ROBERT BARRLONDON (AP) ¿ Compass Group PLC, the world's largest food service company, on Wednesday said profit rose 33 percent in the first half of its financial year, largely on the strength of improved margins. The company said its net profit for the six months ending March 31 was 287 million pounds ($438 million), compared to 216 million pounds a year earlier. Revenue rose 24 percent to 6.9 billion pounds on a reported basis, and 2.6 percent on a comparable basis. Compass Group shares were up 8.2 percent at 360 pence in morning trading on the London Stock Exchange. Julian Cater, analyst at Collins Stewart, said the underlying operating profit of 455 million pounds was ahead of the consensus of 425 million pounds. "The key driver of this was margin improvement," Cater said. "On a reported basis, margins increased by 0.8 percent to 6.5 percent, and on an underlying basis the margin improvement was 0.6 percent, slightly ahead of management's 0.5 percent pre-close guidance."
He reiterated a "buy" recommendation on the shares, as did Robert Morton at Investec Securities. "Today's results are clearly very good, with a particularly impressive improvement in margins," said Morton. "Prospects for the full year look encouraging and we will be raising our forecast for the current year." In North America, which generates 44.5 percent of group revenue, Compass said operating profit rose 14 percent on a constant currency basis with a gain of half a percentage point on margins. Compass highlighted a new contract to feed 10,000 staff of the World Bank in the United States, but noted that event catering and hospitality spending had declined during the economic slump. Continental Europe, which produces 25.5 percent of revenue, posted a 6 percent increase in operating profit, the company said. In the United Kingdom, source of 13.6 percent of revenue, operating profit was up nearly 2 percent to 54 million pounds. A 30 percent gain in operating profit in other regions was boosted by acquiring the remaining 50 percent stake in GR SA in Brazil. However, the company said revenue in Brazil fell on a comparable basis because of rising unemployment there.
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