Shares in Compass Group were up nearly three per cent on the FTSE 100 after the company reported a rise in revenue and profit in the half year ended 31 March 2010.
The catering firm said that its revenue rose 2.6 per cent to £7.1 billion in the six month period while underlying operating profit increased 10.8 per cent to £504 million.
Underlying operating margin was reported as rising 50 basis points to 7.0 per cent. The group said it would be increasing its interim dividend 13.6 per cent to 5.0 pence per share.
Free cash flow was reported as rising 46.3 per cent to £351 million.
Richard Cousins, Chief Executive Officer, said, "Compass has delivered another strong performance in a challenging environment. An acceleration in new business wins and continued progress in operating efficiency has delivered significant growth in the margin of 50 basis points. It is very encouraging that organic revenue growth is now returning. As we look forward we will maintain our relentless focus on efficiency, but at the same time we are laying strong foundations for the future growth of the Group".
Sir Roy Gardner, Chairman, said, "It is a testament to the strength of the Group that whilst the economic background has remained uncertain the business has displayed strong operational discipline and consistently generated momentum in profitability. There are multiple opportunities for the business to develop and we are positioning ourselves to take advantage of the significant growth opportunity in our core food and fast growing support services markets in both developed and emerging countries. Exciting infill acquisitions are adding to this potential. Our confidence in the future underpins our decision to increase the dividend by 14% to 5 pence per share".
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented, "In addition to group 'self help', economic recovery now also looks to be playing its part. Organic revenues grew by 0.4pc, with new business wins accelerating and existing contracts remaining stable.
"Cost reduction programmes by both private and public entities look to be underwriting growth prospects, while group diversification remains a key ingredient - a balanced portfolio of client industries, both cyclical and defensive, combined with a wide geographical spread. "In all, Compass continues to tick many boxes, providing a potent and increasingly reliable combination of defensive growth prospects. As such, market consensus opinion currently denotes a strong buy."
By 10:49 shares in Compass were up 2.93 per cent on the FTSE 100 to 545.00 pence per share.