we grew the company. Felipe feels that now is the right time to embark on new projects, and we are respectful of his decision.

“Felipe’s contributions to AB InBev are hard to overstate. Since becoming CFO in 1999 of what was then Brahma, he has embodied the spirit of true ownership and has been the architect of our company’s financial strategy, our risk management policy and our drive to deliver best-in-class cash flow and shareholder value. Felipe’s contributions to our value creation are significant and wide-ranging.

“He has been the steward of our financial discipline, which has freed up resources to invest behind the organic growth of our business. He has played a key role in the creations of Ambev and InBev, as well as in our landmark combinations with Anheuser- Busch, Grupo Modelo and SAB. In the last few years, he has also driven the creation of our leading Technology function. Perhaps most importantly, he developed a strong bench of internal talent for both Finance and Technology as part of his legacy. We are very grateful to Felipe and wish him the best of luck in his future endeavors.”

Finally, supermarket-focussed real estate investment trust Supermarket Income REIT has reported its interim results for the six months ended 31 December 2019.

It reported a 7% total shareholder return for the period, to take the total return to 24% since the initial listing in July 2017

Its investment properties have been independently valued at £490.4m, up from £368.2m in June.

While its portfolio net initial yield was 5% reflecting yield accretive acquisitions. New assets average acquisition net initial yield of 5.2% versus portfolio average of 4.9%

It declared two quarterly dividends in the period totalling 2.9 pence per ordinary share and it is on track to deliver full-year target dividend of 5.8 pence per share

Chairman Nick Hewson commented: “I am delighted to report another period of solid performance by the Group during which we have generated a 7% total return for our shareholders.

“The contracted RPI rental uplifts in all our leases continues to provide inflation-protected income and allows us to deliver on our inflation-linked dividend growth targets.

“Since our IPO in July 2017, we have delivered a Total Shareholder Return of 24% for our shareholders. We continue to offer investors stable, long-term, inflation-protected income, supported by a compelling real estate opportunity.”

On the markets this morning, the FTSE 100 is up another 0.3% to 7,503.9pts.

Early risers include Premier Foods (PFD), up 2.9% to 36.8p, Marks & Spencer (MKS), up 2% to 184.3p, Compass Group (CPG), up 1.9% to 1,943p.

Fallers include PayPoint, down 3% to 970p, Domino’s Pizza Group, down 1.4% to 305.6p and Hotel Chocolat (HOTC), down 1% to 475p.

Yesterday in the City

The FTSE 100 ended the day up 0.6% to 7,482.5pts.

Imperial Brands (IMB) crashed 6.7% yesterday back to 1,821.6p after issuing a profits warning related to the regulatory crackdown on vaping in the US. It warned adjusted earnings per share will fall around 10% due to the phasing of inventory write-downs, mainly related to the US flavour ban.

Other fallers included AG Barr (BAG), down 2% to 596p, Ocado (OCDO), down 1.7% to 1,221.5p, PayPoint, down 1.6% to 1,000p, Marston’s (MARS), down 1.4% to 104.5p and B&M European Value Retail (BME), down 1.4% to 363.8p.

Domino’s Pizza Group jumped 4.3% to 310p after reporting a 3.7% revenue increase for the fourth quarter of the year to £352m.

Also on the up were McColl’s (MCLS), up 4.4% to 46.4p, McBride (MCB), up 2.4% to 65p, Hotel Chocolat (HOTC), up 2.1% to 480p, Premier Foods (PFD), up 2% to 35.7p and SSP Group (SSPG), up 1.7% to 675p.

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