Compass Group plc announced strong performance during the first half of 2001, the first reported results since the company's "demerger" from Granada Compass in February of this year. That followed the transitional merger of Compass Group and Granada Group (see V/T, July 2000), at which time the demerger was scheduled to take place within 12 months. Compass Group plc is an international foodservice and hospitality organization whose United States operations include Canteen (Charlotte, NC).
Overall, operating profit for the half was up 110 percent to $370 million, versus $176 million a year earlier. Profit rose 157% to $329 million, versus $128 million during the comparable period in 2000.
The organization regained its public company listing in February and has since been disposing of much of its hotel business to strengthen its position and provide resources to expand as a global leader in contract foodservice.
Compass Group continued on track to achieve planned synergies from the Granada merger, which are anticipated to be $28 million this year, including discounts for bulk purchasing and reduction in distribution costs.
In North America, turnover of $1.85 million was up 45% from $1.27 million, and operating profit of $86 million was up 56% from $55 million during the year earlier comparable period.
Compass Group acquired Morrison Management Specialists, Inc., the second-largest U.S. healthcare and senior living/retirement foodservice company, on April 3, 2001. The consideration paid by Compass Group for the Morrison share capital was $563 million; assumed debt totaled $63 million.
Morrison serves more than 475 clients in the healthcare and senior living markets through Morrison Healthcare Services and Morrison Senior Dining. In the fiscal year ended May 31, 2000, Morrison experienced a 20 percent increase in managed volume to $778 million and a 36 percent increase in revenues. The growth prospects in these markets, according to Compass Group, remain good.
On February 12, 2001, the company announced the terms of a recommended cash offer of $532 million to acquire the 66.7% of Selecta (a leading European vending company) not already owned by Compass Group. This was a strategic move, as clients are increasingly seeking the flexibility provided by combined manual foodservice and vending. The move brings Canteen Vending, a leader in the North American market, together with the number one vending company in Europe.
To date, 96.5% of acceptances have been received and a payment of $489 million was made in May 2001.
In November 2000, Compass Group acquired Beaver Foods for $100 million. Beaver Foods has annual revenues of approximately $200 million and has tripled the volume of business for Compass Group in Canada, positioning the company as the leader in education and remote site foodservice within the Canadian marketplace.
Notable first-half events in North America included Canteen Vending's inking of an initial five-year national contract with Sprint, with projected annual revenues of $5 million; Flik's conclusion of an initial five-year contract with Datek Online in New Jersey, with annual revenues predicted at almost $4 million; and the London (ON) Health Sciences Centre foodservice contract which will generate annual revenues of more than $4 million (Canadian). This is an initial 10-year accord calling for service to nearly 27,000 customers a day. Chartwells was awarded the contract to provide foodservice for more than 4,000 students at the University of Missouri-Rolla, with annual revenues in excess of $3 million for an initial 10 years.
"We are now a larger foodservice group, with a strategy for growth in a marketplace with proven growth potential," said chairman Francis Mackay. "Since the demerger from Grenada, we have already made a number of strategic investments and again recorded strong levels of growth. We continue to see a number of opportunities to invest and to grow within the foodservice market and we confidently look forward to a future of continuing growth."